Monday, September 30, 2013

NSA: Analysts spied on love interests

The National Security Agency has admitted that analysts have abused their authority to spy on love interests on several occasions.

In response to a letter from Sen. Chuck Grassley (R-Iowa), the NSA identified 12 incidents since 2003 in which analysts intentionally misused their intelligence gathering powers.

In one case, an analyst spied on a foreign phone number she discovered in her husband’s cellphone, suspecting that he had cheated on her. She intercepted phone calls involving her husband, investigators discovered. The analyst resigned before any disciplinary action could be taken.

On one analyst’s first day of access to the NSA system, he pulled records on six email addresses belonging to his ex-girlfriend. He claimed he just wanted to test the system. The NSA demoted him and docked his pay for two months.

In another case, an analyst collected call data on his girlfriend and his own home phone number “out of curiosity.” He retired before the agency took any action.

Another analyst based in a foreign location collected phone records on her foreign national boyfriend and other foreign nationals, saying she wanted to be sure she wasn’t associating with “shady characters.” She resigned before the agency took disciplinary action.

An analyst who collected data on his wife lost access to the classified system, and another analyst who said he misused the system to help learn a foreign language also lost access to the database.

In the letter to Grassley, George Ellard, the NSA’s inspector general, said the agency currently has two open investigations and is reviewing a third for possible investigation.

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Friday, September 27, 2013

Close the N.S.A.’s Back Doors

In 2006, a federal agency, the National Institute of Standards and Technology, helped build an international encryption system to help countries and industries fend off computer hacking and theft. Unbeknown to the many users of the system, a different government arm, the National Security Agency, secretly inserted a “back door” into the system that allowed federal spies to crack open any data that was encoded using its technology.

Documents leaked by Edward Snowden, the former N.S.A. contractor, make clear that the agency has never met an encryption system that it has not tried to penetrate. And it frequently tries to take the easy way out. Because modern cryptography can be so hard to break, even using the brute force of the agency’s powerful supercomputers, the agency prefers to collaborate with big software companies and cipher authors, getting hidden access built right into their systems.

The New York Times, The Guardian and ProPublica recently reported that the agency now has access to the codes that protect commerce and banking systems, trade secrets and medical records, and everyone’s e-mail and Internet chat messages, including virtual private networks. In some cases, the agency pressured companies to give it access; as The Guardian reported earlier this year, Microsoft provided access to Hotmail, Outlook.com, SkyDrive and Skype. According to some of the Snowden documents given to Der Spiegel, the N.S.A. also has access to the encryption protecting data on iPhones, Android and BlackBerry phones.

These back doors and special access routes are a terrible idea, another example of the intelligence community’s overreach. Companies and individuals are increasingly putting their most confidential data on cloud storage services, and need to rely on assurances their data will be secure. Knowing that encryption has been deliberately weakened will undermine confidence in these systems and interfere with commerce.

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Thursday, September 26, 2013

MCCAIN BASHES CRUZ: ‘ALL OF US SHOULD RESPECT THE OUTCOME OF ELECTIONS’

On Wednesday afternoon, after Senator Ted Cruz (R-TX) finished his quasi-filibuster on the floor of the Senate over his efforts to defund Obamacare, Senator John McCain (R-AZ) rose to rip Cruz. In the process, he proclaimed that Obamacare had been passed through fair process, and said that Republicans had to accept that “elections have consequences.” He stated:

I campaigned all over America for two months, everywhere I could. And in every single campaign rally I said “we had to repeal and replace Obamacare.” Well, the people spoke. They spoke, much to my dismay, but they spoke and they re-elected the President of the United States. No that doesn’t mean that we give up our efforts to try to replace and repair Obamacare. But it does mean elections have consequences and those elections were clear, in a significant majority, that the majority of the American people supported the President of the US and renewed his stewardship of this country. I don’t like it, it’s not something that I wanted the outcome to be. But I think all of us should respect the outcome of elections, which reflects the will of the people.

This sort of weak-kneed thinking has led to Republican surrender time and time again without exhausting all available procedural options. President Obama was indeed re-elected, and the Democrats do indeed control the Senate. But the notion that Obama’s re-election is proof of the popularity of Obamacare is a massive fallacy, as is the idea that Republicans must not use whatever leverage they have at their disposal to fight the law. President Bush was re-elected in 2004. That did not stop Democrats from stymying his attempts at social security privatization.

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Internet Sales Tax Could Crush Small Businesses

Internet commerce is the most dynamic and rapidly growing sector of the American economy. Not surprisingly, the Internet is also relatively free of taxes and regulations, although many in Washington are working to change that. For example, earlier this year the Senate passed the Marketplace Fairness Act, more accurately referred to as the national Internet sales tax act. This bill, which passed the Senate earlier this year, would require Internet businesses to collect sales tax for all 10,000 American jurisdictions that assess sales taxes. Internet business would thus be subject to audits from 46 states, six territories, and over 500 Native American tribal nations.

Proponents of the bill deny it will hurt small business because the bill only applies to Internet business that make over a million dollars in out-of-state revenue. However, many small Internet businesses with over a million dollars in out-of-state revenues operate on extremely thin profit margins, so even the slightest increase in expenses could put them out of businesses.

Some businesses may even try to avoid increasing their sales so as to not have to comply with the Internet sales tax. It is amazing that some of the same conservatives who rightly worry over Obamacare’s effects on job creation and economic growth want to impose new taxes on the most dynamic sector of the economy.

Proponents of the law claim that there is software that can automatically apply sales taxes. However, anyone who has ever dealt with business software knows that no program is foolproof. Any mistakes made by the software, or even errors in installing it, could result in a small business being subject to expensive and time-consuming audits.

Some say that it is a legitimate exercise of Congress’s Commerce Clause power to give state governments the authority to force out-of-state businesses to collect sales taxes. But if that were the case, why shouldn’t state governments be able to force you to pay sales taxes where you physically cross state lines to make a purchase? The Commerce Clause was intended to facilitate the free flow of goods and services across state lines, not to help states impose new burdens on out of state businesses.

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Wednesday, September 25, 2013

Obamacare Bends the Cost Curve—Upward

Back in 2008, three eminent Harvard economists who were advising the Obama campaign—David Cutler, David Blumenthal, and Jeffrey Liebman—wrote a memo claiming that Senator Obama’s health-care plan could reduce national health spending by $200 billion a year. As Kevin Sack recounted in the New York Times, the authors of that memo then took that figure, “divided [it] by the country’s population, multiplied for a family of four, and rounded down slightly to a number that was easy to grasp: $2,500.”

Mr. Obama then took that number on the campaign trail, insisting that his health plan would “lower your premiums by up to $2,500 per family per year.”

Last week, the Obama administration’s Centers for Medicare and Medicaid Services issued a rather different prediction: that “the [Affordable Care Act] is projected to . . . increase cumulative spending by roughly $621 billion” from 2014 to 2022. To be clear, that’s spending on top of the normal health-care inflation that would have happened if Obamacare had not been passed. So much for “bending down the cost curve,” as the president often liked to say his law would do.

Yesterday, over at my Forbes blog, my colleague Chris Conover paid tribute to those three Harvard economists and their favored president, by employing the same arithmetic they did to calculate how much more Americans would spend on health care due to Obamacare. He took the $621 billion, divided by the U.S. population, and multiplied by four.

“Simplistic?” Chris asked. “Maybe, but so too was the President’s campaign promise. And this approach allows us to see just how badly that promise fell short of the mark. Between 2014 and 2022, the increase in national health spending (which the Medicare actuaries specifically attribute to the law) amounts to $7,450 per family of 4.”

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