Welcome to Wonkbook, Ezra Klein and Evan Soltas’s morning policy news primer. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.
“If you look at the reports, even the disclosures that Mr. Snowden's put forward, all the stories that have been written, what you're not reading about is the government actually abusing these programs and, you know, listening in on people's phone calls or inappropriately reading people's e-mails.”
That was President Obama at his press conference last week. The implication was clear: You’re not reading about these infractions because they didn’t happen.
Well, now you are reading about them.
“The National Security Agency has broken privacy rules or overstepped its legal authority thousands of times each year since Congress granted the agency broad new powers in 2008, according to an internal audit and other top-secret documents,” writes Barton Gellman in a blockbuster new story.
The May 2012 audit “counted 2,776 incidents in the preceding 12 months of unauthorized collection, storage, access to or distribution of legally protected communications.” In general, these weren’t malicious or severe breaches. “Most were unintended,” the report says. But they happened — and, yes, they resulted in the NSA “listening in on people's phone calls or inappropriately reading people's e-mails.”
My personal favorite: “In one instance, the NSA decided that it need not report the unintended surveillance of Americans. A notable example in 2008 was the interception of a ‘large number’ of calls placed from Washington when a programming error confused the U.S. area code 202 for 20, the international dialing code for Egypt.”
To be fair to Obama, what the report details isn’t systematic abuse so much as repeated mistakes. But the report is a reminder that we don’t know what we don’t know. And a companion story today makes clear that we can’t trust that the courts providing oversight — weak as they are — know it either.
Even though this was a friendly audit produced with the cooperation of the NSA — and so, by the way, might not have uncovered systemic abuse if indeed it existed — Gellman reports that these kinds of details are “not routinely shared with Congress or the special court that oversees surveillance.”
In a companion story today, the chief judge of the U.S. surveillance courts made clear how much he doesn’t know, telling the Washington Post that "The FISC is forced to rely upon the accuracy of the information that is provided to the Court. The FISC does not have the capacity to investigate issues of noncompliance, and in that respect the FISC is in the same position as any other court when it comes to enforcing [government] compliance with its orders."
This is the reality of the NSA spying programs: Aside from Snowden’s leaks, we only know what the government is telling us. Of course, that’s always the case with intelligence operations. What’s scarier is that the oversight bodies only know what the government is telling them, too.
At his press conference, Obama tried to calm the furor over these programs by positing the absence of information about abuses as proof of the absence of abuses. It’s nothing of the kind.
Wonkbook’s Number of the Day: $67 million. That’s the amount awarded yesterday by the Obama administration to 105 “navigator” groups for the president’s health law.
Wonkbook’s Graphs of the Day: Check out the ones at the top of today’s Barton Gellman scoop.
Wonkbook’s Top 5 Stories: 1) The Washington Post breaks two big NSA stories; 2) when good news is bad news; 3) solar panels return; 4) $67M to navigate Obamacare; and 5) who sequestration hurts.
1) Top story: Two NSA stories you must read
NSA broke privacy rules thousands of times per year, audit finds. “The National Security Agency has broken privacy rules or overstepped its legal authority thousands of times each year since Congress granted the agency broad new powers in 2008, according to an internal audit and other top-secret documents. Most of the infractions involve unauthorized surveillance of Americans or foreign intelligence targets in the United States, both of which are restricted by law and executive order…The documents, provided earlier this summer to The Washington Post by former NSA contractor Edward Snowden, include a level of detail and analysis that is not routinely shared with Congress or the special court that oversees surveillance.” Barton Gellman in The Washington Post.
Court: Ability to police U.S. spying program limited. “The chief judge of the Foreign Intelligence Surveillance Court said the court lacks the tools to independently verify how often the government's surveillance breaks the court’s rules that aim to protect Americans' privacy. Without taking drastic steps, it also cannot check the veracity of the government's assertions that the violations its staff members report are unintentional mistakes…"The FISC is forced to rely upon the accuracy of the information that is provided to the Court," its chief, U.S. District Judge Reggie Walton, said in a written statement to The Washington Post. "The FISC does not have the capacity to investigate issues of noncompliance, and in that respect the FISC is in the same position as any other court when it comes to enforcing [government] compliance with its orders."” Carol D. Leonnig in The Washington Post.
Primary documents: NSA report on privacy violations in the first quarter of 2012.And you have to see the statements NSA gave The Washington Post.
Remember when Obama said the NSA wasn't "actually abusing" its powers? He was wrong. “At a news conference Friday, President Obama insisted that the threat of NSA abuses was mostly theoretical…[T]hat makes it extremely difficult for the FISC to check the court's work, since the NSA can -- and, apparently, did -- hide misconduct from the court that's supposedly supervising its activities.” Andrea Peterson in The Washington Post.
How Ron Wyden nearly became an NSA leaker. “One of the intelligence community's most outspoken critics says he considered talking about the National Security Agency's bulk surveillance program on the Senate floor. In an interview with Rolling Stone, Sen. Ron Wyden (D-Ore.) said he felt pressure from others to disclose the classified information in a way that would have protected him from prosecution. Under the Speech or Debate Clause of the U.S. Constitution, lawmakers receive immunity from lawsuits or trials for acts committed during the process of legislating. If Wyden had spoken out about the NSA, his comments would have become part of the Congressional Record.” Brian Fung in The Washington Post.
Music recommendations interlude: Alan Parsons Project, “Eye in the Sky,” 1982. (I am the eye in the sky / Looking at you / I can read your mind / I am the maker of rules / Dealing with fools / I can cheat you blind…)
Top opinion
NOONAN: What we lose if we give up on privacy. “A loss of the expectation of privacy in communications is a loss of something personal and intimate, and it will have broader implications. That is the view of Nat Hentoff, the great journalist and civil libertarian. He is 88 now and on fire on the issue of privacy. “The media has awakened,” he told me. “Congress has awakened, to some extent.” Both are beginning to realize “that there are particular constitutional liberty rights that [Americans] have that distinguish them from all other people, and one of them is privacy.”" Peggy Noonan in The Wall Street Journal.
KRUGMAN: Moment of truthiness. “We have an ill-informed or misinformed electorate, politicians who gleefully add to the misinformation and watchdogs who are afraid to bark. And to the extent that there are widely respected, not-too-partisan players, they seem to be fostering, not fixing, the public's false impressions. So what should we be doing? Keep pounding away at the truth, I guess, and hope it breaks through. But it's hard not to wonder how this system is supposed to work.” Paul Krugman in The New York Times.
SOLTAS: Kevin Brady, not Rand Paul, is the Republican to follow on monetary policy. “Brady wants to form a 12-member commission to look over the Fed's last 100 years and make recommendations for a new legislative mandate…It would be a shame to go through the worst slump since the Great Depression and not do some radical thinking about monetary policy…Lately the Fed has chosen to reinterpret its mandate unilaterally — by adopting an explicit target of 2 percent inflation. Independence in carrying out the mandate is one thing; freedom to redefine it is another…[I]t’s Congress's job to set the Fed’s goals, and the central bank shouldn't be changing them on the fly, as it did last January.” Evan Soltas in Bloomberg.
This is a surreal piece interlude: David Pogue tries on sunglasses that cure his extreme colorblindness and describes his reaction to looking at a rainbow.
2) Good news: The economy is healing. Bad news: The good news is bad news.
Strong economic data might be hurting stocks, as it raises expectations of a Fed exit. “U.S. stocks stumbled Thursday after a series of strong economic data raised investor concerns that the Federal Reserve could begin to withdraw some of its economic stimulus next month. Claims for jobless benefits unexpectedly dropped last week to the lowest level in almost six years, signaling a continued recovery in the employment market. Confidence among U.S. home builders also rose in August, reaching its highest level since 2005. Consumer prices, a reflection of inflation, rose 0.2 percent last month.” Katerina Sokou in The Washington Post.
Fed’s Bullard floats ideas of small cuts to bond-buying. “[H]is comments were notable because they were the first by a central-bank official on the tactics the Fed might employ when it does begin to wind down the bond purchases…He didn’t elaborate on what amount would constitute a small pullback or a larger one.” Victoria McGrane in The Wall Street Journal.
Foreigners dump US Treasuries, equities. “Private foreign investors sold a net $81.6 billion in long-term securities in June, nearly double the previous record selloff in May, according to a U.S. Treasury Department report released Thursday. That included net selling of $25.5 billion of U.S. equities-the biggest monthly pullout since August 2007--and $40.1 billion of U.S. Treasury bonds and notes…The two months of record sales mark a reversal after several years in which investors around the globe plowed money into U.S. Treasurys as a safe investment. The flows, aided by the Fed's bond buying, pushed Treasury yields to record lows.” Ian Talley in The Wall Street Journal.
Explainer: This chart might make you feel better about American inequality. Dylan Matthews in The Washington Post.
Homebuilders’ confidence is highest since 2005. “The National Association of Home Builders, an industry trade group, saidThursday that its housing-market index increased three points to 59 in August, though the July figure was revised down by one point. This level is the highest since November 2005, marking a rapid climb in recent years. Two years ago the index stood at 15.” Eric Morath and Jonathan House in The Wall Street Journal.
US industrial production stalls in July. “Industrial output last month was unchanged on a seasonally adjusted basis from the prior month, while the use of available production capacity fell 0.1 percentage point to 77.6%, the Federal Reserve said in a reportThursday. Economists had forecast a 0.2% rise in output and capacity utilization of 77.8%. Manufacturing, the biggest and most closely watched component of industrial production, fell 0.1% in July, partially reversing gains posted in May and June. The mining component rose while utility output fell.” Jonathan House and Eric Morath in The Wall Street Journal.
Job data look good. “First-time applications for state unemployment benefits dropped 15,000 to a seasonally adjusted 320,000, the lowest level since October 2007, the Labor Department said. Economists had expected initial claims to come in at 335,000 last week. The four-week moving average of new jobless claims, which irons out week-to-week volatility, fell to its lowest level since November 2007.” Reuters.
…And US consumer prices rise in July, maybe showing strengthening demand. “The Labor Department said on Thursday its Consumer Price Index rose 0.2 percent as the cost of goods and services ranging from tobacco to apparel and food increased. The CPI had increased 0.5 percent in June. July’s increase in consumer inflation was in line with economists’ expectations. In the 12 months through July, the CPI advanced 2.0 percent, the largest increase since February, after increasing 1.8 percent in June.”Reuters.
Explainer: Five facts about household debt in the United States. Neil Irwin in The Washington Post.
Auto loans and risky borrowers. “A new analysis from the Federal Reserve Bank of New York finds new auto loans to borrowers with low credit scores have indeed risen, but are still well below the levels seen during the credit bubble years leading up to the financial crisis. In the second quarter of this year, about 23 percent of new auto loans were issued to borrowers with credit scores under 620. Historically, the share of newly issued auto loans going to this riskier group was about 25 to 30 percent. The share of newly issued auto loans going to the borrowers with the best credit - scores over 720 - peaked at more than half during the recession. It's about 45 percent now.” Catherine Rampell in The New York Times.
Demography interlude: To each man and woman, his or her dot on this map.
3) Solar panels return to White House roof
White House solar panels being installed this week. “The Obama administration had pledged in October 2010 to put solar panels on the White House as a sign of the president's commitment to renewable energy. The White House official, who asked not to be identified because the installation is in process, wrote in an e-mail the project is "a part of an energy retrofit that will improve the overall energy efficiency of the building."” Juliet Eilperin in The Washington Post.
Intermittent nature of green power is challenge for utilities. “[A] recent Vermont episode, which set off a debate among government officials, the New England grid executives and the wind farm producers, highlights a broader struggle taking place across the country as utilities increasingly turn to renewable sources of energy. Because energy produced by wind, for example, is intermittent, its generating capacity is harder to predict than conventional power's. And a lack of widely available, cost-effective ways to store electricity generated by wind only compounds the complex current marketplace.” Diane Cardwell in The New York Times.
Stories you should care about if you’re a human being interlude: “Spoon in underwear saving youths from forced marriage.”
4) $67M to navigate Obamacare
Having more doctors might increase or decrease health spending. We don’t know. “[E]conomists are divided about the role that the supply of doctors plays in health spending because health care is a funny market, given information asymmetries and third-party payers. That is, doctors can sell tests and procedures that may not be totally necessary or helpful both because patients are not good at determining the value of those services, and because patients are not bearing the full cost. The end result is that physicians can "induce demand," to use economic parlance.” Catherine Rampell in The New York Times.
$67M awarded to groups helping with health law. “The Obama administration on Thursday awarded $67 million to 105 groups around the country that will serve as "navigators" to help the uninsured understand their options under the new health care law and sign up for coverage…The stakes are high for the navigator effort, because for the law to succeed, millions of people, particularly the young and healthy, need to buy insurance through the new markets. Many will qualify for federal subsidies to help with the cost. But there will be wide discrepancies from state to state in spending on navigators, and in how many people they can reach.” Abby Goodnough in The New York Times.
Adorable animals interlude: Cat barely survives massive puppy attack.
5) Who sequestration hurts
Puzzle awaits the Capital: How to solve 3 fiscal rifts. “The showdown encompasses three interlocking fiscal disputes that will challenge Mr. Obama and his Republican interlocutors to bridge seemingly irreconcilable goals. Perhaps easiest to resolve is the effort by some conservative Republicans to eliminate financing for the new health care law in return for keeping the government open beyond Sept. 30…A second challenge is determining the fate of the across-the-board budget cuts known as the sequester if Congress avoids a shutdown by extending government financing.” John Harwood in The New York Times.
Sequestration hurting science. “You wouldn’t know from his giddy, optimistic tone that Dutta is currently navigating the biggest obstacle of his career. Five years after he received a $1.3 million grant from the National Institutes of Health to undertake this microRNA project, he’s nearly out of cash. His proposal was placed in the 2nd percentile of all grants reviewed by NIH in 2007, meaning that it was deemed more promising than 98 percent of the proposed projects. When he asked for the same amount of money in 2012, his proposal was scored in the 18th percentile. In years past that score may have been good enough, but in the age of sequestration, NIH is supporting a much smaller pool of applicants. Late last month he was told that there would be no funding.”Sam Stein in The Huffington Post.
Judges urge Congress to drop sequestration. “Top federal judges in 49 states are urging lawmakers to avoid another round of automatic spending cuts that they say would have a "devastating and long-lasting impact" on the federal courts. The unusual letter from the chief judges of trial courts in every state but Nevada says that the $350 million reduction in the judiciary's lower budget for this year has dramatically slowed court proceedings and jeopardized public safety. The judges say there are fewer probation and other law enforcement officers to deal with record numbers of convicts who have been released from prison or given alternative sentences.” Mark Sherman in The Washington Post.
Sen. Cardin sees end to sequestration coming. “Lawmakers will work to end sequestration during the next few months, but not before Oct. 1, a Democratic senator predicted on Wednesday…That prediction might be optimistic. There are nine legislative days before Oct. 1, the start of fiscal 2014, and Congress needs to pass legislation, likely a temporary spending measure, to keep the government open. Then there's the debt ceiling fight.” Kellie Lunney in Government Executive.
Reading material interlude: The best sentences Wonkblog read today.
Wonkblog Roundup
Why aren’t casinos more like airlines? Lydia DePillis.
Is 'Little House on the Prairie' a libertarian parable? Dylan Matthews.
At the Bipartisan Policy Center, is cash the real divide? Lydia DePillis.
Why the Justice Department blocked the American-US Airways merger. Steven Pearlstein.
This chart might make you feel better about American inequality. Dylan Matthews.
The U.S. sends Egypt far more military aid than it needs. Brad Plumer.
Et Cetera
DC in its summer doldrums. Jennifer Steinhauer in The New York Times.
Bipartisan Policy Center offers recommendations on immigration-law overhaul. Ashley Parker in The New York Times.
Wonkbook is produced with help from Michelle Williams.
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