The Year 2013 As It Happened

Dave Barry gives us the low down on important events in 2013, along with his twisted humor.

Income Inequality in a Single Graph

The Washington Post has a column called Wonkblog, which solicited suggestions for the "Graph of the Year" from a number of policy and academic experts. Here is the contribution from Senator Chuck Schumer.

The single greatest problem facing America today is not the deficit, but rather the decline in middle-class incomes. For the first time in our history, middle-class incomes are on a steady and troubling path downward. That trend has turned American politics upside down as middle-class families struggle to pay the bills, their mortgage, and put enough away for a decent retirement.
The income gap this chart represents is not sustainable. There is nothing wrong with being wealthy, but if we don’t pursue policies that advance economic opportunity for the middle-class, this country will change for the worse. We need to focus like a laser on the light blue line in this chart, and get it heading upwards again.

Tax, Welfare, Wal-Mart and McDonald's

I have blogged before about Oregon tax policy that rewards the big fat cats Nike and Intel, which is a huge transfer of tax responsibility from highly profitable corporations to me and you, and continuing that train of thought we might consider Wal-Mart and McDonald's, as well as the entire food service industry, where non-union minimum wage workers are in a majority.  According to a Bloomberg article,

The two biggest welfare queens in America today are Wal-Mart and McDonald's.  According to one study, American fast food workers receive more than $7 billion dollars in public assistance. As it turns out, McDonald's has a “McResource” line that helps employees and their families enroll in various state and local assistance programs. It exploded into the public when a recording of the McResource line advocated that full-time employees sign up for food stamps and welfare. 

Wal-Mart however stands in a category by itself, being the largest private-sector employer in the U.S. and according to a study last May by the Democratic staff of the U.S. House Committee on Education and the Workforce, Wal-Mart forces its employees to use public assistance to survive, resulting in hidden taxpayer subsidies of their profits.  The study reports:

Accurate and timely data on Wal-Mart’s wage and employment practices is not always readily available.  However, occasional releases of demographic data from public assistance programs can provide useful windows into the scope of taxpayer subsidization of Wal-Mart.

After analyzing data released by Wisconsin’s Medicaid program, the Democratic staff of the U.S. House Committee on Education and the Workforce estimates that a single 300-person Wal-Mart Supercenter store in Wisconsin likely costs taxpayers at least $904,542 per year and could cost taxpayers up to $1,744,590 per year – about $5,815 per employee.  Wal-Mart’s size is nothing short of impressive. It employs more than 2 million workers worldwide. It is the nation’s largest private employer; one out of every ten retail workers in America is employed by Wal-Mart. Approximately 1.4 million Americans work at Wal-Mart.  Its workforce is double that of the U.S. Postal Service and outnumbers the populations of 96 countries. In 2012, its total revenue exceeded $469 billion, more than the gross domestic product of oil-rich Norway.  Wal-Mart reported an 8.6 percent increase in profit in the fourth quarter of 2012 and a profit margin of 4.38 percent.  In 2012, it earned $17 billion in profits.

 Wal-Mart says thank you very much as they pocket those hidden subsidies in their profits. 

NSA Phone Metadata Dragnet Ruled "Legal and Necessary"

A federal court judge ruled that the NSA was perfectly within its rights to collect the phone records of every US citizen in an absurd ruling against the ACLU.  The ACLU will appeal the dismissal of their lawsuit.  As MSNBC reports,

When Judge William H. Pauley ruled that the National Security Agency’s metadata program was lawful on Friday, he argued that there was no significant dispute about “the effectiveness of bulk telephony metadata collection.”
Pauley–who issued his ruling from a courthouse less than two miles from where the twin towers once stood–then offered a series of examples cited by the NSA to bolster their claims that the program is effective, all of which have been “seriously disputed.”
Only four plots among the fifty-four the NSA claims to have helped foil have been made public. Pauley cited three of those four plots in arguing that the metadata program was effective, but journalists and legislators have picked already picked those examples apart. ProPublica published a piece in October by Justin Elliott and Theodoric Meyer noting that in each of the three cases Pauley mentions, there were serious doubts as to whether or not the NSA was exaggerating either the plot itself or the impact of the program.

 Two Democratic members of the Senate intelligence committee, Ron Wyden of Oregon and Mark Udall of Colorado, said in July that the NSA has “significantly exaggerated this program’s effectiveness,” and warned that “assertions from intelligence agencies about the value and effectiveness of particular programs should not simply be accepted at face value.”
Aside from Leon and federal legislators, there’s one more entity that has disputed the usefulness of the NSA metadata program: The review board appointed by the White House itself. In their report, the board concluded that bulk collection of metadata “was not essential to preventing attacks.” After the report was released, one of the review board members, Geoffrey Stone, a University of Chicago law professor, told NBC News there was no evidence the program had thwarted any attacks.

Orwellian NSA Spying Ruled Unconstitutional

A Federal Court judge in Washington DC has ruled the NSA bulk phone metadata collection is unconstitutional under the Fourth Amendment protection against unreasonable searches without due process, and he called the program "Orwellian".  Thanks to Edward Snowden the cracks in the NSA armor are about to break.  The Guardian reports:

Judge Richard Leon declared that the mass collection of metadata probably violates the fourth amendment, which prohibits unreasonable searches and seizures, and was "almost Orwellian" in its scope. In a judgment replete with literary swipes against the NSA, he said James Madison, the architect of the US constitution, would be "aghast" at the scope of the agency’s collection of Americans' communications data.  Leon’s opinion contained stern and repeated warnings that he was inclined to rule that the metadata collection performed by the NSA – and defended vigorously by the NSA director Keith Alexander on CBS on Sunday night – was unconstitutional.  Jameel Jaffer, the deputy legal director of the ACLU, praised what he called Leon's "thoughtful" ruling: “This is a strongly worded and carefully reasoned decision that ultimately concludes, absolutely correctly, that the NSA’s call-tracking program can’t be squared with the constitution."  In his ruling, Judge Leon expressly rejected the government’s claim that the 1979 supreme court case, Smith v Maryland, which the NSA and the Obama administration often cite to argue that there is no reasonable expectation of privacy over metadata, applies in the NSA’s bulk-metadata collection. The mass surveillance program differs so much from the one-time request dealt with by the 1979 case that it was of “little value” in assessing whether the metadata dragnet constitutes a fourth amendment search. 

NSA Uses Google Cookies to Target Suspects

The new revelation reported in the Washington Post is not that earth shaking in itself, but it points out how the NSA builds big haystacks of data, making it harder to find a needle.  The experienced terrorist is probably not using Google to roam the internet, so a lot of effort by the NSA probably only tracks the average person, whether they are in the US, Brazil or Germany.  It is intrusive surveillance of people not suspected of doing anything bad.

Separately, the NSA is also using commercially gathered information to help it locate mobile devices around the world, the documents show. Many smartphone apps running on iPhones and Android devices, and the Apple and Google operating systems themselves, track the location of each device, often without a clear warning to the phone's owner. This information is more specific than the broader location data the government is collecting from cellular phone networks, as reported by the Post last week.
"On a macro level, 'we need to track everyone everywhere for advertising' translates into 'the government being able to track everyone everywhere,'" says Chris Hoofnagle, a lecturer in residence at UC Berkeley Law. "It's hard to avoid."

Sensenbrenner Wants Clapper Indicted for Lying to Congress

The Hill.com published excerpts of an interview with Rep. James Sensenbrenner in which he called for James Clapper, the Director of National Intelligence, to be indicted for lying to congress.

Rep. James Sensenbrenner Jr., the original author of the Patriot Act, says Director of National Intelligence James Clapper should be prosecuted for lying to Congress.
"Lying to Congress is a federal offense, and Clapper ought to be fired and prosecuted for it," the Wisconsin Republican said in an interview with The Hill.

He said the Justice Department should prosecute Clapper for giving false testimony during a Senate Intelligence Committee hearing in March.

During that hearing, Sen. Ron Wyden (D-Ore.) asked Clapper whether the National Security Agency (NSA) collects data on millions of Americans. Clapper insisted that the NSA does not — or at least does "not wittingly" — collect information on Americans in bulk. 

After documents leaked by Edward Snowden revealed that the NSA collects records on virtually all U.S. phone calls, Clapper apologized for the misleading comment.

NSA Targets Elves and Orcs

This has to be the most bizarre news story of the day.  The Guardian is reporting that the NSA somehow believed terrorists might be lurking in the hordes of innocent gamers, so naturally they had to do something, not being content with capturing most of the internet traffic already, they had to become Elves and Pixies to root out the terrorists!  One unnamed analyst was given the task of writing up the justification, with comical rationale.

A 2007 invitation to a secret internal briefing noted "terrorists use online games – but perhaps not for their amusement. They are suspected of using them to communicate secretly and to transfer funds." But the agencies had no evidence to support their suspicions. 

This sounded like such fun that the UK's GCHQ, the FBI, CIA, and the Defense Humint Service had to develop their own programs to stem this deadly menace.  Now we know what those folks are doing at work. 

In fact, so crowded were the virtual worlds with staff from the different agencies, that there was a need to try to "deconflict" their efforts – or, in other words, to make sure each agency wasn't just duplicating what the others were doing.
By the end of 2008, such efforts had produced at least one usable piece of intelligence, according to the documents: following the successful takedown of a website used to trade stolen credit card details, the fraudsters moved to Second Life – and GCHQ followed, having gained their first "operational deployment" into the virtual world. This, they noted, put them in touch with an "avatar [game character] who helpfully volunteered information on the target group's latest activities". 

The agencies had other concerns about games, beyond their potential use by terrorists to communicate. Much like the pressure groups that worry about the effect of computer games on the minds of children, the NSA expressed concerns that games could be used to "reinforce prejudices and cultural stereotypes", noting that Hezbollah had produced a game called Special Forces 2.

Well if we needed some comic relief in the never ending trove of Edward Snowden and the masters of spycraft, this will do for today.

Intel Says "Me Too" to Nike Oregon Tax Break

The largest private employer in Oregon with about 16,000 employees, Intel says they'd like the same sweet tax deal Oregon gave to Nike, a 30 year guarantee that their income tax basis won't change from the so-called "single sales factor" tax that only taxes sales in the state of Oregon.  Intel will allegedly create 500 new jobs to earn the break, but those jobs were probably already coming to Oregon, so it was just a favor to keep Intel happy at the expense of all Oregon citizens who will either make up the shortfall or have services cut.  These 30 year tax guarantees will lead to more demands down the road.

Intel already receives tax breaks well in excess of what any other Oregon business enjoys. Its current SIP tax breaks exempt up to $25 billion in Intel equipment from the property taxes that other businesses pay. SIP tax breaks have saved Intel more than $500 million since 2001, according to Washington County officials.   "We have no idea what's going to happen in the world in the next 30 years and it's silly for the state to think that it should sign 30-year agreements with any business," said Jody Wiser of Tax Fairness Oregon. "We shouldn't be tying future legislators hands forever. That's irresponsible."

Flags at Half-Staff for Nelson Mandela

Nelson Mandela (1918 - 2013) has died at age 95.  He was on my list of most admired and was a huge inspiration to the world for his opposition to apartheid most of his life.  President Obama ordered flags flown at half-mast in his honor.

President Obama recounted to the nation on Thursday how he drew inspiration from Mandela during his first public speech.

"My very first political action, the first thing I ever did that involved an issue or a policy or politics, was a protest against apartheid. I studied his words and his writings," he said in a televised address shortly after Mandela's death was announced.

"And like so many around the globe, I cannot fully imagine my own life without the example that Nelson Mandela set, and so long as I live I will do what I can to learn from him."

"He no longer belongs to us," Obama said. "He belongs to the ages."

However the US government opinion of Nelson Mandela and the African National Congress (ANC) movement that he led were blacklisted as terrorists by the US until a 2008 law was signed by then-President Bush removing it from the terrorist list.

The Daily Beast notes:
In the 1980s, Ronald Reagan placed Mandela’s African National Congress on America’s official list of “terrorist” groups. In 1985, then-Congressman Dick Cheney voted against a resolution urging that he be released from jail. In 2004, after Mandela criticized the Iraq War, an article in National Review said his “vicious anti-Americanism and support for Saddam Hussein should come as no surprise, given his longstanding dedication to communism and praise for terrorists.” As late as 2008, the ANC remained on America’s terrorism watch list, thus requiring the 89-year-old Mandela to receive a special waiver from the secretary of State to visit the U.S.

If You Have a Cell Phone, The NSA Knows Where You Are

The Washington Post has broken a new story based on internal NSA documents courtesy of Edward Snowden, it turns out the NSA is intercepting data worldwide from major cell telecoms and storing billions of records daily of cell phones proximity to cell towers.  This gives them a global surveillance capability, able to track anybody with a cell phone down to a city block location. They have software filtering the mass ocean of data looking for interesting people and who they might pass by.  You can only hope you're not one of them.

(Reuters) - The National Security Agency gathers nearly 5 billion records a day on the location of mobile telephones worldwide, including those of some Americans, the Washington Post reported on Wednesday, citing sources including documents obtained by former NSA contractor Edward Snowden.
The records feed a database that stores information about the locations of "at least hundreds of millions of devices," the newspaper said, according to the top-secret documents and interviews with intelligence officials.
The report said the NSA does not target Americans' location data intentionally, but acquires a substantial amount of information on the whereabouts of domestic cellular telephones "incidentally."
One manager told the newspaper the NSA obtained "vast volumes" of location data by tapping into the cables that connect mobile networks globally and that serve U.S. cellphones as well as foreign ones. 

Previously, in late September, Senator Ron Wyden asked NSA director Gen. Keith Alexander during a Senate hearing if the agency had ever made plans to collect Americans’ cell site location data. But, Alexander, after Wyden repeated his question, said the Foreign Intelligence Surveillance Court needed notice if the NSA wanted to collect cell site location records. He then said he did not want to put anything out that would be classified.

How Much We Lost in the Crash of '08

According to Census Bureau Historical tables, we are just now recovering income lost in the cataclysmic Crash of 2008.  The destruction of family earnings took us back to 1996 levels, undoing all the gains of the Clinton years, ending in the brutal destruction during Bush's last year in office. 

The numbers below really understate the extent of destruction as they only reflect the effect on personal income and don't really reflect the loss of wealth that took place due to crashing home values and stock prices, pensions frozen or lost, and businesses bankrupted.  I broke down the Table Data into the years of the Administrations, giving the first year of each president to his predecessor, since any new policy or budget is not set until after a year in office.  Consider the data below showing change in Mean Income Received by Each Fifth and Top 5 Percent of Families.

 

Administration	Lowest fifth	Second fifth	Third fifth	Fourth fifth	Highest fifth	Top 5 percent
Clinton	23.56%	17.63%	16.66%	15.99%	20.44%	23.66%
Bush	-6.72%	-3.44%	-1.75%	-1.13%	-1.93%	-4.10%
Obama	-5.09%	-3.71%	-2.60%	-1.95%	-0.14%	1.27%
Bush 2001-2007	-2.15%	0.74%	1.80%	2.36%	-0.23%	-3.55%
Bush 2008-2009	-4.67%	-4.15%	-3.48%	-3.41%	-1.70%	-0.56%
Obama 2012	-0.43%	-0.41%	0.25%	0.31%	0.24%	0.17%

Looking at this, we might yearn for the good old days of the Clinton Administration, even though he was sowing the seeds of the destruction to come by deregulating the banks, which set them on the path of becoming weapons of mass financial destruction.  During the Clinton Administration, every income category gained, with the lowest bracket doing the best of all, except the top 5%.

The Bush Administration was a disaster for all income groups, but was particularly bad for the group nearest poverty, they lost nearly twice as much in family earnings as any other group.  The other groups mostly gained marginally until 2008 - 2009 when the roof caved in on everybody.

The Obama Administration has not improved things much, but things have stabilized in the last year which gives some hope, but the banks are still fighting all attempts at regulation, leaving open the possibility of another crash and bailout.