declan mccullagh

DOJ Asks For News Site’s Visitor Info

by Evan Banks on November 16, 2009

in Privacy

Declan McCullagh is reporting that earlier this year the Department of Justice subpoenaed the left-of-center news aggregation site Indymedia.us for information including visitor lists and IPs, then issued a gag order forbidding them to talk about it unless authorized to do so. From CBSNews.com:

The subpoena (PDF) from U.S. Attorney Tim Morrison in Indianapolis demanded “all IP traffic to and from www.indymedia.us” on June 25, 2008. It instructed Clair to “include IP addresses, times, and any other identifying information,” including e-mail addresses, physical addresses, registered accounts, and Indymedia readers’ Social Security Numbers, bank account numbers, credit card numbers, and so on.

This gag order presents a particular problem for any news organization in a nation that prides itself on it’s freedom of the press.

Indeed, McCullagh says that news organizations are entitled to special limiting processes when they are subpoenaed, such as requiring “the express authorization of the attorney general.” Information gained from a subpoena issued to a news organization must also be limited in nature.

Apparently the Department of Justice isn’t at liberty to say why the subpoena was issued, although the demand request was retracted after the Electronic Frontier Foundation caught wind of the situation via an Indymedia server administrator and offered to represent the organization free-of-charge. The Attorney General’s office reportedly has no knowledge of the request. Naturally.

LibertyWeek 61: How About FCC Neutrality?

by Richard Morrison on September 21, 2009

in CEI Projects, Environment, Features, Global Warming, Podcast, Zeitgeist

Your host Richard Morrison welcomes returning guest co-host William Yeatman and special guest commenter Ryan Radia to the program for Episode 61 of the LibertyWeek podcast. We start with the FCC’s just-announced proposal for “net neutrality,” Treasury documents that reveal the true cost of cap-and-trade legislation and the plan for getting over California’s great depression. We then move on to the G20 Summit’s potential path to prosperity and the ever-expanding scandal that is ACORN.

Enviros flail over FOIAed Treasury documents

by Marlo Lewis on September 17, 2009 · 2 comments

in Global Warming

A headline in yesterday’s evening edition of Greenwire (subscription required) declares: ”Treasury; enviros go on offensive against media reports of cap-and-trade costs.” In fact, enviros went on defense.

As has been widely reported (e.g. here, here, here, and here), CEI, using the Freedom of Information Act (FOIA), obtained two Treasury Department documents discussing the cost of a cap-and-trade program. The first of these documents, dated 11/6/08, states (p. 1) that the administration’s plan to auction all allowances under a cap-and-trade program “could generate federal receipts on the order to $100 to 200 billion annually.” It further states (p. 2) that, “Economic costs will likely be on the order of 1% of GDP, making them equal in scale to all existing environmental regulation.”

To put these numbers in perspective, CBS reporter Declan McCullagh said that a cap-and-trade program costing $200 billion annually would be ”equivalent to hiking personal income taxes by about 15%,” or an “extra $1,761 per household.” As you can imagine, cap-and-traders went ballistic.

Greenwire faults McCullagh for neglecting to “state that Obama publicly stepped back from a 100% auction of allowances as the House negotiated and passed a climate bill that gives away more than three-quarters of the allowances for free during the program’s first years. The House legislation auctions only 18% of the allowances until about 2020.”

Greenwire quotes Treasury official Alan Kreuger, Harvard economist Robert Stavins, Josh Dorner of Sierra Club, and Tony Kreindler of Environmental Defense Fund, all asserting that McCullagh’s analysis is incorrect, because both the Obama plan and the House bill would return billions of dollars to taxpayers from auction permit sales.

Three points are in order here. First, Obama has not abandoned 100% auctioning.  OMB’s Mid-Session Review of the federal budget (Table S-11) projects “climate revenues” from “emission allowance auctioning” of $626 billion during 2010-2019. That’s slightly lower than the $645.7 billion in climate revenues projected in the President’s Budget(Table S-2). But the difference results from a technical adjustment, not a change in policy to accommodate the Waxman-Markey bill. The Mid-Session Review is an official statement of administration policy; it assumes 100% auctioning of emission allowances.

Second, the whole issue of auctions vs. free allocations is largely a distraction. Whether emission allowances are auctioned or distributed free of charge, the emissions cap determines the total number of allowances, and the market (supply and demand) determines allowance prices. The 11/6/08 Treasury memo is quite clear on this point: “Emission allowances under a cap and trade system are valuable assets regardless of their allocation method (analogous to revenue under an equivalent tax policy).”

As the cap tightens, the supply of allowances declines, allowance prices increase, and energy prices increase. Consequently, consumer spending, GDP, job creation, and wages all decrease relative to what they would be in a non-carbon-constrained economy. 

These impacts are the intended effect of a cap-and-trade program, and they occur regardless of whether allowances are auctioned or given away. The Heritage Foundation’s analysis of the Waxman-Markey bill, for example, assumes the allowance allocation scheme outlined in Reps. Waxman and Markey’s May 14, 2009 Memorandum, “Proposed Allowance Allocation.” The allocation formula in the final legislation passed by the House in June differs only in the details. The Heritage analysis projects significant economic impacts by 2035:

  • Gasoline prices will rise 58% (or $1.38/gallon) above the baseline forecast, which already contains price increases;
  • Natural gas prices will rise 55%;
  • Heating oil prices will rise 56%;
  • Electricity prices will rise 90%;
  • A family of four can expect to pay $1,241 more for energy costs per year;
  • Including taxes, a family of four will pay$4,609 more per year;
  • A family of four will reduce its consumption of goods and services by up to $3,000 per year, as its income and savings fall;
  • Aggregate GDP losses will be $9.4 trillion;
  • Job losses will be nearly 2.5 million; and,
  • The national debt will rise an additional $12,803 per person.

Third, returning part of the revenues from auction sales to households via tax rebates does not ensure low economic impact. Payments for auctioned permits are not the only cost of Waxman-Markey. A bigger cost is the damage done to the economy via higher energy prices. Even with the distribution of allowance revenues to households and other interests, the Heritage Foundation finds Waxman-Markey’s damage to the economy exceeds $9 trillion in the first 24 years.

 A reductio ad absurdum may help clarify this. Imagine that we tax milk at $30,000/gallon and rebate the tax revenue directly to each citizen. Bill Gates buys one gallon per year and nobody else buys any. The tax is returned to the 300 million residents of the United States and each gets $0.0001.

Proponents thus conclude that there is no economic impact. They overlook a whole slew of devastating costs: Lost profits and jobs in the dairy sector, lost tax revenues from the dairy industry, higher unemployment benefit payments, poorer nutrition and health, etc.

Claims that Waxman-Markey is a bargain once you consider the taxpayer rebates are similarly bogus.

WaPo on CEI’s FOIA release – biasing by innuendo

by Fran Smith on September 17, 2009

in Environment, Global Warming, Politics as Usual, Sanctimony

Today the Washington Post carried a follow-up article on CEI’s release of Treasury’s estimates — through a FOIA request –  on the cost of cap-and-trade legislation.  The article by Steven Mufson was quick to find and quote those who said CEI’s interpretation of those costs – an extra $1,761 each year for each American household – were built on false assumptions.  What was more interesting about the article, however, is the subtle slant the reporter gave in his depiction of both CEI and Declan McCullagh, who broke the story.

First, in its only description of CEI, the article states:  “. . . Competitive Enterprise Institute, which questions whether human and industrial activity is linked to global warming. . . .”  That certainly doesn’t describe CEI and the many issues it works on nor its approach to global warming.  Why didn’t the reporter depict it as “a free market policy group” and then go on to describe its global warming position accurately?

Second, the article disparagingly referred to Declan McCullagh as “A CBS News blogger named Declan McCullagh.”  Now, McCullagh is a respected and accomplished journalist, and he is listed on the article referenced by WaPo as “a correspondent for CBSNews.com.” Here’s what his bio says:

Declan McCullagh is a senior correspondent for CBS News’ Web site. He became the chief political correspondent for CNET News in 2002, where he remains a frequent contributor, and lives in the San Francisco area after spending over a decade in Washington, DC.

An award-winning journalist, McCullagh writes and speaks frequently about technology, law, and politics. From 1998 to 2002, he was Wired’s Washington bureau chief. Previously he was a reporter for Time Magazine, Time Digital Daily, and The Netly News, as well as a correspondent for HotWired. At CBS, McCullagh writes for the Taking Liberties section, the successor to a weekly column he started in October 2008 titled Other People’s Money.

Guess straight-forward descriptions didn’t fit what Mufson and the Post wanted to get across.

Firing Blanks on FOIA Part II

by Iain Murray on September 17, 2009

in Economy, Energy, Environment, Global Warming, International, Regulation

In his update to his post, Declan McCullagh notes an objection by the Center for American Progress:

The fourth objection is the most compelling. The Center for American Progress writes: “The potential benefits of clean energy legislation far outweigh the modest costs.” That’s a reasonable cost vs. benefit calculation, and it includes the claim that even with the extra taxes, cap and trade is so vital to America, it’s still worth it.

That’s the right approach to take: it would be a very good thing if all federal regulation were subject to a cost vs. benefit analysis. For example, if rising temperatures are significantly harming the planet, and cap and trade would reduce greenhouse gases enough to slow the rise, that would be a real benefit. But the Center for American Progress never actually makes that argument, and as CEI senior fellow Christopher Horner says: “Nobody has ever said this will change the temperature. It won’t.”

Well, we’ve already covered that one.  Even taking the most favorable analysis to WaxKey, the costs to Americans massively outweigh the benefits to them.  Here’s my post from a week ago:

There’s a new cost:benefit study from New York University Law School’s Institute for Public Integrity that, its authors claim, shows that, “From almost any perspective and under almost any assumption, H.R. 2454 [Waxman-Markey] is a good investment for the United States to make in our own economic future and in the future of the planet.”  A good investment for the US? Really?

The authors recognize that the benefits they find are global, while the costs are located in the US.  So let’s see what benefits accrue to US citizens and at what cost. (I am working with the authors’ figures here, which derive from the EPA, and are significantly different from the figures provided by such groups as the Heritage Foundation or the American Council for Capital Formation, which find much, much higher costs.)

Highest possible benefit = $5.2 trillion / 6 billion people = benefits of $866 per person

Cost to US citizen = $660 billion / 300 million people = cost of $2200 per citizen

That means a best possible benefit to cost ratio for a US citizen of 0.4:1.

The report talks about thinking of the Waxman-Markey costs as a “highly effective, highly leveraged form of foreign aid.”  One has to doubt that, given that the benefits that accrue to the developing world do so mostly in the far future, while the developing world is in desperate need of greater wealth – and better access to energy – today.  Even if it were true, however, one wonders whether the American public will accept a de facto tax increase of around $1300 per person, or $400 billion total, to pay for such climate aid.

Yet that’s assuming that the “high end” benefits scenario is what occurs.  The global low end benefits are actually far outweighed by the American costs, leading to a benefit:cost ratio to America of something in the order of 0.05:1 (or a cost:benefit ratio of 20:1).

And, of course, there’s no guarantee that a reduction in American emissions will amount to a reduction in global emissions.  We have seen the response to European cap-and-trade schemes being the relocation of facilities to other jurisdictions.  If so, the effective foreign aid program of Waxman-Markey might actually be a loss of American jobs to be replaced by developing world jobs, with no emissions reduction at all.  That would be very generous of us, but not quite what the authors of this study have in mind.

To summarize, the authors of the study have conclusively demonstrated that the Waxman-Markey bill is actually a very bad deal for the United States, and their attempts to claim otherwise are just spin.

Firing Blanks in Response to FOIA

by Iain Murray on September 17, 2009

in Economy, Energy, Environment, Features, Global Warming, Regulation, Zeitgeist

As I’m sure you’ve heard by now, CEI has used the Freedom of Information Act to find out what the administration thought its proposal to introduce cap-and-trade would cost the economy. CBSNews’s Declan McCullagh can fill you in on the details:

A previously unreleased analysis prepared by the U.S. Department of Treasury says the total in new taxes would be between $100 billion to $200 billion a year. At the upper end of the administration’s estimate, the cost per American household would be an extra $1,761 a year.

A second memorandum, which was prepared for Obama’s transition team after the November election, says this about climate change policies: “Economic costs will likely be on the order of 1 percent of GDP, making them equal in scale to all existing environmental regulation.”

Politico‘s Ben Smith posted a story on this, to be greeted by an angry harrumph from the League of Conservation Voters:

Specifically, the original White House plan had 100% of emissions permits being distributed by auction; the plan that passed has just 15%.  “Can you say ‘irrelevant analysis’? It would be like pricing the health care bills currently in front of Congress based on a single-payer system,” he writes.

Well, CEI never said that the documents refer to the cost of cap and trade as it passed the House (for the record, the 15% is a bait-and-switch payoff to industry, with the percentage moving to 100% over a number of years), but the figure accurately reflects the likely cost of the president’s proposal, which is, amazingly enough, also the actual position of none other than the League of Conservation Voters:

By embracing a mandatory cap-and-trade program, the Obama energy plan would provide incentives to cut production of carbon dioxide and other pollutants that cause global warming.  In addition, because this program is a 100% auction, this system will generate significant revenues for reinvestment in job-creating, clean energy industries.

So what’s going on here? Is the LCV now fully behind the 15% plan? Or is it annoyed that it has been established that its favored 100% plan is actually just as expensive as everyone now realizes it is?

Oh, and the LCV spokesman added the “postage stamp” canard (the idea that the cost of cap and trade will be less than a postage stamp a day). That only works if you deposit your postage stamp cost in a guaranteed interest account today and withdraw it when the bill comes due in 2020, and even then it will only pay for the real cost, not the nominal cost (see here for a full analysis of the postage stamp claim). One thing even the current bill will not cost is just “a postage stamp a day per household . . . in 2020.”

But the real problem with the postage stamp claim is that even that figure is more than people are willing to pay. Polls show that only 10% are willing to pay more than $100 a year for cap and trade. That’s considerably less than a postage stamp a day.

Even the LCV’s Doublethink won’t get it past that one.

Of course, even the basic premise of the “irrelevance” argument can’t stand when the Administration is still projecting massive revenues (p33) as a result of cap-and-trade.

Meanwhile, how does the Huffington Post repsond?  EXXXXXOOOOOONNNNNN!!!!

Government gets ‘emergency’ control of the internet in new Senate bill

by Gary Howard on August 28, 2009 · 1 comment

in Legal, Personal Liberty, Tech & Telecom

This story just hit the Drudge Report’s front page.  Declan McCullagh at CNET writes today about the latest revision of S.773, a bill that would give the president “emergency control” of the internet in case of a “cybersecurity emergency.”  Wayne Crews, CEI Vice President for Policy,  released a statement on the naming of the cybersecurity chief and wrote an article on this back in May.  See an excerpt below:

Policy makers should avoid collectivizing and centralizing risk management, especially in frontier industries like information technology. Yes, we need government-backed “police forces” to protect private networks and infrastructure, but we also need the “barbed wire” and “door locks” which private companies continuously compete with each other to improve. When government overrules market competition for information/electronic security, it creates barriers to innovative private security solutions. We become less secure, not more.

Some reports indicate that the administration and Congress are seeking government authority over private networks-like power grids and computer networks-in the event of breaches. The very term “cyber” at once means everything and therefore nothing: American telecommunications, the power grid; virtually anything networked to some other computer is fair game to a new czar. The dominant tenor of the cybersecurity debate today is toward greater federal control over private infrastructure.

Washington has a proper role. It entails protecting government’s own networks and setting internal security standards, not regulating private networks. It involves arresting computer criminals and avoiding creating threats to data security in the form of data retention mandates, national ID schemes, proposals to re-regulate encryption, and czars that set terms for all they survey.

Security is an industry, and industries-and abstract concepts like “technology”-do not need czars in Washington. Innovation in information security and privacy protection do not flow from D.C. Rather, a government tech czar would likely grow in “stature” as a target for lobbyists. A federal technology chief could all too easily become an agent for establishing government authority over frontier technologies.

Both suppliers and customers increasingly demand better security from all firms. Improving private incentives for information sharing is at least as important as greater government coordination to ensure security and critical infrastructure protection. That job will entail liberalizing critical infrastructure assets-like telecommunications and electricity networks-and relaxing antitrust constraints so firms can enhance reliability through the kind of “partial mergers” that are anathema to today’s antitrust enforcers.

Private cybersecurity initiatives will gradually move us toward thriving liability and insurance markets for cutting-edge sectors. Heavy-handed cyber-czar gestures and legislation cannot address the lack of authentication and inability to exclude bad actors that is at the root of today’s cybersecurity problems.

Like everything else in the market, security technologies-from biometric identifiers to firewalls to encrypted databases-and cybersecurity services-from consulting to liability insurance to network monitoring-benefit from competition. Corporate information and security officers deal with cybersecurity concerns every day. It’s not clear what government could really fix-but it could break a lot.

See the statement release here.