Lies the government told you

by Andrew P. Napolitano

  Basically, this opened the door to any business that the federal government wanted the records of, including medical records, telephone records, computer keystrokes, legal records, and records from your corner bodega.19 And, as one Congressman noted, the language in the Act “only vaguely limits this expanded definition to financial information.”20

  The government can compel all your records, and needs only to satisfy itself that the information it is gathering is sought in connection with an investigation into terrorism or foreign intelligence gathering. That’s all; the agents are not even required to show to a superior that the information they collect is relevant to that investigation, just that they are in the process of an investigation. Anyone who receives an NSL cannot reveal that fact to anybody, even you as the target, for fear of criminal prosecution.

  In 2005 it was uncovered that during one investigation of Las Vegas businesses, the FBI had issued tens of thousands of NSLs and obtained over a million financial, employment, and medical records of the customers of the target of the investigation. So your medical records, your financial records, and any other records that the government deems necessary will be opened for the world. And there will be not a thing you can do about it. All this, perhaps, because you spoke with the person sitting next to you on an airplane who was deemed suspicious by the government.

  Be Careful What You Read

  Dear reader, since you have actually picked up and read this book, it might be a little late for a warning. Just in case you thought you were safe to read whatever you choose, I want to warn you that your reading habits may be monitored for “suspicious” behavior. Considering the title of this book, your name might now be on a list authorized by the Patriot Act, which permits the FBI to review any tangible record, including reading habits. And the targets of these reading habit investigations need not be terrorists; the government does not even have to show the secret FISA court that the person is linked in any way to terrorism. Instead, all agents are required to show to themselves is that the records are required for an investigation of terrorism.

  Even now, the Department of Justice has actually claimed that the secret FISA court has no authority to reject requests for FISA orders because all of them are acceptable, even when the primary purpose has nothing whatsoever to do with terrorism.21 The libraries and bookstores required to provide the surveillance information cannot reveal or notify anyone of that fact. And, like with National Security Letters, there is no judicial oversight of the secret warrants permitting access to such records.22 The only limitation on access to such records is that the investigation cannot be launched solely if its basis is a First Amendment–protected activity; but if there is any other “unprotected” reason for the investigation, then that trumps the First Amendment.

  The only bright light at the end of the tunnel is that librarians, after realizing the implications of the Act, have begun shredding records at the earliest possible time, so that they would not be able to provide the requested information under an NSL. But all that stands between what we choose to read and the government are the abilities of the librarians to shred faster than the government can collect.

  No End in Sight

  Democrats have admitted that the Patriot Act is unconstitutional, but they were willing to reauthorize the Act for four years, this coming from the party that is meant to stand for civil liberties and freedom.23 Even if the government admits to taking our liberties, trying to justify it by stating that it is necessary for our safety and security, would still be fallacious. No matter how often the government can claim to be able to protect us, and blame any of its inadequacies on lack of power, the argument is a lie. There is only one reason that the government takes away freedoms: Freedom is an obstacle to dominance, and almost everyone in government possesses what St. Augustine called libido dominandi, the lust to dominate.

  The ruse that most persons fall for is that this is done for our safety. People want to feel secure, and their belief that the government can provide us with such security ensures that many are willing to sacrifice their safety. Yet, there is a reason that the Constitution exists in this country. As Congressman Ron Paul has stated, “These are not the most dangerous times in American history, despite the self-flattery of our politicians and media.”24

  Rather, as he so aptly noted, America has survived the burning down of the White House, a Civil War, involvement in two World Wars, and has won a forty-year Cold War with the Soviet Union, a time where spying was rampant through the federal agencies and where citizens drawn by the rhetoric of Communism defected to the Soviet Union, and most notably, fingers were poised to press the nuclear launch button. Yet, somehow, America not only survived but flourished without the Patriot Act. It is in periods of crisis that we should strive to protect our liberties, not sacrifice them on the altar of a false sense of security.

  During the reauthorization of the Patriot Act and an extension of its sunset provisions in 2005, many proponents made mention of the then-recent subway bombings in London as an argument in favor of the Patriot Act. They argued that government spying on Americans without judicially issued search warrants could prevent such actions here. But as Congressman Paul points out, London is “the most heavily monitored city in the world” and the British are “not hampered by our 4th Amendment or our due process requirements,” yet they were unable to protect themselves, proving that “even a wholesale surveillance society cannot be made completely safe against determined terrorists.”25 If the freedomless British cannot protect their cities from attack, why do politicians attempt to argue that stripping us of our liberties will work here at home?

  There is no reason to believe that any of the actions taken under the Patriot Act can make us safer. All the justifications and endless explanations for the need of a Patriot Act have no support in reality and are just lies created by the government to lull us into acquiescence, to enhance the government’s power over us, and to make it appear to fearful or gullible Americans that because the government is curtailing our freedoms it must be making us safer by doing so. Be ashamed for accepting such arrant nonsense.

  It is no surprise, considering the unconstitutional atrocities permitted by the Patriot Act, that seven states have passed resolutions condemning the Act. Each day, more fight to force President Obama to repeal it. But once it has managed to deceive us into granting it more power, the federal government is loath to return it. Unremarkably, therefore, even President Obama, who ran for office as a defender of civil liberties, now supports maintaining the existing law.

  This Is America

  The cynically named Patriot Act is a revolting and unconstitutional example of the federal government taking advantage of people during times of crisis. To pass the Act in the wake of September 11th 2001, was one thing; to reauthorize it after it has proven to be wildly unconstitutional and phenomenally ineffective is quite another. How do we expect to be the example of democracy in the Middle East and around the world when our government doesn’t even trust us, and goes out of its way to lie to us in order to strip us of our freedoms? As a result of the tragedy that was September 11th 2001, it is important to take terrorist threats seriously, but under no circumstances should we have to fear what we say, write, or type. This is America, isn’t it?

  Lie #17

  “America Has a Free Market”

  As hue and cry abound around the current economic crisis, and blame is passed from Wall Street to Main Street and back again, it is strange to note that we hear so little about the blame that should rest in Washington, D.C. And the blame that does come to rest on the shoulders of the government seems largely focused on “too little government intervention,” which permitted “too much capitalism.”1 Apparently, all those acronyms that the government is so famous for producing and the regulations it enforces are not considered intervention.

  The government has managed to convince most Americans not only that they are living in a country whose economy is based on laissez-faire capitalism but a
lso that the free market is to blame for all our problems. And until those myths are rebutted and the truth of the matter is revealed, we will continue on the path forged by the Great Depression, and ending with central economic planning in Washington, privately owned entities under government control, and nationalization of businesses that are “too big to fail.”

  The Unaffordable Cost of “Affordable Housing”2

  Ever since FDR and his New Deal policies in the 1930s, the federal government has inserted itself into housing policy in order to ensure—it contends—that everyone has access to affordable housing. Beginning with rent control, the trend continued with encouraging homeownership, with the establishment of Fannie Mae and Freddie Mac to the Community Reinvestment Act of 1977 (CRA), forcing banks to make loans to those they would normally reject as dangerous credit risks. Somehow, the Reinvestment Act claimed that is was unfair for banks to reject certain parts of the community based on credit, because everyone deserved to own a house, whether he or she could actually afford it or not. Basically, Fannie and Freddie, capitalized with taxpayer dollars, took the under-performing mortgages, that the CRA forced the banks to make, off the banks’ balance sheets. So, credit-risky owners got homes they couldn’t afford, banks got fees for lending to risky borrowers, and taxpayers got stuck with the risks and the eventual losses.

  Yet, even with all the laws and regulations around, the government continues to blame deregulation and the “free” market. How it can do so with a straight face, considering that we have “seventy-three thousand pages of detailed government [economic] regulations,”3 is beyond me. And the regulations and government intervention are directly to blame for the mess we are in now, no matter how hard the government tries to lie to us and blame Wall Street or Main Street or deregulation. It was the government that encouraged, enticed, and compelled banks to loan to people whom they would usually deny as bad credit risks.

  It was the government that created the Department of Housing and Urban Development (HUD), which guaranteed billions of dollars in loans. And, of course, if a loan is guaranteed by the government, there is no reason for a bank to look at the borrower’s ability to return the money.4 Slowly, too, HUD lowered its standards, and the government’s approval for granting mortgage insurance became almost automatic. Such guarantees brought about new banks, like Countrywide Financial, which were opened around the nation, centered on serving that portion of the population that could not get “prime” loans because of poor credit history, and providing them with “sub-prime” mortgages, sometimes with no money down, to buy houses they could ill afford.

  Many were expecting house prices to continue to rise and therefore bought million-dollar houses on incomes of less than $30,000, with no money down. So when the housing bubble burst, as all bubbles eventually do, these people had mortgage payments due that they could not afford, and their houses were worth less than the mortgage that they had to pay. So the banks foreclosed on homes that were not worth the money that had been loaned in order to purchase them.

  These same mortgages had also been wrapped up into securities, called mortgage-backed securities, which were then sold by the banks to investors, which provided the banks with additional money to make more loans. Sometimes Fannie and Freddie were the investors. But the value of these securities depended on the mortgage payments being paid in full and on time. When the housing boom collapsed and people stopped paying, these securities became worthless, and losses of billions accumulated in those who had invested.

  Many of those who had invested were investment banks, which then had losses of billions, and they collapsed as well. The market went into free fall, largely because the government induced and forced banks to loan to people with poor credit, because it felt that everyone deserved affordable housing and so it had to provide it, through any means necessary. But what the government tends to forget is that there is no such thing as a free lunch. So now, we will soon be paying in higher taxes and inflation for the so-called “affordable housing” that the government was desperate to provide.

  The Bailout: Free Money for the Incompetent

  By bailing out banks and related companies, the government has essentially ensured what it claimed it was trying to prevent, market instability. Now that certain firms are aware that they are too big to fail, they will be much more likely to engage in riskier investment schemes. They are aware that if their risky investment fails, the government will ensure their survival, and if it succeeds, there will be a large payout, as there is with any risky investment that succeeds.

  But the payout will be theirs and theirs alone. As the Wall Street Journal so aptly described the process, “[t]heir profit is privatized but their risk is socialized.”5

  Economists often state that the Great Depression was inordinately long, due in large part to the inflexibility of wages and other forms of government intervention.6 The government responded by printing money, artificially stabilizing prices, employing the population on worthless projects, and thereby, according to the Austrian economists, expanding the Great Depression by around fifteen years.7 The Great Depression was “great” because of its duration (from 1929 to 1946) and its duration was assured by FDR’s central planning.

  On the other hand, when the stock market crashed on October 19th 1987—a day known as Black Monday—and the Dow Jones dropped 508 points in one day,8 while 205 banks failed that year,9 President Reagan ignored the cries for help and did nothing. The government took not one step to intervene in the markets, though panic was widespread. Within a few months, the market stabilized and prosperity came slinking back. It has now been nearly eighteen months since the markets had their September 2008 collapse, and as much as the Federal Reserve is claiming that things are looking up, the markets are unstable and unemployment, even with the Bush and Obama bailouts, is over 10 percent.

  Everyone claims that the bailout of the system is necessary in order to prevent another Great Depression. Yet, as Llewellyn Rockwell has pointed out, “[it] makes no sense to warn that we will repeat the past if we fail to do the things that actually made the past as bad as it was.”10 Maybe, rather than emulating a government that prolonged the Great Depression, we might think about emulating the administration that managed to allow Black Monday to be only a three-month-long affair.

  President Reagan’s chief economist, Arthur Laffer, has explained that the Obama $780 billion February 2009 stimulus plan, just like the Bush February 2008 $200 billion stimulus and the Bush October 2008 $700 billion TARP plans, will drive the country to economic ruin.11 Laffer argues that these stimulus packages will have the same result as the $85 billion bailout of AIG, most of which money has ended up with the banks as beneficiaries and the taxpayers as the payees.12 The bailout plan is essentially Robin Hood, except he is taking from the rich and poor alike to give to the extraordinarily wealthy. As Laffer notes, “There is no tooth fairy. Every dollar given to someone comes from someone else.”

  Since the government does not produce wealth, it only transfers resources and consumes wealth, that someone else who had the money will be driven to spend less. So the only gain is for those who receive that money, who, as has already been aptly proven, are not too good at knowing how to spend it. And an examination of the wish list received from cities around the country illustrates that no one seems to know where it will go. Requests include two million dollars for more neon signs in Las Vegas (of all places), three million for an environmentally friendly clubhouse, six million for waterslides, almost one million for a Frisbee golf course, and even Harley Davidson motorcycles for the police.13 The money and how it is to be allocated are still in question. Some of the various projects that have been proposed will create jobs, as did the digging and filling of ditches during the reign of FDR, but whether they can create prosperity is out of the question.

  It is the capitalist market that has proven to be the best allocator of resources. Many considered Lehman Brothers, one of New York’s largest investment banks, too big too fail. Yet
fail it did. In January 2008, the bank had assets of $639 billion and over twenty-six thousand employees, but the government let it go. Within a few days, the market had allowed the viable Lehman pieces to survive, and the rest were washed away.14 That is how the market works, and the only way to ensure that the rest of the available resources are allocated to end this bust as quickly as possible is to stop any government intervention, allowing any firms that must fail to fail, and to do so quickly.

  Any bailout, as in the case of AIG (where currently, executives largely responsible for its near-bankruptcy are to receive $165 million in bonuses),15 will only result in creating a monster that will have a terrible impact on the future of the economy. If the executives are getting paid the big bucks to fail, why would they make any attempts to succeed? The longer a business that squanders money and profits is allowed to stay open, the more damage will be visited to the market and therefore to viable and profitable companies, which could otherwise fill in the gap that would be left by the closing of such companies.