Kevin Drum - December 2008

Network Neutrality Update

| Mon Dec. 15, 2008 3:05 AM EST

NETWORK NEUTRALITY UPDATE....Slowly but surely, support for network neutrality on the internet is eroding:

Google Inc. has approached major cable and phone companies that carry Internet traffic with a proposal to create a fast lane for its own content, according to documents reviewed by The Wall Street Journal. Google has traditionally been one of the loudest advocates of equal network access for all content providers.

At risk is a principle known as network neutrality: Cable and phone companies that operate the data pipelines are supposed to treat all traffic the same — nobody is supposed to jump the line.

....Separately, Microsoft Corp. and Yahoo Inc. have withdrawn quietly from a coalition formed two years ago to protect network neutrality. Each company has forged partnerships with the phone and cable companies. In addition, prominent Internet scholars, some of whom have advised President-elect Barack Obama on technology issues, have softened their views on the subject.

....Lawrence Lessig, an Internet law professor at Stanford University and an influential proponent of network neutrality, recently shifted gears by saying at a conference that content providers should be able to pay for faster service.

It's not too surprising that big content companies are quietly changing their tune on this: big companies are usually willing to pay for preferential treatment that helps them keep little guys little, and preferential access to the internet is no different from any other competitive advantage. But if even Lessig is starting to give in on this, the jig might truly be up.

If I had to take a (tentative) stand on this, I'd say that preferential treatment might be justified for things like television and video-on-demand services, which require infrastructure buildout and higher service levels just in order to be competitive. (TV subscribers simply won't put up with standard internet quality of service.) But for ordinary content providers merely looking for an edge over possible upstarts? I think that's as corrosive as Standard Oil locking competitors out of the railroads in the 19th century or Ma Bell prohibiting third party equipment on their lines in the 20th century. We shouldn't put up with it.

Unfortunately, I'm not entirely sure how to draw the right distinctions here. Nor, in an environment where network traffic is growing at triple-digit rates but the subscriber base is barely growing at double digit rates, am I sure what incentive the backbone providers have to build additional capacity unless they have some way of charging someone for the additional bandwidth. It's a genuine problem, and I'm not sure what the solution is.

UPDATE: Lessig says the Journal is wrong: his views are the same as they've always been. Long story short, he's OK with network providers offering higher service levels to companies willing to pay for it, but only if they offer the same deal to everyone.

Google responds to the Journal here. They say the only thing they've done is offer to colocate Google-specific caching servers within broadband providers' own facilities. Needless to say, your mileage may vary on whether you think this is a violation of net neutrality.

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Metadata

| Sun Dec. 14, 2008 3:28 PM EST

METADATA....So what was it that Jack Goldsmith and James Comey threatened to resign over in 2004? It was some aspect of the NSA's surveillance program, and according to Barton Gellman in Angler, it wasn't just Goldsmith and Comey who were up in arms about it: virtually the entire senior staff of the Justice Department was ready to resign over it until President Bush decided to back down at the last minute. But exactly what part of the program caused the rebellion? Daniel Klaidman reports in Newsweek:

Two knowledgeable sources tell Newsweek that the clash erupted over a part of Bush's espionage program that had nothing to do with the wiretapping of individual suspects. Rather, Comey and others threatened to resign because of the vast and indiscriminate collection of communications data....The program's classified code name was "Stellar Wind," though when officials needed to refer to it on the phone, they called it "SW."

....The NSA's powerful computers became vast storehouses of "metadata." They collected the telephone numbers of callers and recipients in the United States, and the time and duration of the calls. They also collected and stored the subject lines of e-mails, the times they were sent, and the addresses of both senders and recipients. By one estimate, the amount of data the NSA could suck up in close to real time was equivalent to one quarter of the entire Encyclopaedia Britannica per second. (The actual content of calls and e-mails was not being monitored as part of this aspect of the program, the sources say.) All this metadata was then sifted by the NSA, using complex algorithms to detect patterns and links that might indicate terrorist activity.

The metadata sweep has been part of this story almost since the beginning (see here and here, for example), and the New York Times reported last year that it was data mining of some sort that probably sparked the rebellion at DoJ and the showdown in John Ashcroft's hospital room. So this report isn't entirely new. Still, it does add a bit of meat to the bones of the story, and then adds a disturbing coda: apparently we still don't know if, in the end, the rebellion worked:

Days after the hospital clash, Bush shut down the massive data-collection program and stopped searches of the data that had already been stored. (It's unclear whether the administration has since found new legal justification to return to at least some of these activities.)

Looks like the ball's in your court, president-elect Obama. At least, it will be soon, anyway.

Bipartisan

| Sun Dec. 14, 2008 2:39 PM EST

BIPARTISAN....The New York Times writes today about Sen. Chuck Schumer's role over the past decade as the defender of Wall Street. Here's a snippet:

To Christopher Cox, the Republican chairman of the Securities and Exchange Commission, the need for action was obvious in the spring of 2006.

His agency [] had grown deeply concerned about lack of oversight of the nation's largest credit-rating agencies, like Standard & Poor's and Moody's Investors Service...."Without additional legislative authority, the S.E.C. will not be able to regulate in a thoroughgoing way," he told the Senate banking committee at an April 2006 hearing.

....At that time, revenues for the agencies were skyrocketing. The housing market was robust, and Wall Street investment firms were paying the agencies to rate various mortgage-backed securities after first advising the firms — and also collecting fees — on how to package them to get high credit ratings.

It was an obvious conflict of interest, financial experts now say....But Mr. Schumer argued that the companies voluntarily met requirements to eliminate such possible conflicts. He suggested that regulators simply encourage competition and disclosure of agencies' ratings methods.

Schumer has since come around, claiming the rating agencies misled both him and everyone else. But look: when you're arguing in favor of less regulation than Christopher Cox, you should figure that something is wrong. This is not rocket science.

It's also why I haven't been able to work up quite the level of partisan outrage over the fall of Wall Street that some people have. You see, when it comes to environmental regulation, Democrats are mostly on the side of the angels. When it comes to workplace regulation, they're on the side of workers. When it comes to consumer regulation, they're on the side of consumers. But when it comes to financial regulation, they're....um — well, they've been mostly on about the same side as Republicans. It's true that the fanatics are largely on the GOP side, but they've been aided and abetted the entire time by a Democratic Party that went along with their self-regulation agenda with almost nary a complaint. This has truly been a bipartisan train wreck.

The Whistleblower

| Sun Dec. 14, 2008 1:49 PM EST

THE WHISTLEBLOWER....Michael Isikoff has a long, very interesting piece in Newsweek today about the guy who first tipped off the New York Times about the NSA's warrantless wiretapping program. Turns out his name is Thomas Tamm, a Justice Department lawyer who learned in 2002 that the government was probably torturing terrorism suspects in its custody. He wasn't happy about it:

But still, Tamm says he was fully committed to the prosecution of the war on terror and wanted to play a bigger role in it. So in early 2003, he applied and was accepted for transfer to the Office of Intelligence Policy and Review (OIPR), probably the most sensitive unit within the Justice Department....But after arriving at OIPR, Tamm learned about an unusual arrangement by which some wiretap requests were handled under special procedures....Tamm says he found the whole thing especially curious since there was nothing in the special "program" wiretap requests that seemed any different from all the others. They looked and read the same. It seemed to Tamm there was a reason for this: the intelligence that came from the program was being disguised.

....At one point, Tamm says, he approached Lisa Farabee, a senior counsel in OIPR who reviewed his work, and asked her directly, "Do you know what the program is?" According to Tamm, she replied: "Don't even go there," and then added, "I assume what they are doing is illegal." Tamm says his immediate thought was, "I'm a law-enforcement officer and I'm participating in something that is illegal?" A few weeks later Tamm bumped into Mark Bradley, the deputy OIPR counsel, who told him the office had run into trouble with Colleen Kollar-Kotelly, the chief judge on the FISA court. Bradley seemed nervous, Tamm says. Kollar-Kotelly had raised objections to the special program wiretaps, and "the A.G.-only cases are being shut down," Bradley told Tamm. He then added, "This may be [a time] the attorney general gets indicted," according to Tamm.

....The next few weeks were excruciating. Tamm says he consulted with an old law-school friend, Gene Karpinski, then the executive director of a public-interest lobbying group. He asked about reporters who might be willing to pursue a story that involved wrongdoing in a national-security program, but didn't tell him any details. (Karpinski, who has been questioned by the FBI and has hired a lawyer, declined to comment.) Tamm says he initially considered contacting Seymour Hersh, the investigative reporter for The New Yorker, but didn't know where to reach him. He'd also noticed some strong stories by Eric Lichtblau, the New York Times reporter who covered the Justice Department — and with a few Google searches tracked down his phone number.

The rest, as they say, is history. As with many whistleblowers, Tamm's motivations were tangled and a little messy — like so many things in life — and the whole thing is very much worth reading.

Still Fools for Scandal

| Sun Dec. 14, 2008 1:15 PM EST

STILL FOOLS FOR SCANDAL....Peter Baker writes today that Barack Obama and his team have learned a lesson from the scandal-driven "moral jihad" of the Clinton presidency:

Even though Mr. Obama had no known personal involvement, the Clinton veterans understood that was only part of the issue. They had Mr. Obama publicly declare he had never spoken with Gov. Rod R. Blagojevich about the Senate appointment. They imposed a cone of silence on colleagues so they would not make a remark that could come back to haunt them. And they ordered an internal inquiry to document any contacts with the governor's advisers.

Republicans were ready to pounce, rushing out statements linking Mr. Obama to Mr. Blagojevich within an hour or so after the governor's arrest was reported. They too knew the script and that any opening must be exploited. Politics in this hyperpartisan age, after all, is the ultimate contact sport.

All well and good, but it's a little odd that Baker leaves out the role of the press in all this. I'll let Bob Somerby do the heavy lifting here, but I've lost count of the number of op-eds and TV talking head segments over the past week that have started out with something like this: "There's no evidence that Barack Obama was involved in Rod Blagojevich's pay-to-play scheme — in fact just the opposite — but...." After the "but," we get a couple thousand words with some take or another on why this is casting a "lengthening shadow" over Obama even though there's precisely zero evidence that he had even a tangential involvement in the whole thing.

Look, I get it: it was kind of a slow news week, reporters are tired of Obama the Savior stories, the Blagojevich scandal is theatrically sexy, and everyone is desperately trying to find a way to turn it from a local story to a national one. But there's no there there. Maybe Republicans still haven't learned their lesson from the 90s, but that's no reason the press has to follow them over a cliff once again. Cool it, folks.

*Swoopo

| Sat Dec. 13, 2008 10:33 PM EST

SWOOPO....Via Megan McArdle, this has to be seen to be believed. Swoopo.com has been around since 2005, it's almost literally a scheme for throwing money into other people's bank accounts for no special reason, and apparently it's still going strong. Details here.

At least Bernard Madoff's customers had the excuse that they didn't know what he was doing, but Swoopo appears to be pretty upfront about the whole thing. There's no excuse for not realizing what's going on except rank idiocy.

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Heroic Corruption

| Sat Dec. 13, 2008 4:06 PM EST

HEROIC CORRUPTION....One of the things that's made the Rod Blagojevich scandal so amusing is that Blagojevich wasn't just corrupt, he was comically, heroically, epically corrupt. It was the kind of over-the-top corruption you don't really expect to see outside an episode of The Sopranos or a Gilbert & Sullivan operetta.

But you know who else is like that? The credit card industry:

The Federal Reserve on Thursday will vote on sweeping reform of the credit card industry that would ban practices such as retroactively increasing interest rates at will and charging late fees when consumers are not given a reasonable amount of time to make payments.

....Among the many provisions is a ban on raising interest rates on existing balances unless the customer was 30 days or more late in paying the minimum....Banks would also not be able to treat a payment as late if the customer had not been given a fair amount of time to make that payment.

The proposal would also dictate how credit card companies should apply customers' payments that exceed the minimum required each month. When different annual percentage rates apply to different balances on the same card, banks would be prohibited from applying the entire amount to the balance with the lowest rate. Many card issuers do that so that debts with the highest interest rates linger the longest, thereby costing the consumer more.

Credit card issuers, of course, are swearing on their mothers' graves that these changes will doom the entire industry. They have to have the ability to retroactively change your interest rate just because they feel like it. They have to have the ability to treat payments as late even if customers haven't been given a fair amount of time to make the payment. They have to have the ability to apply payments to whichever balance is worst for the consumer and best for them.

Of course they do! Never mind the fact that these rules are so comically, so heroically, so Simon Legree-ishly unfair that most people think you're making things up when you tell them that not only are they legal, they're standard practice. And despite the protestations of doom, it's worth noting just how mild these proposed changes are. Card issuers can still retroactively change your interest rate merely for being late on a single payment, after all, which for some people amounts to a late fee of several thousand dollars. Ka-ching!

And while we're at it, note also that all the wailing and moaning over these new rules comes despite the fact that card issuers succeeded a few years ago in rewriting the bankruptcy laws to give them almost total protection from having to practice actual risk management. They prefer the version where they can give credit to anyone, raise rates whenever they want, and never lose a dime because even if you declare bankruptcy you still have to pay them off.

Universal default should be flatly banned. The 2005 bankruptcy law should be repealed. Credit card fees and interest rates should be brutally capped. Here's a decent start. Put that in your populist pipe and smoke it.

Transition

| Sat Dec. 13, 2008 2:00 PM EST

TRANSITION....According to the New York Times, the Obamas were hoping to move temporarily into Blair House before the inauguration, but it wasn't available:

The Obamas were told that they could move into Blair House on Jan. 15, but no earlier, because it is booked, an Obama transition official said, speaking on the condition of anonymity. "We explored the idea so that the girls could start school on schedule," the official said. "But there were previously scheduled events and guests that couldn't be displaced."

....White House officials said the protocol was that Blair House is available to presidents-elect starting Jan. 15, five days before the inauguration.

I'd never thought about this before, but this is sort of odd, isn't it? Wouldn't it make sense for the government to provide quarters for the president-elect starting right after the election? It doesn't have to be Blair House, though apparently it's pretty convenient since it's already inside the Secret Service's security cordon, but surely it makes sense to provide something. Maybe somebody ought to give some thought to changing this protocol in the future.

Friday Cat Blogging - 12 December 2008

| Fri Dec. 12, 2008 4:05 PM EST

FRIDAY CATBLOGGING....Like Rod Blagojevich until Patrick Fitzgerald got his mitts into him, Domino sees nothing but sunshine hanging over her. I'm pretty sure Fitz doesn't have her phones tapped — and in any case we all know that cats have interdimensional ways of communicating anyway — so I imagine her life will remain sunny and indictment free. Inkblot, on the other hand, apparently thinks someone is trying to watch us from behind our bathroom mirror, so maybe there's more going on here than I think.

The Bailout Deal

| Fri Dec. 12, 2008 2:34 PM EST

THE BAILOUT DEAL....Here's the White House's response to the failure of the auto bailout bill last night:

"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," Dana Perino, Mr. Bush's spokeswoman, said in a carefully nuanced statement released minutes before the financial markets opened in New York. "However, given the current weakened state of the U.S. economy, we will consider other options if necessary — including use of the TARP program — to prevent a collapse of troubled automakers."

The Treasury Department promptly indicated that it would provide short-term relief to the automakers. "Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," a Treasury spokeswoman, Brookly McLaughlin, said.

This whole thing just gets stranger and stranger. Bush sent a handpicked squad of West Wing bigfeet to Capitol Hill a couple of days ago to press Republicans to pass the bill, and they failed miserably. In one sense, of course, this is just more of the same: Bush is a lame duck, even his own party sneers at him these days, and this is yet another demonstration that they couldn't care less about what he does or doesn't want.

Fine. But did he tell the reluctant Republicans that the Senate bill was their best chance for genuine industry restructuring? That if they didn't pass it, he'd be forced to use TARP funds and both the UAW and the car companies would probably end up getting a better deal? And then they'd get a way better deal next month after Democrats took over?

If he didn't tell them that, why not? And if he did, did the Senate Republicans really decide they didn't care that they were giving up what little leverage they had? That they just wanted to make their point, and reality be damned? Are they really that nuts?

I guess so. I wonder if their constituents will ever figure this out?