emptywheel

Neoliberal Utility and the Paradox of Taxation

Published March 4, 2015 | By Ed Walker

I’ve written about definitions and uses of “market” in several posts. The term “utility” is equally important in the development of mainstream economics. Here’s what Samuelson and Nordhaus say in Economics, 2005 ed.:

In a word, utility denotes satisfaction. More precisely, it refers to how consumers rank different goods and services. If basket A has higher utility than basket B for Smith, this ranking indicates that Smith prefers A over B. Often, it is convenient to think of utility as the subjective pleasure or usefulness that a person derives from consuming a good or service. But you should definitely resist the idea that utility is a psychological function or feeling that can be observed. Rather, utility is a scientific construct that economists use to understand how rational consumers divide their limited resources among the commodities that provide them with satisfaction. Emphasis in original.

The idea of a “scientific construct” seems at first glance to be far from the early neoclassical economists; in fact it seems downright bizarre. Recall from this post that the neoclassical economist William Stanley Jevons defined utility this way, quoting Bentham:

”By utility is meant that property in any object, whereby it tends to produce benefit, advantage, pleasure, good, or happiness (all this, in the present case, comes to the same thing), or (what comes again to the same thing) to prevent the happening of mischief, pain, evil, or unhappiness to the party whose interest is considered.”

This perfectly expresses the meaning of the word in Economics, provided that the will or inclination of the person immediately concerned is taken as the sole criterion, for the time, of what is or is not useful.

Jevons recognizes something Samuelson and Nordhaus seem to think, but do not make explicit: utility is solely related to each individual in the role of consumer of goods and services at a specific point in time. Jevons says that we get the total utility of all consumers by adding up the utility of each consumer, and argues that for perfectly competitive markets, this is the highest possible total of utility given a specific group of resources.

But it’s easy to show that even with the highly unlikely circumstances of rational consumers and competitive markets, there are plenty of outcomes that are far less than optimal. One obvious example is the paradox of thrift, first identified by John Maynard Keynes, and popularized by Paul Krugman; here’s an example from his blog, complete with charts and graphs. Here’s another example:

… [S]ometimes the economy is not like a household, [and] our individual choices sometimes lead to outcomes that are in nobody’s interest.

In particular, when you have economy-wide deleveraging — when everyone is trying to spend less than his or her income, so as to pay down debt — you have a fundamental adding-up problem. My spending is your income, and your spending is my income, so if both of us try to spend less at the same time, what we end up achieving is mutual impoverishment.

Those who reject the paradox of thrift, including the Austrians, suggested that something else would happen in the current economic circumstances. They have been proven utterly wrong. For the individual consumer, it is easy to see why the choice of paying down debt is better than the choice to consume more, but the result is an interminable recession.

Here’s another example. No body wants to pay taxes. For each of us, it would be much better not to. But there’s a disaster waiting to happen if everyone ducks taxes, as the examples of Greece and Italy show. The problem is also present in the US, though so far only the rich and their corporations and trusts have managed to escape taxation in a big way; most of us just got miserly tax cuts, and cheating by the 99% is still low. But the results are just as horrible. As Elizabeth Warren and Elijah Cummings pointed out in this op-ed in USA Today, the US middle class is collapsing. They explain the problem this way:

Beginning in the late 1970s, corporate executives and stockholders began taking greater shares of the gains. Productivity kept going up, but workers were left behind as wages stagnated.

Families might have survived as their incomes flattened, except for one hard fact: the costs of basic needs like housing, education and child care exploded. Millions took on mountains of debt and young people began struggling to cling to the same economic rung as their parents.

The response of both political parties at the state and federal level to this slowly growing disaster was the standard neoliberal prescription: tax cuts and reduced regulation. There were some small tax cuts for the working classes, and massive tax cuts for the very rich and their corporations. At the state level, the damage was especially great as governments also doled out huge tax cuts to keep businesses or lure them from other states. See, e.g., Kansas.

Those tax cuts starved state and local governments, and led to cuts in federal spending on all discretionary programs except military and spying. The result was that the cost of education rose dramatically, and that meant a staggering increase in student debt. The cost of housing rose for reasons related to the stunning increase in money in the hands of the wealthy with no investment prospects in new productive enterprises. Child care rose as two worker families and single mothers worked longer and harder to pay for necessities.

Meanwhile, cuts to education were inadequate, so governments stopped maintaining infrastructure. Driving around Chicago is a nightmare of “Rahmholes” and invisible lane dividers. Bridges collapse, inadequate transit systems collapse under winter weather, schools rot, and generally life is more unpleasant.

This list could be extended indefinitely, but I’ll stop. It should be clear that for most of us, the extra costs imposed by the inadequate provision of public goods far outweigh the minimal savings from the tiny tax cuts available to the bottom 90% of income earners.

Here are three lessons I draw from the paradox of taxation:

1. Tax policy focused on the middle class won’t help. That’s the Third Way Democrat policy, and it’s the policy of the remaining sane Republicans. Warren and Cummings suggest getting rid of tax loopholes for the rich and their corporations. That’s a start. Heavy top end income taxes, heavy capital income taxes, heavy estate taxes, greater taxation of corporations, and a heavy wealth tax are a better goal. The key to higher incomes is reducing the ability of the rich to buy up politicians, reporters and compliant academics.

2. Neoclassical economics turns on a simple form of total utility in an economy. They teach that we just add up the utility of all consumers, and claim that we are maximizing utility. That is inadequate for accurate analysis of a complex economy. In fact, it is guaranteed to produce an inadequate supply of public goods, and thus a rotten distribution of scarce resources. It doesn’t deal with the future in any intelligent way. It doesn’t handle scale problems like poisoning of the atmosphere, or filling up the oceans with plastic.

3. The rich take advantage of the inadequate supply of public goods by privatization.The problem the rich have is what to do with all the money they’ve gouged out of the economic system. One solution is to buy roads and rent them to you, to buy street parking and rent it to you, to establish training schools to sell you an education and keep you in debt and hungry for income so you’ll take any rotten job. They want to profit from goods and services we can buy cheaper through government.

The plain fact is that neoliberal economic theory is solely about keeping the rich happy. It has nothing to offer average people who only have labor to sell for the money they need to live.

Posted in Uncategorized | 6 Comments

Partnering with the Kiwis, NSA “Protects” Us from Climate Resistors?

Published March 4, 2015 | By emptywheel

The Intercept has what will be the first in a series of partnering articles with New Zealand’s great surveillance reporter Nicky Hager on the role of New Zealand’s SIGINT agency, Government Security Communications Bureau, in the Five Eyes dragnet. As part of it, they target south Pacific islands that its hard to understand as a threat to anyone.

Since 2009, the Government Communications Security Bureau intelligence base at Waihopai has moved to “full-take collection”, indiscriminately intercepting Asia-Pacific communications and providing them en masse to the NSA through the controversial NSA intelligence system XKeyscore, which is used to monitor emails and internet browsing habits.

[snip]

The documents identify nearly two dozen countries that are intensively spied on by the GCSB. On the target list are most of New Zealand’s Pacific neighbours, including small and vulnerable nations such as Tuvalu, Nauru, Kiribati and Samoa.

Other South Pacific GCSB targets are Vanuatu, the Solomon Islands, New Caledonia, Fiji, Tonga and French Polynesia. The spy agency intercepts the flows of communications between these countries and then breaks them down into individual emails, phone calls, social media messages and other types of communications. All this intelligence is immediately made available to the NSA, which is based in Maryland, near Washington, DC.

Effectively, the NSA forces GCSB to spy on these teeny tiny countries in the middle of the Pacific in order to benefit from our dragnet.

And for what?!?!

Even the CIA acknowledges that Nauru has no military, and it somewhat optimistically claims Nauru has no international disputes.

The same is true of Tuvalu.

Both have a dispute, of course. The rich lifestyles of the rest of the world (which Tuvalu shared in for a period of Phosphate exploitation) threaten to wipe these nations off the face of the earth with rising ocean levels. To the extent they might be threats to the US, it is because the citizens of Tuvalu and Nauru speak with the moral authority of some of the first peoples who will be wiped off the face of the earth because of climate change.

Aside from that, Tuvalu has its own Internet domain; Nauru has become a tax haven.

Still, it’s hard to believe that the most powerful country in the world, which has an active military population that is 136 times the population of these countries, is really threatened by either of these countries.

But nevertheless, we’re forcing New Zealand to get “full take” from them, as the price of admission to our spying club.

Posted in Climate Change, EO 12333 | Tagged Edward Snowden, Nauru, Tuvalu | 12 Comments

DOJ Can’t Keep Its Spin Straight in the Sterling Case

Published March 4, 2015 | By emptywheel

As I noted several weeks ago, Jeffrey Sterling challenged his conviction based on the absence of evidence actually implicating him in the crime. On Monday, the government responded. And while I expect the government will succeed in defeating Sterling’s challenge I am still struck by some very big problems with their story.

As they did at the trial (especially in closing arguments) they argued that Sterling had knowledge of what they claim was the leak, he had a motive to leak it, and he had the pre-existing relationship with James Risen that would explain that he would go to Risen to leak it. So far so good.

They also argued that because Sterling was the only one favorably treated in Risen’s chapter, Sterling must be a source for Risen, which logically doesn’t hold at all.

But in the filing, the government also returns to its efforts — played out in the indictment, rehearsed briefly as both sides tried to make narratological arguments neither was equipped to make, introduced at the opening, but largely dropped during the trial — to a claim that Sterling lied to both the Senate Intelligence Committee and Risen to get them to show interest in his story. Not just that, but they claim Sterling told the same lies to both. This is where their argument starts to fall apart, and fall apart in ways that identify more problems for their argument.

He not only possessed the facts about Classified Program No. 1, he had a motive to spin them in a way that would do maximum damage to the agency. That is exactly what the evidence reflects. Risen’s spin on the program—i.e., that it was botched and risked enabling the Iranian nuclear program—is the same spin the defendant used when he met with Vicki Divoll and Donald Stone from the Senate Select Committee on Intelligence (SSCI) on March 5, 2003, GX 101, the day after he filed his second lawsuit, GX 99, and about a month after his last settlement offer expired. GX 96. Indeed, the only time anyone expressed the concerns Risen parroted in Chapter 9 was when Sterling went to SSCI.

This is wrong on two counts.

First, what Sterling told SSCI was not spin. Here’s what the SSCI report (Exhibit 101) — which Donald Stone claims he wrote on Bill Duhnke’s direction after he informed Stone of an investigation (in which Duhnke was then the prime suspect, for some unknown reason) — says Sterling said.

The operation entailed a CIA asset providing Iran with faulty plans for a Russian based nuclear fire set. Although the plans had been modified by the National Laboratories, Mr. Sterling feared they were insufficiently flawed to prevent a Russian scientist hired by the Iranians from identifying and correcting the mistakes. His concern was based on the fact that the CIA asset recognized the plan’s flaws almost immediately after being shown them. He would have preferred to string the operation out by giving pieces of the plan out over time. In the end, the entire plan was turned over to the Iranians without any means for further follow up. However, CIA supposedly deemed the operation a success. Mr. Sterling fears the CIA gave the Iranians too much information that they can either use themselves or sell to someone else.

And here’s what Stone told the FBI Sterling had told them, but which (in his memo written after he knew of the investigation) he didn’t include in the investigation.

Which is why the details Stone provided the FBI, which would have been captured in his notes but which didn’t show up in the report, are so interesting. First, Sterling said that “they did the equivalent of throwing it over a fence,” an admission of how shoddy the pass-off of the blueprints was. Then, that one of CIA’s two assets involved “got cold feet,” an admission that Merlin almost backed out just before the trip to Vienna. And that one asset (it actually sounds like Stone might have meant Human Asset 2, the other Russian, which the records actually support) “recognized the plans were faulty.”

Every single one of these details are true, not spin. Not only did Merlin immediately say the plans “would not work” (and in testimony said the real plan would have been “100 times more complicated than it was shown in drawing and the schematics”), but the other Russian involved — the guy who gave the plans to the CIA in the first place — apparently had problems with them as well. The National Lab got the plans to work in 3 months (not 5, as Walter C testified under oath), at least according to CIA’s own cables. And the entire operation was premised on the assumption that Iran had access to Russian engineers.

In addition, Merlin did get cold feet, as extensively documented by CIA cables, and confirmed — once he presented it as protecting his own family — by the Russian’s testimony.

But the most important evidence from Sterling’s report to the SSCI is that he complained that “the entire plan was turned over to the Iranians without any means for further follow up,” largely because “they did the equivalent of throwing it over a fence.” Not only are those claims absolutely true — as confirmed by both Bob S and Merlin’s sworn testimony at the trial — but they are one of the two key points of his whistleblower complaint to Congress. Not only did CIA give Iran a nuclear blueprint. But they did so, Sterling worried (according to the SSCI), in such a way as to make further follow-up and intelligence gathering almost impossible. He would have rather strung out the operation so as to collect intelligence.

And that’s important, because that complaint doesn’t show up in Risen’s book with the details that substantiate it, appearing only as “the CIA also gave the blueprints to the Iranians without any certain way of monitoring their use by Iranian scientists.”

Indeed, there are details in Risen’s book that are inconsistent with both the real basis of Sterling’s worry and the facts as presented by CIA cables, Bob S, and Merlin, though not with the instructions originally given to Merlin. The book repeats the instructions that Merlin was not supposed to hide that he lived in the US.

The Russian was also told not to try to hide the fact that he now lived in the United States.

And it includes the final line of the letter it claims Merlin left, indicating his contact information was on the next page.

My contact info on next page.

The thing is, probably because of Bob S’ suppression of the actual details of the operation as executed — Bob S’ false spin, not Sterling’s! — the CIA documents included these details, but they are inaccurate, per both Bob S and Merlin. Merlin did everything he could to ensure any tie with the US was hidden. “Nobody likes United States in the world,” Merlin testified, “I’m not stupid. I can put in danger my family.” And he had been doing so for almost a year by the time of the operation. And according to Merlin — and Bob S claims he knew this at the time — Merlin did not provide the contact information the Iranians would need to contact him.

In other words, a key part of Sterling’s concern, that as Merlin executed the operation, he had left the Iranians no way to contact him and therefore largely prevented any follow-up contact, doesn’t show up in Risen’s book. The “spin” is not the same, and in fact Risen’s version misstates a key concern Sterling shared with SSCI.

If Sterling had wanted to get Risen to publish the same story he told to SSCI, he surely would have foregrounded that Merlin refused to do as he told with respect to leaving his contact information.

And that’s important for two reasons.

First, as I noted, FBI proved unable ultimately to find the version of the letter Merlin left (or the letter that appears in Risen’s book, which is almost certainly a different thing). And FBI proved unbelievably incurious about why Risen was quoting from a report on Merlin’s trip that Bob S claims never existed, a report that included the details that Bob S suppressed in his own reporting of the operation.

Here’s how the government’s filing deals with their inability to produce the actual letter.

The evidence at trial established that over a period of months, the defendant, Robert S., and Merlin worked on drafting and editing a letter for Merlin to provide to the Iranians. See, e.g., DE 435 at 22-23. The document went through multiple drafts. On January 12, 2000, the defendant sent a cable containing the then-current version of the letter. GX 35. Two days later, on January 14, 2000, Robert S. responded in another cable, requesting certain changes, including that the letter make explicit that the schematics were being provided for “free.” GX 36 at 1. There were no additional changes reflected in any cable traffic. The version of the letter that appears in Chapter 9 is the January 12, 2000, formulation, with Robert S.’s suggested changes from January 14 incorporated into the document—i.e., the final version. Compare GX 35 at 2, and GX 36 at 102, with GX 132 at 13-14

This is false. As I laid out, not only did Bob S’ instructions include agreement that the letter should be stripped of “puffery” that it retains in the Risen version, but Bob S himself testified that the letter that appeared in the book was not the final letter either.

In response on January 14, 2000, Bob S wrote (Exhibit 36),

We agree with [Sterling's] comments that the verbiage needs to be tightened up still further to make sure the Iranians understand what he has and on what terms. He should say explicitly that he is offering the schematic and associated parts list free to prove that he can provide further information, and acknowledge that what he is providing initially is incomplete. There should be a very clear message that he expects to be paid for the rest of the details they will need if they want to build the device.

[snip]

Each iteration of his draft letter is better than the previous one, so [Sterling]‘s patience seems to be paying off. It is worth our while to take the extra time to make sure he finally gets it just right, since the letters will have to do much of the work for us with the target.

Now, given Merlin’s payment strike at the following two meetings, it is possible CIA never got around to making the changes Bob S wanted. The fact that Bob S, not Sterling, wrote the cables from those meetings means we would never know, because unlike Sterling, Bob S never included the text of correspondence in cables he wrote (as I laid out here). But Bob S — who ran both the remaining meetings before the Vienna trip with Merlin — clearly wanted changes. And while the letter appearing in Risen’s book retains what Sterling called Merlin’s “puffery” language, it does reflect two of the changes Bob S asked for: reiteration that this package was meant as an assessment package, and an indication Merlin had emailed IS2 to alert him to the package (though see my questions about whether he really did in the update to this post).

In his testimony, Bob S claimed that what appeared in the book was the “nearly final draft,” explaining that the reference to Merlin getting paid was “sharpened” still further after the version that appears in the book. If true, given the way the final meetings worked out, Bob S may have been the only one who would know that.

In spite of the abundant evidence that Bob S was more likely to have these late iteration letters than Sterling, the government goes further to argue — as they prevented Sterling from arguing at trial — that he probably didn’t do his job and that’s why there isn’t a final version of the letter.

It would be entirely reasonable for a jury to conclude that an individual, who was terminated for failure to perform his assigned duties, GX 62 at 1, might also fail to properly document all of his contacts with an asset.

This would require that Merlin and Sterling made changes Bob S knew about, did not document them verbatim as was Sterling’s (but not Bob S’) consistent practice, and Bob S never noticed. Indeed, Bob S insisted at trial that the CIA writes everything down (in contradiction to the evidence that, while Sterling did, he did not). It’s just not possible.

And, as I mentioned, the motion never deals with — as the entire trial didn’t either — the report which Merlin and Bob S say never existed but gets quoted extensively in Risen’s book, which included information which Bob S suppressed in official CIA communications but admits are factually correct.

But the mistranslation of Sterling’s concern is important for another reason: the errors in Risen’s book, errors which Sterling not only knew to be errors (per trial evidence), but errors that make no sense given FBI’s claimed spin. The big one — the one that pissed Merlin off the most — was the claim he was a defector (I’m less convinced that Risen’s claim that CIA helped Merlin get citizenship is entirely false, because there’s reason to believe they did accelerate his green card and treat it differently to allow him to do the Vienna trip).

That is, while there are details that (according to FBI) only Sterling, Bob S, and Merlin knew that weren’t documented (though the majority of those were in the report they didn’t look for), there are also a slew of details that show someone ill-informed, but not in a way that matches’ Sterling’s actual or purported concerns, was talking to Risen.

All this is probably moot. The government will succeed with this motion on evidentiary grounds and the interesting venue argument will be revisited in the Appeals Court.

But it is worth noting that the government’s narrative, even as laid out in a careful motion, continues to make no sense.

Posted in Leak Investigations | Tagged James Risen, Jeffrey Sterling, Leonie Brinkema | 3 Comments

David Petraeus Gets Hand-Slap for Leaking, Two Point Enhancement for Obstruction of Justice

Published March 3, 2015 | By emptywheel

Cross posted from ExposeFacts.

As a supine Congress sitting inside a scaffolded dome applauded Benjamin Netanyahu calling to reject a peace deal with Iran, DOJ quietly announced it had reached a plea deal with former CIA Director David Petraeus for leaking Top Secret/Secure Compartmented Information materials to his mistress, Paula Broadwell.

Among the materials in the eight “Black Books” Petraeus shared with Broadwell were:

…classified information regarding the identities of covert officers, war strategy, intelligence capabilities and mechanisms, diplomatic discussions, quotes and deliberative discussions from high-level National Security Council meetings, and defendant DAVID HOWELL PETRAEUS’s discussions with the President of the United States of America.

The Black Books contained national defense information, including Top Secret/SCI and code word information.

Petraeus kept those Black Books full of code word information including covert identities and conversations with the President “in a rucksack up there somewhere.”

Petreaus retained those Black Books after he signed his debriefing agreement upon leaving DOD, in which he attested “I give my assurance that there is no classified material in my possession, custody, or control at this time.” He kept those Black Books in an unlocked desk drawer.

For mishandling some of the most important secrets the nation has, Petraeus will plead guilty to a misdemeanor. Petraeus, now an employee of a top private equity firm, will be fined $40,000 and serve two years of probation.

He will not, however, be asked to plead guilty at all for lying to FBI investigators. In an interview on October 26, 2012, he told the FBI,

(a) he had never provided any classified information to his biographer, and (b) he had never facilitated the provision of classified information to his biographer.

For lying to the FBI — a crime that others go to prison for for months and years — Petraeus will just get a two point enhancement on his sentencing guidelines. The Department of Justice basically completely wiped away the crime of covering up his crime of leaking some of the country’s most sensitive secrets to his mistress.

When John Kiriakou pled guilty on October 23, 2012 to crimes having to do with sharing a single covert officer’s identity just days before Petraeus would lie to the FBI about sharing, among other things, numerous covert officers’ identities with his mistress, Petraeus sent out a memo to the CIA stating,

Oaths do matter, and there are indeed consequences for those who believe they are above the laws that protect our fellow officers and enable American intelligence agencies to operate with the requisite degree of secrecy.

David Petraeus is now proof of what a lie that statement was.

Posted in Leak Investigations | Tagged David Petraeus, John Kiriakou | 25 Comments

James Clapper Admits Phone Dragnet Data Retention Is about Discerning Patterns

Published March 3, 2015 | By emptywheel

In the Q&A portion of a James Clapper chat at Council on Foreign Relations yesterday, he was asked about the phone dragnet and Section 215 (this starts after 48:00).

He made news for the way he warned Congress that if they take away Section 215 (he didn’t specify whether he was talking about just the phone dragnet or Section 215 and the roughly 175 other orders authorized under it) and something untoward happens as a result, they better be prepared to take some of the blame.

Q: In recent days the government reauthorized the telephone metadata collection program through June 1st, when there’s the Sunset date, obviously, of Section 215 of the PATRIOT Act. What do you want to see happen after that?

Clapper: Well, what we have agreed to, Attorney General Eric Holder and I, last September, signed a letter saying that we supported the notion of moving the retention of the data to providers in a bill that was — actually came out of the Senate from Senator Leahy, so we signed up to that. I think that’s the only thing that’s realistic if we’re going to have this at all. In the end, the Congress giveth and the Congress taketh away. So if the Congress in its wisdom decides that the candle isn’t worth the flame, the juice isn’t worth the squeeze, whatever metaphor you want to use, that’s fine. And the Intelligence Community will do all we can within the law to do what we can to protect the country. But, I have to say that every time we lose another tool in our toolkit, you know? It raises the risk. And so if we have — if that tool is taken away from us, 215, and some untoward incident happens which could have been thwarted had we had it I just hope that everyone involved in that decision assumes responsibility. And it not be blamed if we have another failure exclusively on the intelligence community.

At one level, I’m absolutely sympathetic with Clapper’s worries about getting blamed if there’s another attack (or something else untoward). In some cases (particularly in the aftermath of the 2009 Nidal Hasan and Umar Farouk Abdulmutallab attacks), politicians have raised hell about the Intelligence Community missing a potential attack. But that really did not happen after the Boston Marathon; contemporaneous polls even said most people accepted that you couldn’t prevent every attack. Moreover, in that case, NSA — the entity running the phone dragnet — was excluded from more intensive Inspector General review, as NSA has repeatedly been in the past (including, to a significant extent, the 9/11 attack), even though it had collected data on one or both of the Tsarnaev brothers but not accessed it until after the attack. In other words, NSA tends not to be held responsible even when it is.

Clapper’s fear-mongering has gotten most of the attention from that Q&A, even more than Clapper’s admission elsewhere that “moderate” in Syria — he used scare quotes — means “anyone who’s not affiliated w/I-S-I-L.”

But on the phone dragnet, I found this a far more intriguing exchange.

Q: And just to be clear, with the private providers maintaining that data, do you feel you’ve lost an important tool?

Clapper: Not necessarily. It will depend though, for one, retention period. I think, given the attitude today of the providers, they will probably do all they can to minimize the retention period. Which of course, from our standpoint, lessens the utility of the data, because you do need some — and we can prove this statistically — you do need some historical data in order to, if you’re gonna discern a pattern. And again, 215 to me, is much like my fire insurance policy. You know, my house has never burned down but every year I buy fire insurance just in case.

In general, discussions about why the NSA needs 5 years of phone dragnet have used a sleeper argument: a suspect might have spoken to someone of interest 4 years ago, which would be an important connection to identify and pursue. But that’s not what Clapper says here. They need years and years of our phone records not to find calls we might have made 5 years ago, but to “discern patterns.”

Well, that changes things a bit, and may even suggest how they’re actually using the phone dragnet.

While we know they have, at times, imputed some kind of meaning to the lengths of calls — for a while they believed calls under 2 minutes were especially suspicious until they realized calls to the pizza joint also tend to be under 2 minutes — there’s another application where pattern analysis is even more important: matching burner phones. You need a certain volume of past calls to establish a pattern of a person’s calls so as to be able to identify another unrelated handset that makes the same pattern of calls as the same person.

Connection chaining, not contact chaining.

Clapper’s revelation that they need years of retention for pattern analysis, not for contact chaining, seems consistent with the language describing the chaining process under USA Freedom Act.

(I) using the specific selection term that satisfies the standard required under subsection (b)(2)(C)(ii) as the basis for production; and

(II) using call detail records with a direct connection to such specific selection term as the basis for production of a second set of call detail records;

That is, they’d be getting all the calls the target had made, as well as all the calls an identifiable target’s associate or additional phone had made.

And remember, one of the NSA’s two greatest “successes” with the phone dragnet — when they found that Adis Medunjanin, whom they already knew to be associated with Najibullah Zazi, had a phone they hadn’t known about — involves burner matching. That match took place at an important moment, too, when the NSA had turned off its automatic correlation process (which uses a dedicated database to identify the other known identities of a person in a chain), and when its queries were as closely controlled as they ever have been in the wake of the massive violations in 2009. At a time when they were running a bare bones phone dragnet, they were still doing burner matching, and considered that a success.

Now, let me be clear: matching the burner phones of real suspects is a reasonable use for a phone dragnet, though the government ought to provide more clarity about whether they’re matching solely on call patterns or on patterns of handset use, including on the Internet. It’d also be nice if anyone caught in this fashion had some access to the accuracy claims the government has made and the basis used to make those accuracy claims (for one incarnation of the Hemisphere dragnet, DEA was claiming 94% accuracy, based of 10 years of data and, apparently, multiple providers). And this points to the importance of retaining FISC review of the targets, because people for whom there is not reasonable articulable suspicion of ties to terrorism ought to be able to use burner phones.

James Clapper’s office has gone to great lengths to try to hide any mention of pattern analysis in declassified discussions of the phone dragnet. Apparently, Clapper doesn’t think that detail needs to be classified anymore.

Posted in FISA | Tagged Adis Medunjanin, James Clapper | 3 Comments

The Jihadi John Cover Story

Published March 2, 2015 | By emptywheel

In the WaPo’s story identifying Jihadi John as Mohammed Emwazi, they noted that the FBI intimated it had ID ISIL’s executioner as far back as February.

Authorities have used a variety of investigative techniques, including voice analysis and interviews with former hostages, to try to identify Jihadi John. James B. Comey, the director of the FBI, said in September — only a month after the Briton was seen in a video killing American journalist James Foley — that officials believed they had succeeded.

In a Telegraph piece explaining how the WaPo had IDed Emwazi, Adam Goldman suggests he and his colleagues repeated that approach.

Former hostages said that the Islamic State killer spoke fluent Arabic, a hint that he was not from Britain’s large Pakistani or Bangladeshi communities.

He made his captives watch online videos from al-Shabaab, the Somali terror group, which suggested he may have had an interest in jihad in east Africa before heading to Syria.

“I was trying to pick up pieces of information, data points, scraps,” said Adam Goldman, the Washington Post reporter who broke the story with his colleague Souad Mekhennet. “It was hard, man. People were tight-lipped about this.”

When Mr Goldman finally closed in on the name of Mohammed Emwazi, a Kuwaiti-born British citizen who grew up in west London, two things quickly became evident.

The first was that the name on its own would shed little light on the identity of the man who taunted the West in Isil’s gruesome videos. Emwazi had basically none of the internet presence you would expect from a man in his mid-twenties. No Facebook account, no Twitter, no digital trace.

“The trail was thin. Which was odd because in this day and age if you’re 26 years old you’re all over the internet,” said Mr Goldman. Emwazi’s computer skills, honed at the University of Westminster, may have helped him scrub his record.

In that piece, Goldman also made clear that officials in both the US and UK knew who Emwazi was, but weren’t sharing.

The original WaPo piece also makes clear they relied, in part, on help from CagePrisoners’ Asim Qureshi. As I noted the other day, CagePrisoners has got a great deal of documentation on Emwazi’s early run-ins with the British security state, some of which is now coming out in stories.

In short, people knew, and a number of WaPo journalists were also able to learn who Jihadi John is. And they did so largely by talking to people who had met or known him — classic HUMINT.

Which is why I find this story so odd. Exclusive!! Jihadi John exposed himself via SIGINT!

Mohammed Emwazi, 26, now the world’s most-wanted man after beheading British and US hostages, had been on a shortlist of suspects.

But the crucial piece of the jigsaw fell into place when when Emwazi used a laptop in Syria to download web design software which was being offered on a free trial.

Instead of buying the software with a credit card, he used a student code from London’s Westminster University when he studied computer technology.

The number contained unique information which gave his date of birth, what he studied, and where, and information on his student loan.

Sources revealed the download singled him out as being in the right place and time to be the killer.

The information was passed back through the intelligence chain and further matches showed he was the murderer.

An intelligence source said last night: “In today’s electronic age of social media and technology, we chase the digital footprint before we chase the person.

British intelligence sources are now claiming that the SIGINT hunt for Emwazi preceded the HUMINT one, and also claiming that a SIGINT clue — and the related SIGINT trail that clue uncovered — provided the breakthrough in IDing him.

Which is almost certainly bullshit.

But notable bullshit, for two reasons. First, because the current story — that the UK lost Emwazi — poses really big problems for the dragnet. Because if someone like Emwazi, whom MI5 had been chasing for years, can simply disappear, only to reappear as the man beheading western journalists (though technically, the videos never show him doing so), then it suggests the entire dragnet is least effective when it is most needed. The Express’ ill-defined sources appear to want to tell a story about SIGINT succeeded rather then explain how it is that SIGINT failed (at least according to the story getting told publicly).

Mind you, I’m not entirely convinced Emwazi did disappear. But if he didn’t, that raises some other questions. Questions heightened by the role of CagePrisoners, as well. Remember, the Brits arrested Moazzam Begg for travel it had pre-approved to Syria in 2012, holding him from February to October 2014, when they finally admitted the British government had known of his trip, precisely the period when Jihadi John came into US consciousness.

I suspect both CagePrisoners and British intelligence are trying to spin this, in this case by focusing on SIGINT rather than HUMINT which clearly led to Emwazi.

Posted in Terrorism | Tagged Mohammed Emwazi | 12 Comments

The “Torture Works” Story

Published March 1, 2015 | By emptywheel

After Adam Goldman exposed the identity of Jihadi John, ISIL’s executioner, as Mohammed Emwazi, it set off an interesting response in Britain. CagePrisoners — the advocacy organization for detainees — revealed details of how MI5 had tried to recruit Emwazi and, when he refused, had repeatedly harassed him and his family and prevented him from working a job in Kuwait (where he was born).

While that certainly doesn’t excuse beheadings, it does raise questions about how the intelligence services track those it has identified as potential recruits and/or threats.

And seemingly in response to those questions, the former head of MI6 has come forward to say that torture has worked in a ticking time bomb scenario — that of the toner cartridge plot in 2010.

In his first interview since stepping down from Secret Intelligence Service in January, Sir John Sawers told the BBC yesterday that torture “does produce intelligence” and security services “set aside the use of torture… because it is against the values” of British society, not because it doesn’t work in the short term. Sir John defended the security services against accusations they had played a role in the radicalising of British Muslims, including Mohammed Emwazi, who it is claimed is the extremist responsible for the murder of hostages in Syria.

The IoS can reveal details of a dramatic “Jack Bauer real-time operation” to foil an al-Qaeda plot to bring down two airliners in 2010. According to a well-place intelligence source, the discovery of a printer cartridge bomb on a UPS cargo aircraft at East Midlands airport was possible only because two British government officials in Saudi Arabia were in “immediate communication” with a team reportedly using torture to interrogate an al-Qaeda operative as part of “ticking bomb scenario” operation.

The terror plot was to use cartridge bombs to bring down two aircraft over the eastern United States. However, British authorities intercepted the first device at the cargo airport hub after what they described as a “tip-off” from Saudi Arabia. A second device was intercepted aboard a freight plane in Dubai; both aircraft had started their trips in Yemen.

The IoS understands there was a frantic search prompted by “two or three” calls to Saudi Arabia after the tip-off, with security services battling to find the device. French security sources revealed the device was within 17 minutes of detonating when bomb disposal teams disarmed it.

One intelligence source said: “The people in London went back on the phone two or three times to where the interrogation was taking place in Riyadh to find out specifically where the bomb was hidden. There were two Britons there, in immediate communication with where the interrogation was taking place, and as soon as anything happened, they were in touch with the UK. It was all done in real time.”

I find this rather interesting for several reasons.

At the time, multiple sources on the Saudi peninsula revealed that authorities learned of this plot — and therefore learned about the bombs — from an apparent double agent (and former Gitmo detainee), Jabir al-Fayfi, who had left AQAP and alerted the Saudis to the plot. If so, it would mean what was learned from torture (if this account can be trusted) was the precise location of the explosives in planes that boxes that had already been isolated. I’m not certain, but that may mean this “success” prevented nothing more than an explosion in a controlled situation, because it had already been tipped by a double agent who presumably didn’t need to be tortured to share the information he had been sent in to obtain.

That is, the story, as provided, may be overblown.

Or may be referring to torture that happened in a different place and time, as part of an effort to “recruit’ al-Fayfi.

But I’m interested in it for further reasons.

The toner cartridge story significantly resembles the UndieBomb 2.0 plot, which was not only tipped by a double agent, but propagated by it (indeed, I recently raised questions about whether leaks about both were part of the same investigation). But in that case, the double agent came not via Gitmo and Saudi “deradicalization,” but via MI5, via a recruitment effort very like what MI5 used with Emwazi.

Indeed, it is not unreasonable to imagine that Emwazi knew that double agent and/or that CagePrisoners has suspicions about who he is.

I have increasingly wondered whether the treatment of a range of people implicated in Yemeni and/or Somali networks (MI5 accused Emwazi of wanting to travel to the latter) derives from the growing awareness among networks who have intelligence services have tried to recruit who else might have been recruited.

Which might be one reason to tie all this in with “successful torture” — partly a distraction, partly an attempt to defer attention from a network that is growing out of control.

Posted in Terrorism | Tagged AQAP, Jabir al-Fayfi, Jihadi John, Mohammed Emwazi | 18 Comments

Piketty Gets A Laugh At Mankiw’s Expense

Published February 28, 2015 | By Ed Walker

I’m not a fan of the former Bush economics adviser and Harvard economics professor N. Gregory Mankiw, so I was delighted to see Thomas Piketty make a joke about him at the recent meeting of the American Economics Association. Chuck Collins of the Institute for Policy Studies was there, attending one of the panels on Thomas Piketty’s Capital in the Twenty-First Century. One of those panels, packed with right-wing economists, was set up by Mankiw, who used it as a stage to attack Piketty. He and his fellow ideologues decided unanimously that the best thing to do is to impose a consumption tax, presumably as part of a package to lower taxes on the top earners and to keep capital gains taxes low and corporate taxes at their lowest level in decades.

Mankiw, at another point in his presentation, had still more embarrassing comments to make. Piketty, he intoned, must “hate the rich.” Piketty’s financial success with his best-selling book, Mankiw added, just might lead to self-loathing.

This is what passes for right wing humor in the economist class, though Collins reports that the obviously prepared bon mots “fell flat”. Then someone asked Piketty what he thought about the consumption tax idea. Collins reports his reply:

“We know something about billionaire consumption,” Piketty observed, “but it is hard to measure some of it. Some billionaires are consuming politicians, others consume reporters, and some consume academics.”

Sweet. A correspondent tells me that one of his friends was there and that this jibe brought the house down. Too bad more people don’t laugh at Mankiw and other toadies for the rich.

Posted in Economics, Ed | 9 Comments

Will Verizon Challenge the Government’s Fishy Dragnet?

Published February 27, 2015 | By emptywheel

Tim Edgar has a fascinating post on how the SCOTUS decision in Yates v US — in which a guy busted for throwing away undersized fish was let off because those fish do not constitute a tangible object under the law — might have repercussions for the phone dragnet.

The Supreme Court let Yates off the hook. Five justices agreed that a fish is not a tangible object. At first blush, this seems a bit implausible. Justice Kagan certainly thought so. Her eloquent dissent cites Dr. Seuss’s One Fish Two Fish Red Fish Blue Fish – for a time, my favorite book – as authority that fish are, indeed, tangible objects. I expect it is the first use of any book by Dr. Seuss as legal authority in an opinion of the Supreme Court, and I must say that I found it squarely on point, if not ultimately persuasive.

Justice Ginsburg’s opinion for the plurality explains that fish are not tangible objects because “in law as in life . . . the same words, placed in different contexts, sometimes mean different things.”

[snip]

Surprisingly, Yates has real implications for national security surveillance. The NSA’s bulk collection of telephone records is based on section 215 of the Patriot Act, which amended the business records provision of the Foreign Intelligence Surveillance Act (FISA). That provision is titled “Access to certain business records for foreign intelligence and international terrorism investigations.” It allows the government to obtain an order from the FISA court “requiring the production of any tangible things(including books, records, papers, documents, and other items)” in national security investigations.

Does this literally mean “any tangible things,” or is this just a catch-all ensuring that all types of business records are covered? While the provision is very broad even if limited to business records or data, until Yates it might have meant literally anything at all. For example, it might be tempting for the government to use it to obtain, in national security investigations, the kind of physical items that would otherwise have required a physical search order. As a FISA business records order requires only relevance, and not probable cause, that would be a dangerous loophole. Yates closes it.

Perhaps more to the point, Yates also weakens the government’s bulk collection theory for telephone records. While Yates is interpreting a different statute, the logic is clear: the words “any tangible things” should not be read literally. Instead, they must be read in context, taking account of the words immediately surrounding it, the title of the section, the structure of the law, and its purpose. Read in this way, it is clear that “tangible things” should not be read to encompass things far afield from the sorts of business records that Congress expected would be sought in national security investigations.

[snip]

Bulk collection is qualitatively, not just quantitatively, different from the sorts of requests for records, documents, or other “tangible things” ordinarily made by government both in law enforcement and intelligence investigations.

Steve Vladeck made a similar observation on Twitter earlier today, so Edgar is not the only one raising this question.

As it happens, today is dragnet renewal day. Which not only means that some FISC judge will reapprove the dragnet, but that providers will get new Secondary Orders. And — as happened in January 2014, when Verizon challenged an order based on Richard Leon’s decision in Klayman v. Obama — that presents the providers with an opportunity to challenge the order based on new legal developments.

And it’s not just Verizon that has a new opportunity to challenge the government’s fishy dragnets.

I’ve long suspected that the government has, in limited fashion, used Section 215 to obtain DNA material (they have databases of DNA from Gitmo detainees, for example, and I can imagine that they’d love to obtain DNA samples where they exist).

More interestingly, we’ve been talking about the government’s use of Section 215 to obtain Internet data, probably in hacking investigations. If, as a number of people suspect, they’re using it to get data flow records, that may be deemed even further away from common definitions of “tangible things.” And the Internet companies are riled up.

So let’s have it, providers! Some challenges to the fishy dragnet!

Update: In the post announcing the reauthorization (yesterday, actually) of the dragnet, I Con the Record noted that this one expires on June 1. I suppose that’s designed to add pressure on the reauthorization fight. I think that works out to be a 95 day dragnet.

Posted in FISA | Tagged Elena Kagan, Klayman v. Obama, Richard Leon, Ruth Bader Ginsburg, Verizon, Yates v. US

The Government Continues to Play Hide and Seek with Surveillance Authorities

Published February 27, 2015 | By emptywheel

Last year, I described the effort by the Reaz Qadir Khan’s lawyers to make the government list all the surveillance it had used to catch him (which, significantly, would either be targeted off a dead man or go back to the period during with the government used Stellar Wind). In October the government wrote a letter dodging most notice. Earlier this year, Judge Michael Mosman (who happens to also be a FISA judge) deferred the notice issues until late in the CIPA process. Earlier this month, Khan plead guilty to accessory to material support for terrorism after the fact.

Another defendant accused of material support, Jamshid Muhtorov, replicated that tactic, demanding notice of all the types of surveillance used against him (his co-defendant, Bakhtiyor Jumaev, joined the motion). The government responded to that motion yesterday.

A comparison of the two responses is instructive.

Part of what the government does in both is to rehearse the notice requirements of a particular statute, stating that in this case the evidence hasn’t met those terms. It does so, we can be certain, whether or not the surveillance has been used. That’s because the government addressed FISA Section 703 notice in the Khan case, and we know the government doesn’t use 703 by itself at all.

The responses the government made for both Section 215 request, in which the government said it has no duty to notice Section 215 and a defendant would not have standing nor would have a suppression remedy,

And PRTT, in which the government listed 5 criteria, all of which must be met to require notice, were virtually identical.

Which is why I’m interested that the government’s treatment of EO 12333 notice was different (in both cases, there’s good reason to believe EO 12333 surveillance was involved, though in the case of Khan, that would likely include the illegal dragnet).

With Khan, the government remained completely silent about the questions of EO 12333 collection.

Whereas with Muhtorov — who was likely included in the Internet metadata dragnet, but probably not in Stellar Wind — the government argues he would only get notice if Muhtorov could claim evidence used against him in a proceeding was obtained via allegedly illegal electronic surveillance.

Therefore, under circumstances where § 3504 applies, the government would be required to affirm or deny the occurrence of the surveillance only when a defendant makes a colorable claim that evidence is inadmissible because it was “the primary product of” or “obtained by the exploitation of” allegedly unlawful electronic surveillance as to which he is aggrieved.

Then it included a [sealed material redacted] notice.

Which seems tantamount to admission that EO 12333 data was used to identify Muhtorov, but that in some way his prosecution was did not arise from that data as a “primary product.”

Muhtorov was IDed in a chat room alleged to have ties to the Islamic Jihad Union, which I presume though don’t know is hosted overseas. So that may have been EO 12333 surveillance. But it may be that his communications on it were collected via 702 using the Internet dragnet as an index.

Is the government arguing that using a dragnet the FISC declared to be in violation of FISC orders only as a Dewey Decimal system for other surveillance doesn’t really count?

Posted in FISA | Tagged Jamshid Muhtorov