Gentlemen Don't Read Each Other's Mail

There is quite a furor in the news about the efforts of NSA – The National Security Agency – to listen in on the phone calls of various world leaders. Unfortunately, no one seems to be in the process of either explaining or defending what NSA is doing.  Part of this is simple: virtually all of what NSA does in classified, and any attempt to explain is felt to be inappropriate.  Many at NSA probably wish, at this time, to fade back into the woodwork where they existed for several decades, where, among those who knew, NSA was jokingly said to mean ‘No Such Agency.’  The joke was even more delicious because those who really did know what they were doing could only share it among themselves – it was a real insider’s joke.

That period is long gone.  There have not only been a wide range of unofficial revelations (many of them inaccurate), there have also been enough statements made by those who do know – to include several directors who made comments while they were heading the agency – that it is now fairly clear precisely what is the mission of NSA.

Now, with the revelations provided by the traitor Snowden, there are a whole host of folks who are up in arms.  Conceptually, they fall into two distinct camps: American citizens, and everyone else.

For the American citizens, there is a totally legitimate discussion that needs to take place as to the limits of government security efforts.  NSA, and its leadership, and those above NSA (to include the Director of National Intelligence, the Commander of Strategic Command, the Secretary of Defense, and ultimately the President), need to constantly remember that they are the servants of the people.  They are not princes, they have no rights to their positions, they have no powers beyond those granted them under the Constitution.  They are servants of the people, no more.  The people have the right to insist on observance of the Constitution and for your removal if you fail to do so.

The citizenry of the US also have the right to insist, demand is perhaps a better word, that the operations and efforts of NSA be both the most effective and efficient on the one hand – in keeping with US national security concerns – and Constitutional on the other.  All well and good.

But what about everyone else?  What can the people of Germany, Gabon, Guinea Bissau, Guatemala, or the Galapagos Islands (part of Ecuador) expect from NSA?  The answer is simple: Nothing.

Angela Merkel – Chancellor of Germany – is apparently in a huff over the report that NSA was copying her cell phone.   The point is that NSA initially defended its ‘we listen to everything’ approach on the grounds that it was going after terrorists.  Chancellor Merkel is obviously not a terrorist.  So, why oh why is NSA listening in?

REALLY????  Is that a serious question?  Does anyone other than Miss Manners think that we shouldn’t eavesdrop?  Does anyone think that, if given half a chance, every other country – and every company – on the planet wouldn’t pay good money to know what the President of the US, the Speaker of the House, the Chief Justice of the Supreme Court, the Chairman of the Joint Chiefs – and the secretary of every department is saying every single day?  Here’s a hint: the answer to the question is: they do pay good money.  Perhaps the Vatican doesn’t pay for that intelligence.  If so, they are probably the only ones. 

A couple of things are going on here: first, everyone is jealous of the capabilities of NSA.  Every country out there wishes they had this capability.  Two, it’s always irritating when you find out that someone else heard you say something you wish you hadn’t said.  Three, when you are caught saying something stupid, the necessary response in politics is to issue counter-accusations.

But, more importantly is this: every nation collects intelligence.  And they always have.  On their friends as well as their enemies.  And in particular on the leadership.  In several museums in – gee, Germany – there are thousands of clay tablets, covered in writings.  They date from the 12^th century BC.  They are the notes from the various official representatives from the Hittite courts to the courts of various kingdoms – Egypt, Babylon, and others; in short, they are the reports from the Hittite ambassadors to their king.  (These include the negotiations and eventual agreement between Hattushilish III and Ramses II.)  The point is that for at least the last 3300 years ambassadors have been collecting intelligence on the leaders of other countries – that’s what they do.  We may talk of intelligence agencies collecting information on terrorists.  But much more important than that is information on leaders – current, former, and emerging.  Is it important to the US leadership that they know what Chancellor Merkel is thinking?  Or perhaps the US government shouldn’t be paying attention to the Chancellor?  Should the US be building files on the ‘rising stars’ of German politics?  Or should we ignore such information and wait to be surprised?

One thing is certain: the Germans (and the Guatemalans, and everyone else) are collecting on US politicians; not simply the President, but every major figure they bump into.  After all those dinner parties in Washington DC – all those people – all the foreigners at least - go home and they keep working, writing down what they heard, who said what, their impressions of various figures, who might be susceptible to being a ‘special friend,’ etc.  And that is everyone; the Ambassador from country ‘X’ and his charming and clever wife – they will go home and compare notes, then write them down and send them home – so that folks like Chancellor Merkel can read them. 

The Army attaché from Italy and his beautiful girl-friend from the ‘Economics’ office – they aren’t just there for the drinks and hors d’oeurvres.  If they are good – and the rule is that virtually every country sends their very best to Washington – they have collected everything they can on everyone they met: the under-Secretary of Commerce and his wife: get their names, their address, the names and ages of the kids and what sports they play, schools they went to, the wife’s law firm, what cases has she handled, who she date dated in college, his hat size and bowling score – it’s all going to be collected and put in a file.  All that and as detailed a physical description as they can remember – what they were wearing, how they wore it, how they parted their hair, birthmarks and everything, even the mole on the side of his nose.

In 1929 Henry Stimson, the Secretary of State for President Hoover, closed the State Department’s cryptanalyst office, and uttered the now famous remark that ‘Gentlemen don’t read each other’s mail.’ 12 years later Stimson, by then the Secretary of War for President Franklin Roosevelt, was reading Japanese ‘mail’ every day.  The times didn’t change – every nation has attempted to read each other’s mail for millennia – Stimson did.  Chancellor Merkel may be upset, but her pique is not representative of wise policy.

There is an old saw, often attributed to the French, but in fact as old as civilization itself, which goes that “Countries don’t have friends, they have interests.”  The US, and this President in particular, may take great notice of its many allies.  But, before any of its allies, the US must address its own interests.  And it is always in our interests to know as much as we can about the leadership of the countries with whom we are dealing.  They are doing the same to the US.  I repeat: they are doing the same to the US.  They are watching every move of not only the President, but of every senior official.  If they have a chance to eavesdrop, they will.  If they can listen in on a conversation, they will.  If Merkel is genuinely upset and thinks this kind of thing shouldn’t be taking place, she is naïve and immature.  If President Obama didn’t understand that US intelligence agencies were, and always have been, interested in the activities, and conversations, of foreign leadership, then he is idiot.

Frankly, I don’t think President Obama is an idiot, nor do I think Chancellor Merkel is naïve or immature.  So, this is ‘theater.’  So, say your lines, get off the stage, and lets get on to something more important.  Just remember this: whatever you do, don’t do something now that will hurt our intelligence capabilities in the future.

Miss Blige and the National Anthem

Mary J. Blige sang the national anthem at the start of the Word Series last night.  The rule always seems that we slam those who make a mistake and ignore those who do a good job.  That being said, I would like to take the opportunity to say ‘Well done’ to Miss Blige.

Furthermore, I think it was fairly obvious to the average observer, as the cameras focused on her in the seconds before she began to sing, that Miss Blige, accomplished, award winning vocalist though she may be, was a bit nervous.  I would suggest that that speaks all the better of her, that at one level she had the ‘butterflies’ of all professionals in the moments before they begin to perform – no matter what the profession: sports, singing, acting, medicine, the military in any of a score of fields – professionals all want to perform at their best; and in those few seconds before they begin, they do experience ‘butterflies.’

And, at another level, I suspect there is a slight additional increase in the ‘number of butterflies’ when you are getting ready to sing the national anthem.  Unless you are an arrogant and cynical soul, singing the national anthem will move you.  Doing so in front of tens of thousands (millions if you include the TV audience) even more so.  It seemed apparent to me that it moved Miss Blige.

And so, I would like to say to her: Thank You!  Great Job!

More Than Meets the Eye

The polls suggest that only 10% of the citizenry believe Congress is doing a good job.  I’m not certain what they say about the President, but I think his figure is something in the high 30% range, maybe even 40%.   These numbers, of course, reflect the frustration many feel following the Washington DC drama of the last month.

But they also tell a different story, if we care to peel back things and take a closer look.  And that means putting all this in the context of everything else that is going on around us.

The first item to note is this: there has not been a real budget passed by the ‘Government’ since the last Bush budget.  (That budget, submitted as President Bush was leaving office, was passed in 2009.)  How then have we been grinding forward for nearly 5 years?  Several processes are in work: First, we have had a long series of ‘continuing resolutions,’ bills passed by both the House and the Senate, and then signed by the President, that basically say ‘same as before.’  Spending continues as before overall.  No new projects can be started, no changes can be made to any particular element of the huge federal budget except by specific action.  So, everyone keeps getting paid, for example.  If there is a desire to raise the pay for folks in uniform, for example, that must be specifically addressed.

Now, from the outside, that probably seems like some sort of budgeting process, and it is.  But the big difference is this: at no point in this whole churn is there a comprehensive look at what the whole government is doing, and the necessary trade-offs between this and that.  Instead, we see a long stream of disconnected bills that make their way through various committees, get voted on, eventually pass both the House and Senate, and then are signed into law by the President.  (There are more steps then that, but you get the point.)

The second side of it is that it leaves so much ‘up in the air’ that it is nearly impossible to figure out what is really happening.  You may have read the frustration that some folks have with the Department of Defense budget, and the call for an across the department audit to see where the money is going.  The issue is both comical and trivial; comical because anyone who has spent any time in the military knows just how much waste there is – even of the technically legal kind (you know, where a piece of gear (from pencil sharpener to jet-fighter) is ‘written off’ and a new one requested because ‘it’s just too hard to fix this one’) – across the entire DOD.  So, even without looking for some sort of illegal waste or abuse of the federal monies, there is a mountain of waste in just the way DOD does business.  But, the simple truth is this: of all the executive departments DOD is just about the most diligent in trying to wisely spend the people’s money.  Anyone who has had to deal with several departments at once will recognize this to be the case.  And DOD is only 1/5^th of the federal government.  So how much waste is there?

The answer, of course, is ‘A LOT.’  But it is going to be essentially impossible to know if we don’t even have a budget. 

The problem with doing things this way is simple: No one, least of all the President, need sit down and work out a comprehensive plan.  Has the President submitted comprehensive budgets?  Yes, every year.  In several of those years the budget was so clearly not serious, so different from what reality said was possible, that even in the Reid controlled Senate – one of the most liberal in our history – no one – not one single senator – supported the whole budget.  And Senator Reid, a clear devotee of the President, has several times over the past few years expressed clear apathy to the budget process.

And the sad part of it is this: without real budgets, without a need for the President to propose serious budgets, and for members of the House and Senate to sit down and talk across various departments, to make hard decisions about what gets more money and what gets less, there is no real possibility of our getting our debt under control.  But, there is more to it then that.

The real issue here is that without real, regular budgets, and real, independent audits – across the breadth and depth of the federal government – there is no real way to see depth of inefficiency in the government.  We have all seen pieces, but just to take a look at some items that have appeared in the news recently:

Obamacare registration: the system does not work.  After three years of preparation – for a program that will affect the entire $2 trillion healthcare system - the system is a mess.  How much did we pay for this?  Well, the original contract was for something on the order of $100 million, but the Department of Health and Human Services has already spent in excess of $600 million.  And it does not work.

Here are other examples of truly bizarre waste (From Sen. Coburn of Oklahoma, who identified more than $18 billion of similar waste in last years spending):

Moroccan Pottery Training Program – for Moroccans: $27 million

A Boutique Brewery: $750,970 in federal funds to build three new brew tanks

Beef jerky: $639,884 technology

Pet shampoo: $505,000

Lake Murray airport (averages 1 flight per month): $450,000

Robotic squirrel San Diego State University: $325,000

Smokey Bear promotions: $49,447

Fullerton Public Library Vending machine for library books: $35,000

Alabama Watermelon Queen tour: $25,000

Circus classes: $20,000

But these are truly insignificant when we take a look at major pieces of the government.  Consider two major issues (if only to keep this short): energy and education.  Under President Carter the government created two new federal departments: the Department of Energy and the Department of Education. 

The Department of Energy was created to do two things: reduce US energy dependence on foreign energy – oil, and to manage the maintenance of US nuclear weapons programs.  Since the creation of the Department US dependence on foreign oil increased steadily for 30 years – only turning downward during the last few years because of oil and gas development in South Dakota and elsewhere utilizing new technology.  This development has taken place almost completely on private lands, and over the objections, and sometimes strong objections, of: the Department of Energy.  At the same time, as US consumption of oil has increased, US refining capacity has not kept pace with growth – a direct result of Departmental policies, forcing the US to import not only crude oil but often more expensive refined products.  Meanwhile, the maintenance of our nation’s nuclear weapons arsenal has slowed to a crawl, much has been delayed and pushed off – making future maintenance even more expensive, and there is nearly universal concern – outside the Department’s senior management – that future maintenance will be even more expensive then planned.

And how much will the Department of Energy receive in 2013? $30 billion

Or consider the Department of Education, also started during the Carter Administration.  Charged with improving the performance of US students in all grades, the Department has mainly been successful in increasing the cost of education.  Over the past 30 years there has been no substantive change in graduation rates or in literacy, and US performance in math sciences has dropped.  But cost of education has increased at more than twice the rate of inflation.  In short, we are getting less for a lot more.  In fact, the US now spends more per capita on education then virtually any other country. 

And leading that charge, the Department will spend $70 billion in 2013.

Several weeks ago the President said that ‘raising the debt ceiling does not mean raising the debt.’  The debt ceiling was raised a couple of days ago and the debt climbed more than $300 billion yesterday – as the President’s Department of Treasury played clever accounting games and reshuffled some debt that it has been keeping off the books for the past few months.

The President is sitting on top of an executive branch that knows how to spend, but seemingly little else.  It is not efficient, and it is often not effective.  We all know that something is wrong, that this beast that we are funding – the ‘government’ – is massively wasteful and nearly out of control.  The Congress is doing little to control it, the President even less.  Deep down I suspect that is what everyone is saying.  But until we do something definitive, until we insist that the President and Congress get OUR ‘books’ in order, this economy – OUR economy – will continue to move further down the road to ruin.

Whose Fault Default?

We need a little clarity: Default occurs when a debtor fails to meet a legal obligation.  Or to put it more simply: when you fail to pay a bill.  Now, the federal government has a host of bills: bills owed to a host of contractors for things (from desks and pencils to bombers and aircraft carriers), for services (from janitorial service to building maintenance to tippy top secret stuff people are doing for the CIA), and for money (the borrowing that everyone talks of, amounting to more than $17 billion.)

In addition to these debts, the federal government pays out a great deal of money to what are euphemistically known as entitlements, that is, those receiving it are ‘entitled’ to them, without providing any goods or services.  Strictly speaking, many of these are not debts.  Failure to provide aid to unwed mothers may seem unsavory, but if the US Government did so, it would not constitute default in the financial sense.

Further, there is a legal hierarchy for debt.  At the top of that hierarchy are outside debtors.  Thus, no company can refuse to pay a mortgage based on the claim that they must pay their workers first.  The bank that owns the mortgage comes before the employees.  So, with the US in debt to the tune of $17 billion, total annual payments to service that debt come before any other payments.  For the year 2013 total interest is a bit short of $416 billion.  This works out to about $35 billion per month. Thus, the US need only pay that amount, plus the payoffs for the various Treasury notes – some 20 and some 30 year notes – that will come due (mature) each year; so, we add perhaps another $700 billion, or $58 billion per month.  Thus, for some $95 billion per month the US will not default.

Does the US have $95 billion per month?  Absolutely.  US tax revenue will total about $2.6 trillion for 2013, or about $215 billion per month.  So, we – the US – can pay our debts and still have $120 billion per month to spend on critical issues.  No default.

Repeat that: no default.

So, how could we default?  For the near term (the next few years), there are only two ways we could default:

1)    The Treasury / IRS stop collecting taxes. How that would happen is a mystery, but I suppose it is possible, perhaps UFOs land on the Mall and the aliens take control.  Short of that, it seems pretty unlikely, in as much as the federal withholding tax process has a stranglehold on everyone’s income.

2)    The Treasury decides to stop paying the debt as it comes due.

It should be noted that #2 above is illegal.  It would require a willful act on the part of the Secretary of Treasury, he would have to make the decision to pay out money into other programs before he paid money to service debt.  That is illegal under US law.  I have to assume the Secretary of Treasury knows this, as does, I assume, the President.

Which leads to simple question: Why did both Secretary Lew and President Obama both say that the current tempest in Washington risked pushing the nation into a default?  Is it possible that President Obama and the Secretary Lew don’t know that most basic of laws: that debtors must be serviced first?  Secretary Lew and President Obama are both lawyers.  Certainly they know the law.  Secretary Lew has worked both at the Office of Management and Budget and at CitiGroup.  I suspect he knows fairly well the law as it pertains to debt and bonds.  President Obama is a Constitutional scholar.  And he has regularly commented on the law as it pertains to debt and in particular the national debt.  In March 2006, when US debt was $8 trillion (less than half of where it now stands), one  senator commented:

"The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the US Government cannot pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.  Increasing America’s debt weakens us domestically and internationally. Leadership means that 'the buck stops here'. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and Grandchildren. America has a debt problem and a failure of leadership. Americans deserve better."

That was the then junior senator from Illinois, Barack Obama.  Presumably, then Senator Obama was not advocating default, he was simply saying that the US should live within an $8 trillion debt.  Since then US debt has doubled, 7 of the 9 trillion coming at the hands of President Obama; and it promises to increase at nearly $1 trillion per year for the next 10 years – if we adhere to President Obama’s spending plans.

So, how is it that then senator Obama felt that the right thing to do was oppose a debt increase and now President Obama says that to do so risks default?  Is it that he no longer understands the issue, that such an act cannot precipitate default unless the government actually decides not to pay?  Or is it that he is fear mongering?  Whatever the reason, one thing is certain, it certainly doesn’t constitute the leadership he spoke of 6 years ago.

For the record, the US has defaulted in the past.  As recently as April and May of 1979 the US Treasury failed to make payment on time – it was an internal bookkeeping mistake.  They later made up the payments, but there was a default.  We have also in fact defaulted a number of times via de-linking the dollar from gold and letting it float – thereby reducing the value of all debts (1971); or by changing the value of the dollar such as when FDR restated the value of a dollar as 1/35^th of an ounce of gold (1933).  In short, this has happened before.  It is not an over the edge catastrophe, it is a gradual, corrosive event that undermines the whole society.  John Adams – and others – stated that at the heart of Western thought lie two ideas, inextricably tied together: the contract, and personal property.  The concept of contract means that we can individually bind ourselves, that we can make an agreement with someone else and having done so we must comply with the terms of our agreement (with all the normal exceptions – you must be competent, it must not be an illegal act, etc.)  And, there must also be personal property, that is, there must be something of ours – land, equipment, ideas, money, our labor – that are the things that are exchanged.  Undermine either one of these concepts and you threaten all the rest of the huge structure that is Western political thought.  And that, it would seem, is what the President is playing with.