Rick Perlstein | The Nation

The NSA slide that tech experts say Glenn Greenwald misinterpreted. (The Guardian/NSA, US Federal Government.)

Bloggers and experts in the tech world have been raising an important caveat to a key aspect of Glenn Greenwald’s world-shaking scoop about the NSA’s PRISM story—an aspect my friend Karl Fogel, an open-source software guru, blogger and the proprietor of QuestionCopyright.org, calls an “epic botch” by Greenwald. People outside of the tech world absolutely need to know about this debate too, which is why, though I’m no expert, I’m sharing it with this wider audience. I deeply admire what Greenwald and his team at The Guardian are doing. I write in the interest of helping them do it better.

The “crucial question,” as Fogel frames it in a blog post, is this: “Are online service companies giving the government fully automated access to their data,” as Greenwald says they are, “without any opportunity for review or intervention by company lawyers?” This is what the companies have been denying—in statements that critics have been interpreting as non-denial denials. (Apple: “We have never heard of PRISM. We do not provide any government agency with direct access to our servers, and any government agency requesting customer data must get a court order.” So what if Apple et al. knew the formal name of the program? And what about indirect access? Or government contractors? And how are they defining “customer data”? Etc.)

Fogel points out that a widely read post to this effect called “Cowards” from the blog Uncrunched—“What has these people, among the wealthiest on the planet, so scared that they find themselves engaging in these verbal gymnastics to avoid telling a simple truth?”—is “mostly wrong.” He says, “It looks like Greenwald and company simply misunderstood an NSA slide [see image at the top of this post for the slide] because they don’t have the technical background to know that ‘servers’ is a generic word and doesn’t necessarily mean the same thing as ‘the main servers on which a company’s customer-facing services run.’ The ‘servers’ mentioned in the slide are just lockboxes used for secure data transfer. They have nothing to do with the process of deciding which requests to comply with—they’re just means of securely and efficiently delivering information once a company has decided to do so.”

In other words, this slide describes how to move data from once place to another without it getting intercepted in transit: “What the hell are the companies supposed to do?” Fogel jokes. “Put the data on a CD-ROM and mail it to Fort Meade?”

The implications of this interpretation, if correct, completely shift the grounds for the discussion of how the NSA’s PRISM program works—“the difference,” as Mark Jaquith of WordPress writes, “between a bombshell and a yawn of a story.”

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(I contacted Google to ask about the issue, and a spokesman pointed me to their open letter to Attorney Holder and FBI Director Mueller and another to users, and reiterated, “We refuse to participate in any program—for national security or other reasons—that requires us to provide governments with access to our systems or to install their equipment on our networks. When required to comply with these requests, we deliver that information to the US government—generally through secure FTP transfers and in person. The US government does not have the ability to pull that data directly from our servers or network.” I followed up by asking whether “refusing to participate in any program…that requires us to provide governments with access to our systems or to install their equipment on our networks” includes refusing to provide government contractors with access to our systems or to install their equipment on our networks,” and the spokesman replied, “Yes.”)

Greenwald has not yet made a public evaluation of whether or not he agrees that he made that mistake. [Update: on Twitter, Greenwald linked to this interview with Chris Hayes as evidence that he has; I'll leave it to readers to judge whether they agree that he's answered the criticism.] He owes it to us to do so, with as much speed as practicably possible. It’s not too much to say that the fate of his broader NSA project might hinge on doing so effectively—because the powers that be will find it very easy to seize on this one error to discredit his every NSA revelation, even the ones he nailed dead to rights. (“It’s not like there aren’t legitimate things to complain about here,” as Fogel notes.) Such distraction campaigns are how power does its dirtiest work. Think of the way the questions about the authenticity of the “Killian documents” were able to obscure the fact that George W. Bush actually did go AWOL from the Texas Air National Guard or how the unrelated or how the unrelated killing of a CIA station chief in Greece was used to discredit the congressional investigations of CIA wrongdoing in 1975—cases with which Greenwald should be well-familiar. So, Glenn Greenwald, what’s the word? The fate of our civil liberties may depend on it.

New York City mayoral candidate Bill de Blasio is bringing inequality to the forefront of his campaign. Read Katrina vanden Heuvel’s analysis here.

This photograph shows a copy of the US Foreign Intelligence Surveillance Court order requiring Verizon on an “ongoing, daily basis,” to give the National Security Administration (NSA) information on all landline and mobile telephone calls of Verizon Business in its systems. (AP Photo)

What goes around comes around.

The latest news in the National Security Agency spy scandal: that the NSA has been Hoovering up your emails, documents, and connection details directly from the servers of nine US Internet companies. And that, according to NBC News, the government has been collecting records on every phone call made in the United States ever since the passage of the Patriot Act. And they have been doing so with legal immunity. Barack Obama has been helping with that, since well before he was president; and now that he is, he does what presidents do, which is to aggrandize the power of their office by whatever means at their disposal.

We have been here before.

In the fall of 1975, when a Senate select committee chaired by Frank Church and a House committee chaired by Otis Pike were investigating abuses of power by the CIA and FBI, Congresswoman Bella Abzug, the loaded pistol from New York (she had introduced a resolution to impeach Richard Nixon on her first day in office in 1971) dared turned her own House Subcommittee on Government Information and Individual Rights to a new subject: the National Security Agency, and two twin government surveillance projects she had learned about codenamed “SHAMROCK” and “MINARET.” They had monitored both the phone calls and telegrams of American citizens for decades.

At the time, even political junkies did not know what the NSA was. “With a reputed budget of some $1.2 billion and a manpower roster far greater than the CIA,” the Associated Press explained, it had been “established in 1952 with a charter that is still classified as top secret.” (Is it still? I’d be interested to know.) President Ford had persuaded Frank Church not to hold hearings on the matter. (Ford had something in common with Obama: hypocrisy. “In all my public and private acts as your president, I expect to follow my instincts of openness and candor with full confidence that honesty is always the best policy in the end,” he’d said in his inaugural address, the one where he proclaimed, “Our long national nightmare is over.”) So Abzug proceeded on her own. At first, when she subpoenaed the executives responsible for going along with the programs the White House tried to prevent their testimony by claiming the private companies were “an agent of the United States.” When they did appear, they admitted their companies had voluntarily been turning over their full records of phone and telegram traffic to the government at the end of every single day, by courier, for over forty years, full stop. The NSA said the programs had been discontinued. Abzug claimed they still survived, just under different names. And at that, Church changed his mind: the contempt for the law here was so flagrant, he decided, he would initiate NSA hearings, too.

Conservative members of his committee issued defiant shrieks: “people’s right to know should be subordinated to the people’s right to be secure,” said Senator John Tower. It would “adversely affect our intelligence-gathering capability,” said Barry Goldwater. Church replied that this didn’t matter if the government was breaking the law. (“Tell me about the time when senators used to complain when the government broke the law, grandpa!”) He called the NSA’s director to testify before Congress for the first time in history. Appearing in uniform, Lieutenant General Lew Allen Jr. obediently disclosed that his agency’s spying on Americans was far vaster than what had even been revealed to President Ford’s blue-ribbon commission on intelligence chaired by Vice President Nelson Rockefeller. He admitted that it was, technically, illegal, and had been carried out without specific approval from any president. But he declined to explain how it worked. And added that thanks to such surveillance, “we are aware that a major terrorist attack in the US was prevented.” He refused to give further details on that, either—as if daring the senators to object. What goes around comes around: did I mention that before?

The president could comfort himself that few were paying attention. Back in August, Rockefeller Commission member Ronald Reagan had instructed his listeners, “My own reaction after months of testimony and discussion during the investigation of the CIA is ‘much ado about—if not nothing, at least very little’”: just “instances of some wrongdoing with regard to keyhole-peeking,” long since corrected by the agency itself. He claimed his commission’s most important finding—that more Soviet spies were living and working in America than ever—had been buried: instead, “the media seized upon whatever misdeeds we found and played them up possible to confirm the earlier charges and possibly because they thought they made for exciting drama.”

That fall he earned a surprising ally in the argument: Senator William J. Fulbright, whose devastating 1966 hearings against the Vietnam War were so subversive to the Establishment’s amour propre that CBS cut away to a rerun of The Andy Griffith Show rather than continue live coverage. Now Fulbright published an article in the Columbia Journalism Review. He allowed that recent revelations about the CIA might be true. “But I have come to feel of late that these are not the kind of truths we need most right now; these truths which must injure if not kill a nation.” What was needed was “restored stability and confidence.” What the press required was “voluntary restraint” to reaffirm the “social contract.” What the public most certainly did not not need was the media’s present “inquisition psychology.”

In truth, though, the media were proving not very inquisitive at all. The Nation’s own William Greider, then with The Washington Post, wrote at about the same time in Esquire about the scanty coverage of the intelligence hearings, especially after the blanket coverage of Watergate, “There is a strong wish all over town, a palpable feeling that it would be nice if somehow this genie could be put back in the bottle…a nostalgic longing for the easy consensual atmosphere which once existed among the contending elements in Washington.” He noted how “the press essentially tugs back and forth at itself, alternatively pushing the adrenal instincts unleashed by Watergate, the rabid distrust bred by a decade of out-front official lies, and then abruptly playing the cozy lapdog.”

Indeed Abzug’s revelations received hardly any coverage. General Allen’s testimony was buried in back pages (in the Louisville Courier Journal it was trumped by news of a religious community of 177 in Arkansas who pulled their children out of school to await the second coming of Christ). A stunning colloquy between Senator Walter Mondale, the liberal Democrat from Minnesota, with NSA deputy director, Benson Buffham—

Mondale: Were you concerned about its legality?

Buffham: Legality?

Mondale: Whether it was legal.

Buffham: In what sense? Whether that would have been a legal thing to do?

Mondale: Yes.

Buffham: That particular aspect didn’t enter into the discussion.

—was not quoted anywhere at all, even by The New York Times, whose article on the NSA hearing ran on page 81. As for the president, he followed the recommendation of Chief of Staff Donald Rumsfeld and his lieutenant Dick Cheney and closed down further NSA inquiry by extending executive privilege to the officials and telecommunications executives involved. That got no coverage either.

Why? The Washington Post had recently suggested that after the serial outrages of the Vietnam, the My Lai, the secret bombing of Cambodia, Watergate, the energy crisis and all the rest, the public was suffering “a kind of deadening of moral nerve-ends, a near inability to be surprised, let alone disturbed.”

And yet, for all that, Congress acted. In 1978 it passed the Foreign Intelligence Surveillance Act, a bipartisan law (one of its sponsors was Strom Thurmond) banning surveillance without a court order that involved acquiring “the contents of any communication to which a United States person is a party.” Though it was pretty soft soap, for all that: judicial authorization was only required within seventy-two hours after the surveillance began.

Subsequent amendments have rendered it all but gone now, of course. Congress still can speak in a bipartisan manner on the subject of surveillance. Only now, they thunder in unison, Quit your bitching! “It’s called protecting America,” Diane Feinstein said. Says her dear Republican colleague Saxby Chambliss, “This is nothing particularly new. Every member of the United States Senate has been advised of this, and to my knowledge we have not had any citizen who has registered a complaint relative to the gathering of this information.”

More Orwellian words have never been spoken. Brave new world, that has such senators in it.

Many of the groups who helped Scott Walker win the Wisconsin recall were 501(c)(4) Tea Party groups that worked in close tandem with his campaign despite their non-political tax designation. (AP Photo/Morry Gash, File.)

My pixels have been absent from these precincts while I report a feature story for The Nation, and I’ll have more to say about the ersatz Scandalpalooza being ginned up by Republicans this week, but for now I wanted to drop a quick word about just how overblown the outrage is about the Internal Revenue Service flagging groups with “Tea Party” in their name for extra scrutiny when they apply for 501(c)(4) status. Jeffrey Toobin, in a New Yorker post called “The Real I.R.S. Scandal,” succinctly explains the legal background:

It’s important to review why the Tea Party groups were petitioning the I.R.S. anyway. They were seeking approval to operate under section 501(c)(4) of the Internal Revenue Code. This would require them to be “social welfare,” not political, operations. There are significant advantages to being a 501(c)(4). These groups don’t pay taxes; they don’t have to disclose their donors—unlike traditional political organizations, such as political-action committees. In return for the tax advantage and the secrecy, the 501(c)(4) organizations must refrain from traditional partisan political activity, like endorsing candidates….

Particularly leading up to the 2012 elections, many conservative organizations, nominally 501(c)(4)s, were all but explicitly political in their work. In every meaningful sense, groups like Americans for Prosperity were operating as units of the Republican Party. Democrats organized similar operations, but on a much smaller scale. (They undoubtedly would have done more, but they lacked the Republican base for funding such efforts.)

So the scandal—the real scandal—is that 501(c)(4) groups have been engaged in political activity in such a sustained and open way.

Just how sustained and open a way? Well, in June of last year I reported from the closing weekend of the recall campaign against Republican governor Scott Walker of Wisconsin:

I drive to a microscopic town next to Racine, where a giant open field was a stop on the bus tour in which Americans for Prosperity, the fake grassroots group that fronts for the Koch Brothers, was shipping supporters from, among other places, Illinois, to these here rallies around the state. Not, they claim, to support the Walker campaign—that would violate election law—which they had nothing to do with, but just in the interest of “educating folks in the importance of the reforms.”

The three hundred or so (though National Review counts differently than me) white people—and one black, who stood precisely in the center of the front row and wore an AFP staff T-shirt—heard an AFP staffer hosanna “economic freedom, limited government, and lower taxes.” And that “even Barack Obama’s Bureau of Labor Statistics” said “we’ve created jobs in Wisconsin.” Then he introduced as an “honorary Wisconsinite,” the head of Americans for Prosperity—Wisconsin, Tim Phillips—a Southerner who made a joke about frigid weather. Apparently reverse carpet-bagging is a signal feature of this “grassroots” movement.

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Then a third speaker, but I had already wandered off, bored by the conspicuous lack of energy, past a sign reading “Republican’s Are Makers Democrats Are Takers” [sic, of course], and tables featuring free DVDs on both the glories of Scott Walker and the United Nation’s plan to enslave the United States, in the direction of a second, entirely separate, stage across the field put up by the Racine Tea Party. A few minutes later, the rest of the crowd followed me there. For, yes, an entirely separate rally, which had “nothing” to do with the nonpartisan one two hundred yards away that had just ended [wink wink, nudge nudge]. There they heard Walker’s running mate Rebecca Kleefisch rant about the “big union bosses from out of state,” and how the unions were just like Goliath, and her boss was exactly like David.

Me, I fingered my slick Americans for Prosperity—Wisconsin flier, which I later noticed contained the most revealing typo in the history of politics. “The forces of BIG GOVERNMENT would like nothing more than for you to DO NOTHING,” it warned, but promised, “We are gathering citizens together from across Michigan to make phone calls, knock on doors and educate their friends, family and neighbors.”

As Toobin points out, this is the real scandal: the nakedly transparent flouting of the tax laws by groups claiming to be nonpolitical and nonpartisan. Count on the media in Washington to entirely miss that obvious point.

President Obama introduces Penny Pritzker as his nominee for Secretary of Commerce. (AP Photo/Carolyn Kaster.)

For those who’ve been waiting for Barack Obama, unfettered from the constraints of re-election, to emerge from his chrysalis and take wing as the true liberal they have always known he was, well, here we are: a proposal to cut Social Security benefits via a cost-of-living adjustments (candidate Obama in 2008 said John McCain suggests “the best answer for the growing pressures on Social Security might be cost-of-living adjustments or raise the retirement age. Let me be clear: I will not do either.”) And now this.

In December of 2008, Obama’s choice for Secretary of Commerce, Chicago-based business tycoon Penny Pritzker, withdrew her name from consideration in the face of a triple-barreled onslaught. First, there was her position on the board of Superior Bank, which her family bought with the help of $645 million in tax credits for the federal government. In 2001, Superior collapsed after pioneering the bottom-feeding trade in subprime mortgages. In In These Times, David Moberg called it a “mini-Enron scandal”; 1,406 uninsured depositors lost their savings. Here was what one of the victims had to say: “The Pritzkers are crooks. They don’t care anything about people who spent their whole lives trying to save.” And here is how Penny responded: “We had seven years of clean audits and then the auditors said, ‘Well, maybe we’ll change the way we calculate.’ ” Exquisite humanity, that. The family coughed up $435 million in settlement money in exchange for not having to admit any wrongdoing. But why, Penny was asked, would they pay half a billion dollars to clean up a mess she said was none of their fault? Because, she answered, “My family is not going to litigate with the federal government at a time like this”—a reference to the September 11 attacks; classy.

Here was the second concern which kept her from the Commerce Department in 2008: “Whether she could disentangle herself,” as The Washington Post put it, from her family’s “vast financial holdings”—many of which they would prefer not to see scrutinized in public. How vast? Well, way back in 1973, The New York Times reported of “The Very Private Pritzkers,” “The family law firm, Pritzker & Prizker, hasn’t accepted an outside client for thirty years because of the potential conflict of interest with the Pritzker enterprises, which are too numerous for any one member of the family to recall at any given moment.” In 1982, when the list became public for the very first time—more on why later—the holdings included at least 216 separate corporate entities, from mining to motels. One current holding is TransUnion—Penny is chairman of the board—which is one of three companies controlling the creepy trade in credit reports. “After widespread consumer complaints about shoddy service in the credit checking industry,” Bloomberg reported back in 2008, “the US Congress passed legislation in 2003 that allowed people to obtain free copies of credit reports so they could check for mistakes and block information obtained from identity theft. That same year, a jury awarded Judy Thomas of Klamath Falls, Oregon, $5.3 million after she claimed TransUnion took six years to correct a mistake in her credit report.” Penny’s reaction? Public-spirited as ever: “The company has always encouraged consumers to monitor their reports, Pritzker says.”

The third reason Obama chose not to risk political capital on a Penny Pritzker nomination fight is that unions despise her. Among the reasons: the Hyatt hotel chain, which the Pritzkers built practically from nothing, is infamous for just about the worst treatment of their staff in the business. (Here’s a moving first-hand account.)

Since that near-nomination, Chicago’s new mayor, Rahm Emanuel, chose Penny Pritzker to join the mayor-appointed school board—a body, as I’ve been documenting here, that has fanatically devoted to breaking the Chicago Teachers Union, and turning over the system to charter school operators. Their excuse has been the school system’s alleged $500 million deficit. Which is where Penny comes in. For while the city’s budget for schools is alleged to be bare, the city’s tax increment financing (TIF) fund, a slush pile for rich developers, carries a surplus of at least $500 million. What does this have to do with Penny Pritzker? Well, as it happens, on my very street, she is building a Hyatt financed with $5.2 million in TIF funds. As the Chicago Teachers Union points out, the TIF fund is controlled personally by the mayor; members of the school board (from which Pritzker recently resigned ahead of her Commerce appointment), overwhelmingly his rich campaign backers, are personally appointed by the mayor; and nothing’s keeping them from leaning on the mayor to tap the TIF surplus to plug the school deficit—except the fact that this very deficit is the rhetorical foundation for all the things they’re doing to weaken the union. All in all, Penny Pritzker’s relationship with labor has become exponentially worse since her near-nomination in 2008.

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So how has second-term Obama responded? By renominating her.

It should make for some interesting confirmation hearings. This family is famously secretive. In 2003 two family scions, siblings Liesel and Matthew Pritzker, sued their father Robert Pritzker for $6 billion, claiming he had looted their trust fund. In 2004, a judge gave them access to sealed financial reports. Explained investigating reporter Gus Russo, “that unearthed a secret family deal cut after Liesel’s uncle Jay Pritzker’s death in 1999, a plan that would have broken up the fortune into eleven shares valued at $1.4 billion each. In early 2005, rather than expose the complicated Pritzker offshore shelters to the light of day, the Pritzker family put the final touches on a private settlement agreement” giving Liesel and Matthew Pritzker upwards of $500 million each to drop the case.

Which is how these cats tend to do business: cash in exchange for quiet. In 1982, for instance, when The Kansas City Times published an investigation of family finances after the collapse of a skywalk at a Kansas City Hyatt killed 114, they discovered that the family’s casino purchases beginning in 1959 were funded by $54 million in loans from the notorious mob-connected Teamsters Pension Fund, without telling stockholders as the law required. (The family agreed to a consent decree that allowed them to neither admit nor deny the allegations—shades of Superior Bank). The paper also quoted an IRS informant, a vice president of the offshore bank where the family stashed their cash: “The Pritzker family of Chicago through their Hyatt Corp. initially received their backing from organized crime.” According to the reporter who won a Pulitzer for the series, Knut Royce, Jay Pritzker’s initial response was to try to buy the newspaper. Failing that, he arranged a private takeover of Hyatt, the family’s one company that has ever been public, so it never would have to file information with the Securities ad Exchange Commission again.

If Republican senators have any strategic sense, they’ll be asking in open hearings about this sort of stuff: how the Pritzkers came by all those billions in the first place, how they’ve kept it from the view of the public and the taxman both, and what it is they’ve been so eager to hide. I’ll have more to say about that tomorrow. To put it lightly: It’s not the kind of thing Barack Obama needs America to hear about one of his cabinet appointees.

Read Rick Perlstein on pyramid schemes and the right.