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Ann Coulter — Adios, America — Videos

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Jesse Watters & Ann Coulter On The Insane MSM & Trumps Second Try At Repealing & Replacing Obamacare

Ann Coulter: Stephen Colbert lacks humor, taste

Ann Coulter: Is Sick And Tired Of Donald Trump (5.3.2017)

Ann Coulter On UC Berkeley Speech, Border Wall & More | The View

Ann Coulter: Berkeley hoped I would cancel

Ann Coulter on Berkeley event: My allies ran away, gave in

Adios America! Ann Coulter Says The Left Is Turning USA Into a Hellhole

Ben Shapiro interviews Ann Coulter; Adios America; 7/13/2015; C-Span

Ann Coulter DESTROYS EVERYONE Compilation

Ann Coulter DESTROYS Bill Maher in Immigration Debate

Ann Coulter on Illegal Immigration

NEW: Al Franken No Match For Ann Coulter In Heated Debate

Ann Coulter shuts up Raven Symone with One Line

Ann Coulter’s take on Syria, Trump’s foreign policy

Ann Coulter on illegal immigration

Ann Coulter debates Fox Idiot on: The Confederate flag & LEGAL Imigration

Ann Coulter Argues Eloquently Against Destroying America With Immigrants

Ann Coulter owns Whoopi Goldberg on Race and White Guilt

Ann Coulter on the Democratic Party and her muslim boyfriend

Couric vs. Coulter

Ann Coulter documentary (2004)

The Best Ann Coulter Insults at the Rob Lowe Roast

How Trump Betrayed Ann Coulter on Immigration

The political commentator may be more committed to the Republican nominee’s platform than he is.

Donald Trump has just betrayed Ann Coulter. Which is a dangerous thing to do.This week, Coulter released her new book, In Trump We Trust. As the title suggests, it’s a defense of Trump. But more than that, it’s a defense of Trumpism. Most Trump surrogates contort themselves to defend whatever The Donald says, no matter its ideological content. They’re like communist party functionaries. They get word from the ideologists on high, and regurgitate it as best they can.

Since then, they’ve been allies. But unlike many Trump defenders, Coulter makes clear that her primary allegiance is not to Trump the man. It’s to the nostalgic “Make America White Again” brand of conservatism that she began peddling even before he did. In In Trump We Trust, Coulter calls Trump a “tasteless, publicity-seeking, coarse billionaire” and argues that, “the one thing voters weren’t wild about was his personality.”

The secret of Trump’s success, she argues, has been ideological. He recognized that “Americans,” by which she mostly means Republicans, “are homesick.” They don’t just oppose immigration because they believe it depresses wages and strains government services. They’re homesick for a whiter America, an America that was once truly free because “it’s not in the Anglo-Saxon character either to take orders or to give them.” (Never mind about slavery.) Since 1965, however, when Lyndon Johnson signed legislation allowing more immigration from Latin America, Asia, and Africa, the United States has been, according to Coulter in In Trump We Trust, overrun by “illiterate peasants … who can be instructed to learn certain symbols and bloc-vote for the Democrats.” In response, Democrats, along with rich Republicans, keep the doors open to non-European immigration, and thus America has grown “browner” and “shorter.” (That’s Coulter’s description from Adios America). Corruption rises. So does terrorism and rape.Coulter’s ideological interpretation of Trump’s appeal is plausible. It explains, for instance, why support for Trump correlates more strongly to racial resentment than economic misfortune.

Trump may win votes by moderating his stance on immigration. But that’s not how Coulter sells books.

Coulter’s problem is that on the very week she’s unveiled her immigration-themed defense of Trumpism, Trump himself has begun jettisoning it. On Wednesday night, he admitted that it’s “very, very hard” to deport all the undocumented immigrants in the country and implied that he would be open to some people being allowed to stay legally without becoming citizens, provided they pay back taxes. Suddenly, Trump is flirting with an immigration policy that resembles that of every other Republican who ran for president. Which makes Coulter look like a dupe. On Thursday on his show, Rush Limbaugh had a hearty laugh at her expense.

So far, Coulter has responded in contradictory ways. She’s fired off tweets attacking Trump’s immigration shift. But she’s also downplayed it.

Maybe Coulter, like the other high-profile supporters Trump has burned, will accept her humiliation and resort to defending Trump no matter what he says. Her incentives, however, are different. Unlike most of the folks who appear on television supporting Trump, she has an independent brand. And it’s built on white nationalism. Trump may win votes by moderating his stance on immigration. But that’s not how Coulter sells books.

Coulter also needs an explanation for Trump’s likely defeat, an explanation that will preserve her ability to claim that America’s silent majority believes the things she does. By emphasizing Trump’s immigration flip-flop, Coulter could argue that this issue cost him the white votes he needed to win.

Trumpism—a brand of conservatism defined above all by white racial nostalgia—will survive November’s election. Less clear is whether Trump will remain its champion or become its fall guy. Like many people Trump has done business with, Coulter has learned that trusting Trump is not the wisest of investments.

https://www.theatlantic.com/politics/archive/2016/08/how-trump-betrayed-ann-coulter-on-immigration/497618/

Ann Coulter

From Wikipedia, the free encyclopedia
Ann Coulter
Ann Coulter smiling, with a blue wallpaper behind her.

Born Ann Hart Coulter
December 8, 1961 (age 55)
New York City, New York, U.S.
Nationality American
Alma mater Cornell University(BA)
University of Michigan(JD)
Occupation Author, columnist, political commentator
Political party Republican[1]
Website anncoulter.com
Signature
Ann Coulter Signature.png

Ann Hart Coulter (/ˈkltər/; born December 8, 1961) is an American conservativesocial and politicalcommentator, writer, syndicated columnist, and lawyer. She frequently appears on television, radio, and as a speaker at public and private events.

Born in New York City to a conservative family, Coulter was raised in New Canaan, Connecticut. She deepened her conservative interests while studying history at Cornell University, where she helped found The Cornell Review. She subsequently embarked on a career as a law clerk before rising to prominence in the 1990s as an outspoken critic of the Clinton administration. Her first book concerned the Bill Clinton impeachment, and sprang from her experience writing legal briefs for Paula Jones‘s attorneys, as well as columns she wrote about the cases.[2][3]

Coulter has described herself as a polemicist who likes to “stir up the pot,” and does not “pretend to be impartial or balanced, as broadcasters do,”[4] drawing criticism from the left, and sometimes from the right.[5] Coulter’s syndicated column for Universal Press Syndicate appears in newspapers, and is featured on major conservative websites. As of 2016, Coulter has 12 best-selling books, including most recently Adios, America! and In Trump We Trust.

Early life

Coulter as a senior in high school, 1980.

Ann Hart Coulter was born on December 8, 1961, in New York City, to John Vincent Coulter (1926–2008), an FBI agent of Irish–German heritage,[6] who was a native of Albany, New York; and Nell Husbands Coulter (née Martin; 1928–2009), a native of Paducah, Kentucky.[7][8] All eight of her paternal great-great-grandparents were immigrants.[6] Her family later moved to New Canaan, Connecticut, where Coulter and her two older brothers, James and John, were raised.[9] She was raised in a conservative household in Connecticut by Republican parents, with a father who loved Joseph McCarthy. Coulter says she has identified as a conservative since kindergarten. To prep for arguments, she read books like Barry Goldwater‘s Conscience of a Conservative.[10]

At age 14, Coulter visited her older brother in New York City where he attended law school. While he was in class, he had his little sister read books by Milton Friedman and William E. Simon. When he got home from class, he quizzed Coulter. As a reward, he and his friends took her out to bars on the Upper East Side. Reading Republican books made Coulter dream about working as a writer.[10] She graduated from New Canaan High School in 1980. Coulter’s age was disputed in 2002 while she was arguing that she was not yet 40, yet Washington Post columnist Lloyd Grove cited that she provided a birthdate of December 8, 1961, when registering to vote in New Canaan, Connecticut, prior to the 1980 Presidential election. Meanwhile, a driver’s license issued several years later allegedly listed her birthdate as December 8, 1963. Coulter will not confirm either date, citing privacy concerns.[11]

While attending Cornell University, Coulter helped found The Cornell Review,[12][13] and was a member of the Delta Gamma national sorority.[14] She graduated cum laude from Cornell in 1984 with a B.A. in history, and received her J.D. from the University of Michigan Law School in 1988, where she was an editor of the Michigan Law Review.[15] At Michigan, Coulter was president of the local chapter of the Federalist Society and was trained at the National Journalism Center.[16]

Career

After law school, Coulter served as a law clerk, in Kansas City, for Pasco Bowman II of the United States Court of Appeals for the Eighth Circuit.[17] After a short time working in New York City in private practice, where she specialized in corporate law, Coulter left to work for the United States Senate Judiciary Committee after the Republican Partytook control of Congress in 1994. She handled crime and immigration issues for Senator Spencer Abraham of Michigan and helped craft legislation designed to expedite the deportation of aliens convicted of felonies.[18] She later became a litigator with the Center for Individual Rights.[19]

In 2000, Coulter considered running for Congress in Connecticut on the Libertarian Party ticket[20] to serve as a spoiler in order to throw the seat to the Democratic candidate and see that Republican Congressman Christopher Shays failed to gain re-election, as a punishment for Shays’ vote against Clinton’s impeachment. The leadership of the Libertarian Party of Connecticut, after meeting with Coulter, declined to endorse her. As a result, her self-described “total sham, media-intensive, third-party Jesse Ventura campaign” did not take place.[21][22] Shays subsequently won the election, and held the seat until 2008.[23]

Coulter’s career is highlighted by the publication of twelve books, as well as the weekly syndicated newspaper column that she publishes. She is particularly known for her polemical style,[24] and describes herself as someone who likes to “stir up the pot. I don’t pretend to be impartial or balanced, as broadcasters do”.[25] She has been compared to Clare Boothe Luce, one of her idols, for her satirical style.[26] She also makes numerous public appearances, speaking on television and radio talk shows, as well as on collegecampuses, receiving both praise and protest. Coulter typically spends 6–12 weeks of the year on speaking engagement tours, and more when she has a book coming out.[27] In 2010, she made an estimated $500,000 on the speaking circuit, giving speeches on topics of modern conservatism, gay marriage, and what she describes as the hypocrisy of modern American liberalism.[28] During one appearance at the University of Arizona, a pie was thrown at her.[29][30][31] Coulter has, on occasion, in defense of her ideas, responded with inflammatory remarks toward hecklers and protestors who attend her speeches.[32][33]

Books

Coulter is the author of twelve books, many of which have appeared on The New York Times Best Seller list, with a combined 3 million copies sold as of May 2009.[34]

Coulter’s first book, High Crimes and Misdemeanors: The Case Against Bill Clinton, was published by Regnery Publishing in 1998 and made the New York Times Bestseller list.[2] It details Coulter’s case for the impeachment of President Bill Clinton.

Her second book, Slander: Liberal Lies About the American Right, published by Crown Forum in 2002, reached the number one spot on The New York Times non-fiction best seller list.[35] In Slander, Coulter argues that President George W. Bush was given unfair negative media coverage. The factual accuracy of Slander was called into question by then-comedian and author, and now Democratic U.S. Senator from Minnesota, Al Franken; he also accused her of citing passages out of context.[36] Others investigated these charges, and also raised questions about the book’s accuracy and presentation of facts.[37][38][39] Coulter responded to criticisms in a column called “Answering My Critics”.[40]

In her third book, Treason: Liberal Treachery from the Cold War to the War on Terrorism, also published by Crown Forum, she reexamines the 60-year history of the Cold War—including the career of Senator Joseph McCarthy, the Whittaker ChambersAlger Hiss affair, and Ronald Reagan’s challenge to Mikhail Gorbachev to “tear down this wall“—and argues that liberals were wrong in their Cold War political analyses and policy decisions, and that McCarthy was correct about Soviet agents working for the U.S. government.[41] She also argues that the correct identification of Annie Lee Moss, among others, as communists was misreported by the liberal media.[42]Treason was published in 2003, and spent 13 weeks on the Best Seller list.[43]

Crown Forum published a collection of Coulter’s columns in 2004 as her fourth book, How to Talk to a Liberal (If You Must): The World According to Ann Coulter.[44]

Coulter’s fifth book, published by Crown Forum in 2006, is Godless: The Church of Liberalism.[45] In it, she argues, first, that American liberalism rejects the idea of God and reviles people of faith, and second, that it bears all the attributes of a religion itself.[46]Godless debuted at number one on the New York Times Best Seller list.[47] Some passages in the book match portions of others’ writings published at an earlier time (including newspaper articles and a Planned Parenthood document), leading John Barrie of iThenticate to assert that Coulter had engaged in “textbook plagiarism”.[48]

Coulter’s If Democrats Had Any Brains, They’d Be Republicans (Crown Forum), published in October 2007, and Guilty: Liberal “Victims” and Their Assault on America (Crown Forum), published on January 6, 2009, both also achieved best-seller status.[49][50][51]

On June 7, 2011, Crown Forum published her eighth book Demonic: How the Liberal Mob Is Endangering America. Coulter said she based this book heavily on the work of Frenchsocial psychologistGustave Le Bon, who wrote on mass psychology, and in it she argues that liberals have mob-like characteristics.[52]

Her ninth book, published September 25, 2012, is Mugged: Racial Demagoguery from the Seventies to Obama. It argues that liberals, and Democrats in particular, have taken undue credit for racial civil rights in America.[53]

Coulter’s tenth book, Never Trust a Liberal Over 3 – Especially a Republican, was released October 14, 2013. It is her second collection of columns and her first published by Regnery since her first book, High Crimes and Misdemeanors.[54]

Coulter published her eleventh book, Adios, America: The Left’s Plan to Turn Our Country Into a Third World Hellhole on June 1, 2015. The book addresses illegal immigration, amnesty programs, and border security in the United States. [55]

Columns

In the late 1990s, Coulter’s weekly (biweekly from 1999–2000) syndicated column for Universal Press Syndicate began appearing. Her column is featured on six conservative websites: Human Events Online, WorldNetDaily, Townhall.com, VDARE, FrontPageMag, Jewish World Review and her own web site. Her syndicator says, “Ann’s client newspapers stick with her because she has a loyal fan base of conservative readers who look forward to reading her columns in their local newspapers”.[56]

In 1999 Coulter worked as a regular columnist for George magazine.[21][57] Coulter also wrote exclusive weekly columns between 1998 and 2003 and with occasional columns thereafter for the conservative magazine Human Events. In her columns for the magazine, she discusses judicial rulings, Constitutional issues, and legal matters affecting Congress and the executive branch.[58]

In 2001 as a contributing editor and syndicated columnist for National Review Online (NRO), Coulter was asked by editors to make changes to a piece written after the September 11 attacks. On the national television show Politically Incorrect, Coulter accused NRO of censorship and said that she was paid $5 per article. NRO dropped her column and terminated her editorship. Jonah Goldberg, editor-at-large of NRO, said, “We did not ‘fire’ Ann for what she wrote… we ended the relationship because she behaved with a total lack of professionalism, friendship, and loyalty [concerning the editing disagreement].”[59]

Coulter contracted with USA Today to cover the 2004 Democratic National Convention. She wrote one article that began, “Here at the Spawn of Satan convention in Boston…” and referred to some unspecified female attendees as “corn-fed, no make-up, natural fiber, no-bra needing, sandal-wearing, hirsute, somewhat fragrant hippie chick pie wagons”. The newspaper declined to print the article citing an editing dispute over “basic weaknesses in clarity and readability that we found unacceptable”. An explanatory article by the paper went on to say “Coulter told the online edition of Editor & Publisher magazine that ‘USA Today doesn’t like my “tone”, humor, sarcasm, etc., which raises the intriguing question of why they hired me to write for them.'” USA Today replaced Coulter with Jonah Goldberg, and Coulter published it instead on her website.[60][61][62]

In August 2005, the Arizona Daily Star dropped Coulter’s syndicated column, citing reader complaints that “Many readers find her shrill, bombastic, and mean-spirited. And those are the words used by readers who identified themselves as conservatives”.[63]

In July 2006, some newspapers replaced Coulter’s column with those of other conservative columnists following the publication of her fourth book, Godless: The Church of Liberalism.[64] After The Augusta Chronicle dropped her column, newspaper editor Michael Ryan explained that “it came to the point where she was the issue rather than what she was writing about”.[65] Ryan also stated that “pulling Ann Coulter’s column hurts; she’s one of the clearest thinkers around”.

She has criticized former president George W. Bush‘s immigration proposals, saying they led to “amnesty”. In a 2007 column, she claimed that the current immigration system was set up to deliberately reduce the percentage of whites in the population. In it, she said:[66]

In 1960, whites were 90 percent of the country. The Census Bureau recently estimated that whites already account for less than two-thirds of the population and will be a minority by 2050. Other estimates put that day much sooner.

One may assume the new majority will not be such compassionate overlords as the white majority has been. If this sort of drastic change were legally imposed on any group other than white Americans, it would be called genocide. Yet whites are called racists merely for mentioning the fact that current immigration law is intentionally designed to reduce their percentage in the population.

Overall, Coulter’s columns are highly critical of liberals and Democrats. In 2006, she wrote:[67]

This year’s Democratic plan for the future is another inane sound bite designed to trick American voters into trusting them with national security.

To wit, they’re claiming there is no connection between the war on terror and the war in Iraq, and while they are all for the war against terror—absolutely in favor of that war—they are adamantly opposed to the Iraq war. You know, the war where the U.S. military is killing thousands upon thousands of terrorists (described in the media as “Iraqi civilians”, even if they are from Jordan, like the now-dead leader of al-Qaida in Iraq, Abu Musab al-Zarqawi). That war.

Television and radio

Ann Coulter at the 2012 Time 100

Coulter made her first national media appearance in 1996 after she was hired by the then-fledgling network MSNBC as a legal correspondent. She later appeared on CNN and Fox News.[68] Coulter went on to make frequent guest appearances on many television and radio talk shows, including American Morning, The Fifth Estate, Glenn Beck Program, The Mike Gallagher Show, The O’Reilly Factor, Real Time with Bill Maher, Red Eye w/ Greg Gutfeld, The Rush Limbaugh Show, The Sean Hannity Show, The Today Show, Lou Dobbs Tonight, Fox and Friends, The Laura Ingraham Show, The View, The Michael Medved Show, and HARDtalk.

In an interview with Bob McKeown on the edition of January 26, 2005, of The Fifth Estate, Coulter came under criticism for her statement, “Canada used to be… one of our most… most loyal friends, and vice versa. I mean, Canada sent troops to Vietnam. Was Vietnam less containable and more of a threat than Saddam Hussein?” McKeown contradicted her with, “No, actually Canada did not send troops to Vietnam.”[69] On the edition of February 18, 2005 of Washington Journal, Coulter justified her statement by referring to the thousands of Canadians who served in the American armed forces during the Vietnam era, either because they volunteered or because they were living in the United States during the war years and got drafted. She said, “The Canadian Government didn’t send troops … but … they came and fought with the Americans. So I was wrong. It turns out there were 10,000 Americans who happened to be born in Canada.” (There were actually between 5,000 and 20,000 Canadians who fought in Vietnam itself, including approximately 80 who were killed.)[70] John Cloud of Time, writing about the incident a few months later, said, “Canada [sent] noncombat troops to Indochina in the 1950s and again to Vietnam in 1972″.[68]

Films

Coulter appeared in three films released during 2004. The first was Feeding the Beast, a made-for-television documentary on the “24-Hour News Revolution”.[71] The other two films were FahrenHYPE 9/11, a direct-to-video documentary rebuttal of Michael Moore‘s Fahrenheit 911, and Is It True What They Say About Ann?, a documentary on Coulter containing clips of interviews and speeches.[72] In 2015, Coulter had a cameo as the Vice President in the made-for-TV movie Sharknado 3: Oh Hell No!.

Personal life

Coulter has been engaged several times, but she has never married and has no children.[32] She has dated Spin founder and publisher Bob Guccione, Jr.,[21] and conservative writer Dinesh D’Souza.[73] In October 2007, she began dating Andrew Stein, the former president of the New York City Council, a liberal Democrat. When asked about the relationship, Stein told the paper, “She’s attacked a lot of my friends, but what can I say, opposites attract!”[74] On January 7, 2008, however, Stein told the New York Post that the relationship was over, citing irreconcilable differences.[75]Kellyanne Conway, who refers to Coulter as a friend, told New York Magazine in 2017 that Coulter “started dating her security guard probably ten years ago because she couldn’t see anybody else.”[76]

Coulter owns a house, bought in 2005, in Palm Beach, Florida, a condominium in Manhattan, and an apartment in Los Angeles. She votes in Palm Beach and is not registered to do so in New York or California.[77][78]She is a fan of several jam bands, such as the Grateful Dead, the Dave Matthews Band, and Phish.[79][80] Some of her favorite books are the Bible, Mere Christianity, Wuthering Heights, Anna Karenina, true crime stories about serial killers, and anything by Dave Barry.[81]

Religious views

Coulter is a Christian and belongs to the Presbyterian denomination.[82][83] Her father was Catholic and her mother was a Protestant.[84] At one public lecture she said, “I don’t care about anything else; Christ died for my sins, and nothing else matters.”[85] She summarized her view of Christianity in a 2004 column, saying, “Jesus’ distinctive message was: People are sinful and need to be redeemed, and this is your lucky day, because I’m here to redeem you even though you don’t deserve it, and I have to get the crap kicked out of me to do it.” She then mocked “the message of Jesus… according to liberals”, summarizing it as “something along the lines of ‘be nice to people,'” which, in turn, she said “is, in fact, one of the incidental tenets of Christianity.”[86]

Confronting some critics’ views that her content and style of writing is un-Christian-like,[87] Coulter stated that “I’m a Christian first and a mean-spirited, bigoted conservative second, and don’t you ever forget it.”[88]She also said, “Christianity fuels everything I write. Being a Christian means that I am called upon to do battle against lies, injustice, cruelty, hypocrisy—you know, all the virtues in the church of liberalism”.[89] In Godless: The Church of Liberalism, Coulter characterized the theory of evolution as bogus science, and contrasted her beliefs to what she called the left’s “obsession with Darwinism and the Darwinian view of the world, which replaces sanctification of life with sanctification of sex and death”.[90] Coulter subscribes to intelligent design, a theory that rejects evolution.[91]

Coulter was accused of anti-semitism in an October 8, 2007, interview with Donny Deutsch on The Big Idea. During the interview, Coulter stated that the United States is a Christian nation, and said that she wants “Jews to be perfected, as they say” (referring to them being converted to Christianity).[92] Deutsch, a practicing Jew, implied that this was an anti-semitic remark, but Coulter said she didn’t consider it to be a hateful comment.[93][94] In response to Coulter’s comments on the show, the Anti-Defamation League, American Jewish Committee and Bradley Burston condemned those comments,[95] and the National Jewish Democratic Council asked media outlets to stop inviting Coulter as a guest commentator.[96] Talk show host Dennis Prager, while disagreeing with her comments, said that they were not “anti-semitic”, noting, “There is nothing in what Ann Coulter said to a Jewish interviewer on CNBC that indicates she hates Jews or wishes them ill, or does damage to the Jewish people or the Jewish state. And if none of those criteria is present, how can someone be labeled anti-Semitic?”[97] Conservative activist David Horowitz also defended Coulter against the allegation.[98]

Coulter again sparked outrage in September 2015, when she tweeted in response to multiple Republican candidates’ references to Israel during a Presidential debate, “How many f—ing Jews do these people think there are in the United States?”[99] The Anti-Defamation League referred to the tweets as “ugly, spiteful and anti-Semitic.”[100] In response to accusations of anti-Semitism, she tweeted “I like the Jews, I like fetuses, I like Reagan. Didn’t need to hear applause lines about them all night.”[99]

Political views

Coulter is a conservative columnist. She is a registered Republican and member of the advisory council of GOProud since August 9, 2011.[101]

Coulter supported George W. Bush’s presidency. She endorsed Mitt Romney in the 2008 Republican presidential primary[102] and the 2012 Republican presidential primary and presidential run.[103] In the 2016 Republican Party presidential primaries, she endorsed Donald Trump.[104] However, in the wake of the 2017 Shayrat missile strike, Coulter expressed her dismay by tweeting, “Trump campaigned on not getting involved in Mideast.”[105]

Abortion

Coulter believes Roe v. Wade should be overturned and left to the states. She is anti-abortion, but believes there should be an exception if a woman is raped.[106]

Illegal immigration

She strongly opposed amnesty for illegal immigrants, and at the 2013 CPAC said she has now become “a single-issue voter against amnesty”.[107]

Afghanistan War

Although she originally supported the war in Afghanistan during the Bush administration, beginning in 2009 she expressed concern that the war might have turned into another Vietnam, and opposed sending more troops to Afghanistan.[108]

LGBT rights

Coulter opposes same-sex marriage and once supported a federal U.S. constitutional amendment defining marriage as a union of one man and one woman.[109] She insists that her opposition to same-sex marriage “wasn’t an anti-gay thing” and that “It’s genuinely a pro-marriage position to oppose gay marriage”.[110] In an April 1, 2015, column, Coulter declared that liberals had “won the war on gay marriage (by judicial fiat)”.[111]

She also opposes civil unions[112] and privatizing marriage.[113] When addressed with the issue of rights granted by marriage, she said, “Gays already can visit loved ones in hospitals. They can also visit neighbors, random acquaintances, and total strangers in hospitals—just like everyone else. Gays can also pass on property to whomever they would like”.[114] She disagreed with the U.S. Supreme Court‘s 2003 Lawrence v. Texas ruling, stating there was no right to sodomy written in the Constitution and that under federalism each individual state and territory would have to repeal their sodomy laws. She stated she opposed banning same-sex sexual intercourse.[115] She also stated that same-sex sexual intercourse was already protected under the Fourth Amendment, which prevents police from going into your home without a search warrant or court order.[116]

In regard to Romer v. Evans described anti-discrimination laws covering LGBT as “affirmative action benefits.”[117] She also disagreed with repealing Don’t Ask Don’t Tell, stating that it is not an “anti-gay position; it is a pro-military position” because “sexual bonds are disruptive to the military bond”.[118] On April 1, 2015, in a column, Ann Coulter expressed support for Indiana‘s Religious Freedom Restoration Act and said it was an “apocryphal” assertion to claim the Religious Freedom Restoration Act would be used to discriminate against LGBTs.[111] She has also endorsed the Public Facilities Privacy & Security Act and opposes transgender individuals to use bathroom usage corresponding to their gender identity.[119]

LGBT conservatism

Since the 1990s, Coulter has had many acquaintances in the LGBT community. She considers herself “the Judy Garland of the Right.” In the last few years, Coulter has attracted many LGBT fans, namely gay men and drag queens.[10][120][121]

At the 2007 CPAC, Coulter said, “I do want to point out one thing that has been driving me crazy with the media—how they keep describing Mitt Romney‘s position as being pro-gays, and that’s going to upset the right wingers,” and “Well, you know, screw you! I’m not anti-gay. We’re against gay marriage. I don’t want gays to be discriminated against.” She added, “I don’t know why all gays aren’t Republican. I think we have the pro-gay positions, which is anti-crime and for tax cuts. Gays make a lot of money and they’re victims of crime. No, they are! They should be with us.”[122]

In Coulter’s 2007 book If Democrats Had Any Brains, They’d Be Republicans, in the chapter “Gays: No Gay Left Behind!”, she argued that Republican policies were more pro-gay than Democratic policies. Coulter attended the 2010 HomoCon of GOProud, where she commented that same-sex marriage “is not a civil right.”[123] On February 9, 2011, in a column, Coulter described the national Log Cabin Republicans as “ridiculous” and “not conservative at all.” She did however describe the Texas branch of Log Cabin Republicans, for whom she’s been signing books for years, as “comprised of real conservatives.”[124]

At the 2011 CPAC, during her question-and-answer segment, Coulter was asked about GOProud and the controversy over their exclusion from the 2011 CPAC. She boasted how she talked GOProud into dropping its support for same-sex marriage in the party’s platform, saying, “The left is trying to co-opt gays, and I don’t think we should let them. I think they should be on our side,” and “Gays are natural conservatives.”[125] Later that year, Coulter joined advisory board for GOProud. On LogosThe A-List: Dallas she told gay Republican Taylor Garrett that “The gays have got to be pro-life,” and “As soon as they find the gay gene, guess who the liberal yuppies are gonna start aborting?”[126] Coulter has referred to Democractic politicians Bill Clinton, Al Gore, and John Edwards as “fag(got).”[127]

War on Drugs

Coulter strongly supports continuing the War on Drugs.[128] However, she has said that, if there were not a welfare state, she “wouldn’t care” if drugs were legal.[129]

Coulter spoke about drugs as a guest on Piers Morgan Live, when she said that marijuana users “can’t perform daily functions.”[130]

Political activities and commentary

Ann Coulter has described herself as a “polemicist” who likes to “stir up the pot” and doesn’t “pretend to be impartial or balanced, as broadcasters do.”[4] While her political activities in the past have included advising a plaintiff suing President Bill Clinton as well as considering a run for Congress, she mostly serves as a political pundit, sometimes creating controversy ranging from rowdy uprisings at some of the colleges where she speaks to protracted discussions in the media. Time magazine’s John Cloud once observed that Coulter “likes to shock reporters by wondering aloud whether America might be better off if women lost the right to vote.”[68] This was in reference to her statement that “it would be a much better country if women did not vote. That is simply a fact. In fact, in every presidential election since 1950—except Goldwater in ’64—the Republican would have won, if only the men had voted.”[131] Similarly, in an October 2007 interview with the New York Observer, Coulter said:[132]

If we took away women’s right to vote, we’d never have to worry about another Democrat president. It’s kind of a pipe dream, it’s a personal fantasy of mine, but I don’t think it’s going to happen. And it is a good way of making the point that women are voting so stupidly, at least single women.

It also makes the point, it is kind of embarrassing, the Democratic Party ought to be hanging its head in shame, that it has so much difficulty getting men to vote for it. I mean, you do see it’s the party of women and ‘We’ll pay for health care and tuition and day care—and here, what else can we give you, soccer moms?’

In addition to questioning whether women’s right to vote is a good thing, Coulter has also appeared on Fox News and advocated for a poll tax and a literacy test for voters (this was in 1999, and she reiterated her support of a literacy test in 2015).[133] This is not a viewpoint widely shared by members of the Republican Party.

Paula Jones – Bill Clinton case

Coulter first became a public figure shortly before becoming an unpaid legal adviser for the attorneys representing Paula Jones in her sexual harassment suit against President Bill Clinton. Coulter’s friend George Conway had been asked to assist Jones’ attorneys, and shortly afterward Coulter, who wrote a column about the Paula Jones case for Human Events, was also asked to help, and she began writing legal briefs for the case.

Coulter later stated that she would come to mistrust the motives of Jones’ head lawyer, Joseph Cammaratta, who by August or September 1997 was advising Jones that her case was weak and to settle, if a favorable settlement could be negotiated.[18][134] From the outset, Jones had sought an apology from Clinton at least as eagerly as she sought a settlement.[135] However, in a later interview Coulter recounted that she herself had believed that the case was strong, that Jones was telling the truth, that Clinton should be held publicly accountable for his misconduct, and that a settlement would give the impression that Jones was merely interested in extorting money from the President.[18]

David Daley, who wrote the interview piece for The Hartford Courant recounted what followed:

Coulter played one particularly key role in keeping the Jones case alive. In Newsweek reporter Michael Isikoff’s new book Uncovering Clinton: A Reporter’s Story, Coulter is unmasked as the one who leaked word of Clinton’s “distinguishing characteristic”—his reportedly unusually large penis that Jones said she could recognize and describe—to the news media. Her hope was to foster mistrust between the Clinton and Jones camps and forestall a settlement … I thought if I leaked the distinguishing characteristic it would show bad faith in negotiations. [Clinton lawyer] Bob Bennett would think Jones had leaked it. Cammaratta would know he himself hadn’t leaked it and would get mad at Bennett. It might stall negotiations enough for me to get through to [Jones adviser] Susan Carpenter-McMillan to tell her that I thought settling would hurt Paula, that this would ruin her reputation, and that there were other lawyers working for her. Then 36 hours later, she returned my phone call. I just wanted to help Paula. I really think Paula Jones is a hero. I don’t think I could have taken the abuse she came under. She’s this poor little country girl and she has the most powerful man she’s ever met hitting on her sexually, then denying it and smearing her as president. And she never did anything tacky. It’s not like she was going on TV or trying to make a buck out of it.”[18]

In his book, Isikoff also reported Coulter as saying: “We were terrified that Jones would settle. It was contrary to our purpose of bringing down the President.”[134] After the book came out, Coulter clarified her stated motives, saying:

The only motive for leaking the distinguishing characteristic item that [Isikoff] gives in his book is my self-parodying remark that “it would humiliate the president” and that a settlement would foil our efforts to bring down the president … I suppose you could take the position, as [Isikoff] does, that we were working for Jones because we thought Clinton was a lecherous, lying scumbag, but this argument gets a bit circular. You could also say that Juanita Broaddrick’s secret motive in accusing Clinton of rape is that she hates Clinton because he raped her. The whole reason we didn’t much like Clinton was that we could see he was the sort of man who would haul a low-level government employee like Paula to his hotel room, drop his pants, and say, “Kiss it.” You know: Everything his defense said about him at the impeachment trial. It’s not like we secretly disliked Clinton because of his administration’s position on California’s citrus cartels or something, and then set to work on some crazy scheme to destroy him using a pathological intern as our Mata Hari.[136]

The case went to court after Jones broke with Coulter and her original legal team, and it was dismissed via summary judgment. The judge ruled that even if her allegations proved true, Jones did not show that she had suffered any damages, stating, “… plaintiff has not demonstrated any tangible job detriment or adverse employment action for her refusal to submit to the governor’s alleged advances. The president is therefore entitled to summary judgment on plaintiff’s claim of quid pro quo sexual harassment.” The ruling was appealed by Jones’ lawyers. During the pendency of the appeal, Clinton settled with Jones for $850,000 ($151,000 after legal fees) in November 1998, in exchange for Jones’ dismissal of the appeal. By then, the Jones lawsuit had given way to the Monica Lewinsky sex scandal.

In October 2000, Jones revealed that she would pose for nude pictures in an adult magazine, saying she wanted to use the money to pay taxes and support her grade-school-aged children, in particular saying, “I’m wanting to put them through college and maybe set up a college fund.”[137] Coulter publicly denounced Jones, calling her “the trailer-park trash they said she was” (Coulter had earlier chastened Clinton supporters for calling Jones this name),[138] after Clinton’s former campaign strategist James Carville had made the widely reported remark, “Drag a $100 bill through a trailer park, and you’ll never know what you’ll find,” and called Jones a “fraud, at least to the extent of pretending to be an honorable and moral person.”[137]

Coulter wrote:

Paula surely was given more than a million dollars in free legal assistance from an array of legal talent she will never again encounter in her life, much less have busily working on her behalf. Some of those lawyers never asked for or received a dime for hundreds of thousands of dollars in legal work performed at great professional, financial and personal cost to themselves. Others got partial payments out of the settlement. But at least they got her reputation back. And now she’s thrown it away.[139]

Jones claimed not to have been offered any help with a book deal of her own or any other additional financial help after the lawsuit.[137]

2008 presidential election

As the 2008 presidential campaign was getting under way, Coulter drew criticism for statements she made at the 2007 Conservative Political Action Conference about presidential candidate John Edwards:[140][141]

I was going to have a few comments on the other Democratic presidential candidate, John Edwards, but it turns out that you have to go into rehab if you use the word ‘faggot,’ so I’m… so, kind of at an impasse, can’t really talk about Edwards, so I think I’ll just conclude here and take your questions.

The comment was in reference to Grey’s Anatomy star Isaiah Washington‘s use of the epithet and his subsequent mandatory “psychological assessment” imposed by ABC executives.[142] It was widely interpreted as meaning that Coulter had called Edwards a “faggot,” but Coulter argued that she did not actually do so, while simultaneously indicating she would not have been wrong to say it.[143] Edwards responded on his web site by characterizing Coulter’s words as “un-American and indefensible,” and asking readers to help him “raise $100,000 in ‘Coulter Cash’ this week to keep this campaign charging ahead and fight back against the politics of bigotry.”[144] He also called her a “she-devil,” adding, “I should not have name-called. But the truth is—forget the names—people like Ann Coulter, they engage in hateful language.”[145] Coulter’s words also drew condemnation from many prominent Republicans and Democrats, as well as groups such as the Gay and Lesbian Alliance Against Defamation (GLAAD).[144][146][147] Three advertisers (Verizon, Sallie Mae and Netbank) also pulled their advertisements from Coulter’s web site,[148] and several newspapers dropped her column.[149][150] Coulter responded in an e-mail to the New York Times, “C’mon, it was a joke. I would never insult gays by suggesting that they are like John Edwards. That would be mean.”[147] On March 5, 2007, she appeared on Hannity and Colmes and said, “Faggot isn’t offensive to gays; it has nothing to do with gays. It’s a schoolyard taunt meaning ‘wuss.'”[151] Gay rights advocates were not convinced. “Ann Coulter’s use of this anti-gay slur is vile and unacceptable,” said Neil G. Giuliano, president of the Gay & Lesbian Alliance Against Defamation, “and the applause from her audience is an important reminder that Coulter’s ugly brand of bigotry is at the root of the discriminatory policies being promoted at this gathering.”[141] A spokesman for Sen. John McCain, a Republican presidential candidate, called Coulter’s comments “wildly inappropriate.”[141]

As the campaign waged on, she continued to insert her commentary regarding the candidates, both Democrats and Republicans. In a June 2007 interview, Coulter named Duncan Hunter as her choice for the 2008 Republican Presidential nomination, highlighting his views on immigration and specifically his anti-abortion credentials, saying “[t]his is a winning issue for us, protecting little babies.”[152] On January 16, 2008, Coulter began endorsing Governor Mitt Romney as her choice for the 2008 Republican nomination, saying he is “manifestly the best candidate” (contrasting Romney with Republican candidates John McCain, Mike Huckabee, and Rudy Giuliani).[153] By contrast, Coulter was critical of eventual Republican nominee John McCain. On the January 31, 2008, broadcast of Hannity and Colmes, Coulter claimed that if McCain won the Republican nomination for president, she would support and campaign for Hillary Clinton, stating, “[Clinton] is more conservative than McCain.”[154]

Regarding then-presidential-candidate Barack Obama in an April 2, 2008, column, she characterized his book Dreams from My Father as a “dimestore Mein Kampf.” Coulter writes, “He says the reason black people keep to themselves is that it’s ‘easier than spending all your time mad or trying to guess whatever it was that white folks were thinking about you.’ Here’s a little inside scoop about white people: We’re not thinking about you. Especially WASPs. We think everybody is inferior, and we are perfectly charming about it.”[155]

2010 Canadian university tour

Ann Coulter at CPAC in February 2012

In March 2010, Coulter announced that she would be embarking on a speaking tour of three Canadian universities, The University of Western Ontario, the University of Ottawa and the University of Calgary. The tour was organized by the International Free Press Society.[156]

On the eve of Coulter’s first speech at the University of Western Ontario, an e-mail to Coulter from François Houle, provost of the University of Ottawa, was leaked to the media. The e-mail warned that “promoting hatred against any identifiable group would not only be considered inappropriate, but could in fact lead to criminal charges.” Coulter released a public statement alleging that by sending her the e-mail, Houle was promoting hatred against conservatives.[157] During her speech at the University of Western Ontario, she told a Muslim student to “take a camel,” in response to the student’s question about previous comments by Coulter that Muslims should not be allowed on airplanes.[158]

On March 22, the University of Ottawa made international news when liberal protesters conspired to prevent Coulter from speaking. The event was canceled in spite of a massive security presence; Alain Boucher of the Ottawa Police Service said there were ten officers visible at the scene, “plus other resources” nearby.[159] Boucher alleged that Coulter’s security team decided to call off the event, saying, “We gave her options,” including, he said, to “find a bigger venue.” But “they opted to cancel … It’s not up to the Ottawa police to make that decision.”[160] Boucher claimed there were no arrests.[161] CTV News reported, “It was a disaster in terms of just organization, which is probably one of the reasons why it was cancelled,” citing the small number of students tasked with confirming who had signed up to attend Coulter’s talk.[162]

Event organizer and conservative activist Ezra Levant blamed the protest on the letter sent to Coulter by Houle.[163] After the cancellation, Coulter called the University of Ottawa “bush league,” stating:[164]

I go to the best schools, Harvard, the Ivy League, and those kids are too intellectually proud to threaten speakers … I would like to know when this sort of violence, this sort of protest, has been inflicted upon a Muslim—who appear to be, from what I’ve read of the human rights complaints, the only protected group in Canada. I think I’ll give my speech tomorrow night in a burka. That will protect me.

Comments on Islam, Arabs, and terrorism

On September 14, 2001, three days after the September 11 attacks (in which her friend Barbara Olson had been killed), Coulter wrote in her column:

Airports scrupulously apply the same laughably ineffective airport harassment to Suzy Chapstick as to Muslim hijackers. It is preposterous to assume every passenger is a potential crazed homicidal maniac. We know who the homicidal maniacs are. They are the ones cheering and dancing right now. We should invade their countries, kill their leaders and convert them to Christianity. We weren’t punctilious about locating and punishing only Hitler and his top officers. We carpet-bombed German cities; we killed civilians. That’s war. And this is war.[165]

This comment resulted in Coulter’s being fired as a columnist by the National Review, which she subsequently referred to as “squeamish girly-boys.”[166] Responding to this comment, Ibrahim Hooper of the Council on American-Islamic Relations remarked in The Chicago Sun Times that before September 11, Coulter “would have faced swift repudiation from her colleagues,” but “now it’s accepted as legitimate commentary.”[167]

David Horowitz, however, saw Coulter’s words as irony:

I began running Coulter columns on Frontpagemag.com shortly after she came up with her most infamous line, which urged America to put jihadists to the sword and convert them to Christianity. Liberals were horrified; I was not. I thought to myself, this is a perfect send-up of what our Islamo-fascist enemies believe—that as infidels we should be put to the sword and converted to Islam. I regarded Coulter’s phillipic (sic) as a Swiftian commentary on liberal illusions of multi-cultural outreach to people who want to rip out our hearts.[168]

One day after the attacks (when death toll estimates were higher than later), Coulter asserted that only Muslims could have been behind the attacks:

Not all Muslims may be terrorists, but all terrorists are Muslims—at least all terrorists capable of assembling a murderous plot against America that leaves 7,000 people dead in under two hours.[169]

Coulter has been highly critical of the U.S. Department of Transportation and especially its then-secretary Norman Mineta. Her many criticisms include their refusal to use racial profiling as a component of airport screening.[170] After a group of Muslims was expelled from a US Airways flight when other passengers expressed concern, sparking a call for Muslims to boycott the airline because of the ejection from a flight of six imams, Coulter wrote:

If only we could get Muslims to boycott all airlines, we could dispense with airport security altogether.[171]

Coulter also cited the 2002 Senate testimony of FBI whistleblower Coleen Rowley, who was acclaimed for condemning her superiors for refusing to authorize a search warrant for 9-11 conspirator Zacarias Moussaoui when he refused to consent to a search of his computer. They knew that he was a Muslim in flight school who had overstayed his visa, and the French Intelligence Service had confirmed his affiliations with radical fundamentalist Islamic groups. Coulter said she agreed that probable cause existed in the case, but that refusing consent, being in flight school and overstaying a visa should not constitute grounds for a search. Citing a poll which found that 98 percent of Muslims between the ages of 20 and 45 said they would not fight for Britain in the war in Afghanistan, and that 48 percent said they would fight for Osama bin Laden she asserted “any Muslim who has attended a mosque in Europe—certainly in England, where Moussaoui lived—has had ‘affiliations with radical fundamentalist Islamic groups,'” so that she parsed Rowley’s position as meaning that “‘probable cause’ existed to search Moussaoui’s computer because he was a Muslim who had lived in England.” Coulter says the poll was “by the “Daily Telegraph“, actually it was by Sunrise, an “Asian” (i.e., Indian subcontinent-oriented) radio station, canvassing the opinions of 500 Muslims in Greater London (not Britain as a whole), mainly of Pakistani origin and aged between 20 and 45. Because “FBI headquarters … refused to engage in racial profiling,” they failed to uncover the 9-11 plot, Coulter asserted. “The FBI allowed thousands of Americans to be slaughtered on the altar of political correctness. What more do liberals want?”[172][173]

Coulter wrote in another column that she had reviewed the civil rights lawsuits against certain airlines to determine which of them had subjected Arabs to the most “egregious discrimination” so that she could fly only that airline. She also said that the airline should be bragging instead of denying any of the charges of discrimination brought against them.[174] In an interview with The Guardian she said, “I think airlines ought to start advertising: ‘We have the most civil rights lawsuits brought against us by Arabs.'” When the interviewer replied by asking what Muslims would do for travel, she responded, “They could use flying carpets.”[131]

One comment that drew criticism from the blogosphere, as well as fellow conservatives,[175] was made during a speech at the Conservative Political Action Conference in February 2006, where she said, referring to the prospect of a nuclear-equipped Iran, “What if they start having one of these bipolar episodes with nuclear weapons? I think our motto should be, post-9-11: Raghead talks tough, raghead faces consequences.”[176] Coulter had previously written a nearly identical passage in her syndicated column: “… I believe our motto should be, after 9/11: Jihad monkey talks tough; jihad monkey takes the consequences. Sorry, I realize that’s offensive. How about ‘camel jockey‘? What? Now what’d I say? Boy, you tent merchants sure are touchy. Grow up, would you?”[177]

In October 2007, Coulter made further controversial remarks regarding Arabs—in this case Iraqis—when she stated in an interview with The New York Observer:

We’ve killed about 20,000 of them, of terrorists, of militants, of Al Qaeda members, and they’ve gotten a little over 3,000 of ours. That is where the war is being fought, in Iraq. That is where we are fighting Al Qaeda. Sorry we have to use your country, Iraqis, but you let Saddam come to power, and we are going to instill democracy in your country.[178]

In a May 2007 article looking back at the life of recently deceased evangelical Reverend Jerry Falwell, Coulter commented on his (later retracted) statement after the 9/11 attacks that “the pagans, and the abortionists, and the feminists, and the gays and the lesbians who are actively trying to make that an alternative lifestyle, the ACLU, People For the American Way, all of them who have tried to secularize America … helped this happen.” In her article, Coulter stated that she disagreed with Falwell’s statement, “because Falwell neglected to specifically include Teddy Kennedy and ‘the Reverend’ Barry Lynn.”[179]

In October 2007, Coulter participated in David Horowitz‘ “Islamo-Fascism Awareness Week,” remarking in a speech at the University of Southern California, “The fact of Islamo-Fascism is indisputable. I find it tedious to detail the savagery of the enemy … I want to kill them. Why don’t Democrats?”[180]

In the wake of the Boston Marathon bombings, Coulter told Hannity host Sean Hannity that the wife of bombing suspect Tamerlan Tsarnaev should be jailed for wearing a hijab. Coulter continued by saying “Assimilating immigrants into our culture isn’t really working. They’re assimilating us into their culture.”[181]

In the wake of the Charlie Hebdo shooting in Paris, Coulter said France “needs to move to the next step” in dealing with terror. Coulter said of some immigrants:

They don’t want to live in Muslim countries, and yet they want to change the non-Muslim countries they move to [into] Muslim countries. It may be a small minority of Muslims “and still it’s enough of them that maybe you take a little pause in Muslim immigration for a while.”[182]

Coulter has attributed American gun violence in America to black and Muslim American men, stating that the epidemic of gun-related deaths is “not a gun problem, it’s a demographic problem.”[183]

When asked about the financial crisis in the 2000s, Coulter claimed one reason for it was that “they gave your mortgage to a less qualified minority.”[184]

Ionizing radiation as “cancer vaccine”

On March 16, 2011, discussing the Fukushima I nuclear accidents, Coulter, citing research into radiation hormesis, wrote that there was “burgeoning evidence that excess radiation operates as a sort of cancer vaccine.”[185] Her comments were criticized by figures across the political spectrum, from Fox NewsBill O’Reilly (who told Coulter, “You have to be responsible … in something like this, you gotta get the folks out of there, and you have to report worst-case scenarios”)[186] to MSNBC‘s Ed Schulz (who stated that “You would laugh at her if she wasn’t making light of a terrible tragedy.”)[187]

2012 presidential election

During the Republican Party presidential primaries, she supported Mitt Romney over former Speaker of the HouseNewt Gingrich. On an interview during The O’Reilly Factor on Fox News, she compared Newt Gingrich’s attacks on the media to Jesse Jackson “accusing people of racism.”[188] On her website, she posted a column titled, “Re-elect Obama: Vote Newt!” arguing that if Newt Gingrich won the Republican nomination, Barack Obama would win re-election.[189] When asked to respond about her criticism, Newt Gingrich dismissed them as “the old order” and cited recent polls showing him ahead of Mitt Romney.[190]

On October 22, 2012, following a presidential debate between Mitt Romney and Barack Obama, Coulter published the following tweet from her official Twitter account: “I highly approve of Romney’s decision to be kind and gentle to the retard,” drawing stiff criticism for her use of a word which some find offensive to describe the president of the United States. The Special Olympics condemned Coulter in a tweet shortly after Coulter’s.[191] On The Alan Colmes Show, Coulter stated that she does not regret her use of the word, saying, “‘Retard’ had been used colloquially to just mean ‘loser’ for 30 years. But no, these aggressive victims have to come out and tell you what words to use.”[192]

After the election, in which Barack Obama won, Ann Coulter wrote a column titled “Romney Was Not the Problem”. In it she argued against the idea that Mitt Romney lost because he failed to get his message across. She also said that Mitt Romney lost because he was running against an incumbent.[193]

2013 CPAC Conference

In March 2013, Coulter was one of the keynote speakers at the Conservative Political Action Conference, where she made references to New Jersey Governor Chris Christie‘s weight (“CPAC had to cut back on its speakers this year about 300 pounds”) and progressive activist Sandra Fluke‘s hairdo. (Coulter quipped that Fluke didn’t need birth control pills because “that haircut is birth control enough.”) Coulter advocated against a path to citizenship for undocumented immigrants because such new citizens would never vote for Republican candidates: “If amnesty goes through, America becomes California and no Republican will ever win another election.”[194][195]

2016 presidential election

In the summer of 2015, Coulter appeared on Real Time with Bill Maher and predicted of all of the Republicans that have announced their candidacy for the presidency, that Donald Trump had the best chance of winning the general election, she was laughed at by the studio audience.[196] Coulter later endorsed Donald Trump in the general election.[197]

VDARE

Coulter has been a contributor to VDARE since 2006.[198]

VDARE is a right wing website and blog founded by anti-immigration activist and paleo-conservativePeter Brimelow.[199] VDARE is considered controversial because of its alleged ties to white supremacist rhetoric and support of scientific racism and white nationalism.[200][201][202][203][204]

Berkeley cancellation

In April 2017, The New York Times reported that the University of California, Berkeley had cancelled Ann Coulter’s speech scheduled for April 27.[205] A university spokesman said they had not discussed a specific date with her and only learned about it by reading news reports.[206] The university administrators cited threats of violence and offered to accommodate her on a later date. Coulter said she saw no way forward, telling The New York Times, “It’s a sad day for free speech.”[207] Both Bernie Sanders and Elizabeth Warren publicly called for the university to defend her right to free speech.[207]

Plagiarism accusations

In October 2001, Coulter was accused of plagiarism in her 1998 book High Crimes and Misdemeanors by Michael Chapman, a columnist for the journal Human Events who claims that passages were taken from a supplement he wrote for the journal in 1997 titled “A Case for Impeachment.”[166]

On the July 5, 2016, episode of Countdown with Keith Olbermann, guest John Barrie, the CEO of iParadigms, offers his professional opinion that Coulter plagiarized in her book Godless as well as in many columns over the past year.[208] Barrie ran “Godless” through iThenticate, his company’s machine which is able to scan works and compare them to existing texts. He points to a 25 word section of the text that exactly matches a Planned Parenthood pamphlet and a 33 word section almost duplicating a 1999 article from the Portland Press as some examples of evidence.

Media Matters for America has appealed to Random House publishing to further investigate Coulter’s work.[209] The syndicator of her columns cleared her of the plagiarism charges.[210] Universal Press Syndicate and Crown Books also defended Coulter against the charges.[211]

Columnist Bill Nemitz from the Portland Press Herald accused Coulter of plagiarizing a very specific sentence from his newspaper in her book Godless, but he also acknowledged that one sentence is insufficient grounds for filing suit.[212]

Public perception

General

Sometimes referred to as an “internet queen,”[213] Coulter’s has a high public profile. [214]

Gendered criticism

Known for rejecting “the academic convention of euphemism and circumlocution,”[215] Coulter has been subject to a fair amount of criticism from scholars. Feminist critics have criticized the way that Coulter functions as a thin, blonde, heterosexual woman in the Republican party who prefers mini skirts and heels over a business suit. The argument here is that Coulter plays to misogyny in order to further her goals; she “dominates without threatening (at least not straight men).”[216] These critics also reject Coulter’s opinion that the gains made by women have as far as to create an anti-male society[217] and her call for women to be rejected from the military because they are more vicious than men.[218] Like the famous anti-feminist Phyllis Schlafly, Coulter uses traditionally masculine rhetoric as reasoning for the need for traditional gender roles, and she carries this idea of feminized dependency into her governmental policies, according to feminist critics.[219]

2016 Comedy Central Roast

In September 2016, Coulter was invited to participate in a roast of Rob Lowe on Comedy Central, as Coulter is often considered a successful satirist.[220] There is speculation that Coulter attended with the primary goal of promoting her newest book at the time, In Trump We Trust, but she ended up becoming the main target of the vitriol, and the roast subsequently went viral. Coulter herself refers to the roast as the “Ann Coulter Roast with Rob Lowe.”[221]

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[Ed. Note: To see exactly what this former Reagan insider has to say about Trump and specifically what he believes must be done to drain the swamp, David Stockman is sending out a copy of his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back out to any American willing to listen. To learn how to get your free copy CLICK HERE.]

As bonds break a three day win streak and the U.S market hitting new record highs with a trifecta of records, CNBC was roaring about what to expect going forward. The Daily Reckoning contributor David Stockman joined Courtney Reagan to discuss what to expect going forward.

After the CNBC host positioned the critiques offered by David Stockman of the Trump administration she asked whether that would continue given the state of the market. Stockman did not mix words beginning the conversation with, “What’s going on today is complete insanity. The market is apparently pricing in a huge Trump stimulus package, when if you just look at the real world out there the only thing that is going to happen is a fiscal bloodbath and a White House train wreck like never before in U.S history.

How much more evidence do these so called traders need? Trump is lost in Twitter-land and he is out of control. He is turning out to be a complete jackass in the Oval Office. Co-President Bannon is off the deep end on terrorism, travel bans, Mexican walls, immigrant bashing and protectionism.”

David Stockman is a former Reagan Administration official who was the Office of Management and Budget Director. He also served as a two-term Congressman from the great state of Michigan. His latest book, Trumped! A Nation on the Brink of Ruin… And How to Bring It Back is out now. It offers his insight and exclusive analysis on exactly what the newly elected president must do in order to succeed in the White House. To get your own FREE copy, CLICK HERE to learn how.

“[They are] having nothing to do with the economic agenda and Trump has got an empty economic bench. He’s got no Secretary of the Treasury, no Office of Management and Budget, no Council of Economic Advisor Chairman. By this time, when I was there with the Reagan Administration, the plan was ready to go and he was going to Congress within a couple of days into February. We have a debt ceiling freight train coming down the road which will hit March 15 and then the cash will start running out and the system will be on edge. All of the continuing resolutions expire in April.”

“They are going to spend the year trying to repeal and replace Obamacare and it will be a fiasco. Nothing is going to happen this year. I don’t even think they can pass the budget resolution. There is going to be no tax action this year. If there is any bill next year it is going to be deficit neutral. Which means it is not going to add $15 to earnings like these crazy people expect.”

“Why would you be trading in this market, with this kind of chaos emerging everywhere at twenty six times trailing earnings? That’s where we are. It is completely crazy and it is only a question of how many more days or weeks that this kind of fantasy land can last.”

David Stockman Market In Text 2

Courtney Reagan then pressed back asking, “At what point do you give in and admit that [Trump] is atypical but maybe he could get things done? I mean, look at all of the CEO’s that Trump has met with.” The former Reagan insider remarked that, “CEO’s come and go with every president. They came in with Reagan, they tell a president what they want to hear. These guys are just selling the song and dance about how many jobs they’re going to create in the next five years. They have no clue.”

“If we have a recession in the next five years, which surely we will, because recessions have not been outlawed and we haven’t had one for ten years. None of this stuff is going to happen. This is meaningless. What is meaningful is that Trump is out of control. This tweeting and getting off track on all of this terrorism stuff. This is a sign that there is going to be no governing coalition and that all of this fiscal stimulus expected by Wall Street is a complete fantasy. It can’t happen.”

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When CNBC then turned over the camera to a day trader who asked about the positive sentiment that exists within the market regarding Trump and his plan to deregulate Stockman stayed true to message. “Trump is just putting out press releases and the guise of Executive Orders. All of this stuff is going to get litigated, it goes through a rulemaking process, that takes years. So the relief on regulation will be important, but it way down the road and it won’t be that impactful.”

“The second thing, is we’re at 92 months in this expansion already. It is running out of gas. You can’t expect it to run forever. That is seemingly what is priced in by the market.”

“The third thing is, we have a giant debt and deficit problem. The debt ceiling is coming back into play it will be 20 trillion when it freezes in on March 15th. I’ll tell you this, people aren’t paying attention to the fact that Trump will never get a debt ceiling increase through the Congress without a government shutdown. When that happens it is, “bar the doors” because nobody is expecting it. We need to look at the facts, not the hopes.”

As the CNBC affirmed, it is not clear that the market is just going to drop tomorrow and history will repeat itself, Stockman repositioned. “The market it clearly factoring in a big Trump stimulus and I think anybody down there would admit if it doesn’t happen, if we get zero tax cuts, if we get a fiscal bloodbath in the Washington I am describing – the market is not going to stay where it is today at these absurd multiples of earnings.”

“This is all based on the idea that there is going to be a surge of economic growth and that profits are going to come back from about $89 a share by basis, where they were during the last twelve months, to a potential $110 or $130. My argument is there is not going to be any economic rebound. There is not going to be any profit surge. Therefore the market will be repricing dramatically downward once it is clear.”

Another CNBC analysis asked why – with the positive trends in jobless claims, manufacturing increasing, interest rates at near record lows – would the market not close out the year near record levels? “The market is assuming that profits are going to rebound. That we are not going to have any market dislocation and that nobody is going to be pushing back on Trump. It is hard to understand how people watching the day-to-day action down there could believe that.”

“Everybody is pushing back on Trump, he can’t even get his cabinet approved. He’s going to be bogged down in a Supreme Court fight, he’s going to be bogged down in a fight over a ridiculous travel ban. The idea that there is not going to be pushback is naive. What there is going to be is a train wreck. It is already clear that the people in the White House have no idea what they’re doing and it is only a matter of time before this honeymoon goodwill evaporates and the politicians get down to doing what they do best. Which is to undermine and obstruct anything that might be positive.”

When finally asked whether there is anything positive that would make him turn bullish in the near future he responded affirmably, “No, because Trump is inheriting thirty years of a disaster created by his predecessors. We have to take this $20 trillion of debt seriously. There is $10 trillion more built in under current policy, and that is without a dime of Trump tax cuts, infrastructure or stimulus. There is going to be a tremendous fiscal crisis in the years ahead which will prevent any of the kind of action that the “stimulus junkies” are looking for.

To catch the full interview with David Stockman on CNBC click here. If you would like to claim your own free copy of David Stockman’s bestseller Trumped! Click here to learn how.

Thanks for reading,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

https://dailyreckoning.com/stockman-market-under-trump/

David Stockman

From Wikipedia, the free encyclopedia
David Stockman
David Stockman by Gage Skidmore.jpg
Director of the Office of Management and Budget
In office
January 21, 1981 – August 1, 1985
President Ronald Reagan
Preceded by Jim McIntyre
Succeeded by Jim Miller
Member of the U.S. House of Representatives
from Michigan‘s 4th district
In office
January 3, 1977 – January 21, 1981
Preceded by Edward Hutchinson
Succeeded by Mark Siljander
Personal details
Born David Alan Stockman
November 10, 1946 (age 70)
Fort Hood, Texas, U.S.
Political party Republican
Spouse(s) Jennifer Blei (1983–present)[1]
Education Michigan State University (BA)
Harvard University
Website Official website

David Alan Stockman (born November 10, 1946) is a former businessman and U.S. politician who served as a Republican U.S. Representative from the state of Michigan (1977–1981) and as the Director of the Office of Management and Budget (1981–1985) under President Ronald Reagan.

Early life and education

Stockman was born in Fort Hood, Texas, the son of Allen Stockman, a fruit farmer, and Carol (née Bartz).[2] He is of German descent, and his family’s surname was originally “Stockmann”.[3] He was raised in a conservative family, and his maternal grandfather, William Bartz, was a Republican county treasurer for 30 years.[4][5] Stockman was educated at public schools in Stevensville, Michigan. He graduated from Lakeshore High School in 1964[6] and received a B.A. in History from Michigan State University in 1968. He was a graduate student at Harvard University, 1968–1970 studying theology

Political career

Stockman’s Congressional portrait

He served as special assistant to United States Representative and 1980 U.S. presidential candidate John Anderson of Illinois, 1970–1972, and was executive director, United States House of Representatives Republican Conference, 1972–1975.

Congress

Stockman was elected to the United States House of Representatives for the 95th Congress and was reelected in two subsequent elections, serving from January 3, 1977, until his resignation January 21, 1981, to accept appointment as Director of the Office of Management and Budget for U.S. President Ronald Reagan.

Office of Management and Budget

Stockman was one of the most controversial OMB directors ever appointed, also known as the “Father of Reaganomics.” He resigned in August 1985. Committed to the doctrine of supply-side economics, he assisted in the passing of the “Reagan Budget” (the Gramm-Latta Budget), which Stockman hoped would curtail the “welfare state“. He thus gained a reputation as a tough negotiator with House Speaker Tip O’Neill‘s Democratic-controlled House of Representatives and Majority Leader Howard Baker‘s Republican-controlled Senate. During this period, Stockman became well known to the public during the contentious political wrangling concerning the role of the federal government in American society.

Stockman’s influence within the Reagan Administration was weakened after the Atlantic Monthly magazine published the infamous 18,246 word article, “The Education of David Stockman”,[7] in its December 1981 issue, based on lengthy interviews Stockman gave to reporter William Greider.

Stockman was quoted as referring to Reagan’s tax act in these terms: “I mean, Kemp-Roth [Reagan’s 1981 tax cut] was always a Trojan horse to bring down the top rate…. It’s kind of hard to sell ‘trickle down.’ So the supply-side formula was the only way to get a tax policy that was really ‘trickle down.’ Supply-side is ‘trickle-down’ theory.”[7] Of the budget process during his first year on the job, Stockman was quoted as saying, “None of us really understands what’s going on with all these numbers,” which was used as the subtitle of the article.[7]

After “being taken to the woodshed by the president” because of his candor with Greider, Stockman became concerned with the projected trend of increasingly large federal deficits and the rapidly expanding national debt. On 1 August 1985, he resigned from OMB and later wrote a memoir of his experience in the Reagan Administration titled The Triumph of Politics: Why the Reagan Revolution Failed in which he specifically criticized the failure of congressional Republicans to endorse a reduction of government spending to offset large tax decreases to avoid the creation of large deficits and an increasing national debt.

Fiscal legacy

President Jimmy Carter’s last fiscal year budget ended with a $79.0 billion budget deficit (and a national debt of $907,701,000,000 [8] as of September 30, 1980), ending during the period of David Stockman’s and Ronald Reagan’s first year in office, on October 1, 1981.[9] The gross federal national debt had just increased to $1.0 trillion during October 1981 ($998 billion on 30 September 1981, up from $907.7 billion during the last full fiscal year of the Carter administration[8]).

By 30 September 1985, four and a half years into the Reagan administration and shortly after Stockman’s resignation from the OMB during August 1985, the gross federal debt was $1.8 trillion.[8] Stockman’s OMB work within the administration during 1981 until August 1985 was dedicated to negotiating with the Senate and House about the next fiscal year’s budget, executed later during the autumn of 1985, which resulted in the national debt becoming $2.1 trillion at fiscal year end 30 September 1986.[8] Reaganomics had just begun.

In 1981, Stockman received the Samuel S. Beard Award for Greatest Public Service by an Individual 35 Years or Under, an award given out annually by Jefferson Awards.[10]

Business career

After leaving government, Stockman joined the Wall St. investment bank Salomon Brothers and later became a partner of the New York–based private equity company, the Blackstone Group.[11]:125–127 His record was mixed at Blackstone, with some very good investments, such as American Axle, but also failures, including Haynes International and Republic Technologies.[11]:144–147 During 1999, after Blackstone CEO Stephen A. Schwarzman curtailed Stockman’s role in managing the investments he had developed,[11]:146 Stockman resigned from Blackstone to start his own private equity fund company, Heartland Industrial Partners, L.P., based in Greenwich, Connecticut.[12]

On the strength of his investment record at Blackstone, Stockman and his partners raised $1.3 billion of equity from institutional and other investors. With Stockman’s guidance, Heartland used a contrarian investment strategy, buying controlling interests in companies operating in sectors of the U.S. economy that were attracting the least amount of new equity: auto parts and textiles. With the help of about $9 billion in Wall Street debt financing, Heartland completed more than 20 transactions in less than 2 years to create four portfolio companies: Springs Industries, Metaldyne, Collins & Aikman, and TriMas. Several major investments performed very poorly, however. Collins & Aikman filed for bankruptcy during 2005 and when Heartland sold Metaldyne to Asahi Tec Corp. during 2006, Heartland lost most of the $340 million of equity it had invested in the business.[13]

Collins & Aikman Corp.

During August 2003, Stockman became CEO of Collins & Aikman Corporation, a Detroit-based manufacturer of automotive interior components. He was ousted from that job days before Collins & Aikman filed for bankruptcy under Chapter 11 on May 17, 2005.

Criminal and civil charges

On March 26, 2007, federal prosecutors in Manhattan indicted Stockman in “a scheme… to defraud [Collins & Aikman]’s investors, banks and creditors by manipulating C&A’s reported revenues and earnings.” The United States Securities and Exchange Commission also brought civil charges against Stockman related to actions that he performed while CEO of Collins & Aikman.[14] Stockman suffered a personal financial loss, over $13 million, along with losses suffered by as many as 15,000 Collins & Aikman employees worldwide.

Stockman said in a statement posted on his law firm’s website that the company’s end was the consequence of an industry decline, not due to fraud.[15] On January 9, 2009, the US Attorney’s Office announced that it did not intend to prosecute Stockman for this case.[16]

Web site

In March 2014 Stockman launched a web based daily periodical, David Stockman’s Contra Corner featuring both his own articles and those from leading contrarian thinkers on geopolitics, economics, and finance.

Personal life

Stockman lives in the Upper East Side of Manhattan in New York City.[12] He is married to Jennifer Blei Stockman and is the father of two children, Rachel and Victoria. Jennifer Blei Stockman is a chairwoman emerita of the Republican Majority for Choice,[17] and President of the Solomon R. Guggenheim Foundation Board of Trustees.[18] In 2013, Stockman signed an amicus brief to the Supreme Court in favor of same-sex marriage.[19]

Quotes

  • “[Social Security] has to be means-tested. And Medicare needs to be means-tested […] Let the Bush tax cuts expire. Let the capital gains go back to the same rate as ordinary income.”[20]
  • “The Republican Party has totally abdicated its job in our democracy, which is to act as the guardian of fiscal discipline and responsibility. They’re on an anti-tax jihad — one that benefits the prosperous classes.”[21]
  • “I invest in anything that Bernanke can’t destroy, including gold, canned beans, bottled water and flashlight batteries.”[22]
  • “Ninety-two percent of the wealth is owned by five percent of the people.” (Bloomberg TV 2013)
  • “[T]he Republican Party was hijacked by modern imperialists during the Reagan era. As a consequence, the conservative party cannot perform its natural function as watchdog of the public purse because it is constantly seeking legislative action to provision a vast war machine of invasion and occupation.” [23]

Bibliography

  • The Reagan Economic Plan, 1981
  • The Triumph of Politics: Why the Reagan Revolution Failed, Harper & Row, 1986, ISBN 9780060155605
  • The Great Deformation: The Corruption of Capitalism in America, PublicAffairs, 2013, ISBN 9781586489120
  • Trumped!: A Nation on the Brink of Ruin, and How to Bring it Back, 2016

References

  1. Jump up^ “LOSING THE BATTLES AND WINNING THE WAR”. Lexington Herald-Leader. April 7, 1985.
  2. Jump up^ Hunter, Marjorie (December 12, 1980). “Office of Management and Budget David Alan Stockman; Strong Support From Kemp Chosen by House Republicans Views on Economy”. The New York Times.
  3. Jump up^ “News65”. 19 June 1998.
  4. Jump up^ “The Tuscaloosa News – Google News Archive Search”.
  5. Jump up^ “The Montreal Gazette – Google News Archive Search”.
  6. Jump up^ Heibutzki, Ralph (2012-06-04). “Stockman Surprise Speaker at Lakeshore’s Graduation”. The Herald-Palladium. Retrieved 2012-06-04.
  7. ^ Jump up to:a b c William Greider (December 1981). “The Education of David Stockman”. The Atlantic Online.
  8. ^ Jump up to:a b c d Treasury Department’s Historical Debt Outstanding – Annual 1950 – 1999
  9. Jump up^ Office of Management and Budget Historical Tablessee Table 1.1 (Excel Spreadsheet)
  10. Jump up^ “Jefferson Awards”. Jefferson Awards.
  11. ^ Jump up to:a b c David Carey & John E. Morris (2001). King of Capital: The Remarkable Rise, Fall and Rise Again of Steve Schwarzman and Blackstone. Crown.
  12. ^ Jump up to:a b “Collins & Aikman seeks to emerge from bankruptcy,” Bloomberg News article by Jeff Bennett, published in the newspaper The Advocate of Stamford and (identical version, perhaps with changes by the local editor in the common business section for both newspapers) in the Greenwich Time on September 5, 2006, page A7, The Advocate
  13. Jump up^ David Carey and Lou Whiteman, “PE firms find buyer for Metaldyne,” The Deal, Sept. 1, 2006.
  14. Jump up^ Levin, Doris (29 March 2007). “Stockman Outsmarts Self in Detroit”. Bloomberg. Retrieved 19 September 2014.
  15. Jump up^ “Ex-Collins Chief David Stockman Charged With Fraud (Update10)”. Bloomberg. March 26, 2007. Retrieved 2010-08-02.
  16. Jump up^ “Fraud charges dropped against ex-Reagan aide David Stockman”. Chicago Tribune. 10 January 2009. Retrieved 19 September 2014.
  17. Jump up^ About Us Republican Majority for Choice
  18. Jump up^ Trustees, Solomon R. Guggenheim Foundation
  19. Jump up^ [1]
  20. Jump up^ “Why David Stockman Isn’t buying it”. CBS News. March 2, 2012.
  21. Jump up^ Dickinson, Tim (Nov 9, 2011). “How the GOP Became the Party of the Rich”. Rolling Stone. Retrieved 2011-11-10.
  22. Jump up^ David Stockman: I Invest In Anything Bernanke Can’t Destroy, John Carney, CNBC, October 6, 2010
  23. Jump up^ Stockman, David (2013). The Great Deformation — the corruption of capitalism in America. PublicAffairs. p. 688. ISBN 978-1586489120.

External links

United States House of Representatives
Preceded by
Edward Hutchinson
Member of the U.S. House of Representatives
from Michigan’s 4th congressional district

1977–1981
Succeeded by
Mark Siljander
Political offices
Preceded by
Jim McIntyre
Director of the Office of Management and Budget
1981–1985
Succeeded by
Jim Miller
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Totalitarians of Lying Lunatic Left Attempt to Suppress Speech of Conservatives, Libertarians, and Classical Liberals — Something New — Go On Offense And Attack The Collectivist Totalitarians — Battle For Berkeley — Berkeley Protesters Take the Pepsi Challenge — Why the Right Won — Chief of Police Orders Police Officers To Stand Down — Security Is The New Shut-Up — Shame On UC Berkeley — Videos

Posted on April 22, 2017. Filed under: American History, Blogroll, College, Communications, conservatives, Constitution, Corruption, Crime, Culture, Education, Freedom, history, Language, Law, liberty, Life, media, People, Philosophy, Photos, Police, Political Correctness, Politics, Radio, Rants, Raves, Raymond Thomas Pronk, Regulations, Speech, Strategy, Success, Television, Video, Welfare, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , |

 

Image result for berkely april 15, 2017Image result for berkely april 15, 2017Image result for berkely april 15, 2017Image result for berkely april 15, 2017Image result for cartoons berkely april 15, 2017Image result for berkely april 15, 2017Image result for cartoons berkely april 15, 2017Image result for berkely april 15, 2017Image result for cartoons berkely april 15, 2017Image result for berkely april 15, 2017

Berkeley Pro Free Speech Protesters Chase Out AntiFA

The Battle of Berkeley in 81 seconds

Berkeley Protesters Take the Pepsi Challenge

Antifa and UC Berkeley: LIVE with Tim Pool

CALLING OUT THE BERKELEY VIOLENCE

UNDERCOVER AS ANTIFA WITH JOEY SALADS

LEFT VS RIGHT DOUBLE STANDARDS IN MEDIA

UC Berkley Must Be Disciplined For Furthering Leftist Violence Against Conservatives

Battle of Berkeley: Why the Right Won

Published on Apr 17, 2017

Berkeley erupted into political violence on April 15th, 2017, with leftwing radicals attacking the Freedom Rally hosted by Trump supporters. The Antifa thugs were roundly defeated by the Freedom Rally attendees, but where did this violence start? I discuss the events that lead up to this day and uncover the progression of leftwing violence that’s destroying a city that once celebrated free speech.

Lauren Southern And The Madness Behind The Battle Of Berkeley

THE BEAUTIFUL LAUREN SOUTHERN; ProudBoys and Some Ugly Antifa

Battle of Berkeley 3 FULL DAY[ANTIFA Vs FREE SPEECH PROTESTERS]Patriots Day Rally Ft. Based Stickman

Trump Supporters chase Antifa down the street at FREE SPEECH Rally in Berkeley

Battle of Berkeley 3 as Antifa circled the park

2017 The Battle for Berkeley LARP!

Patriot’s Day Riot in the Streets

Mark Steyn Security is the new shutup to conservatives

Why UC Berkeley shouldn’t have canceled Ann Coulter’s speech

UC Berkeley Cancels Coulter Appearance Over Security Concerns

Conservative Commentator Ann Coulter To Speak At UC Berkeley

Did Mark Levin Get Berkeley To Reverse Decision To Cancel Speech By Ann Coulter?

Ben Shapiro Interviews Based Stickman on Berkeley Riots & Ann Coulter being BANNED

Ben Shapiro interviews Ann Coulter; Adios America; 7/13/2015; C-Span

UC Berkeley Presses Campus Republicans To Cancel Another Conservative Speaker

WARNING:TRUMP SUPPORTERS ATTACKED AT BERKELEY BY ANTI TRUMP PROTESTERS

Free Speech Battle For Berkeley, California! | Lauren Southern and Stefan Molyneux

Berkeley Mayor Connected to Antifa

Tucker Carlson Has UC Berkeley Protest Leader Yvette Felarca Explain Fascism

Lauren Southern Coverage of Antifa vs Trump Supporters Battle

Berkeley April 15,Based stick man Antifa smashing

ANTIFA VS America Compilation

Antifa Reddit Admits They Lost Berkeley Battle with Trump Supporters

Berkeley April 15,BAMN leader Yvette Felarca assaults patriots

Berkeley Leftists Riot Against Milo (Mini Documentary: Arrest Yvette Felarca Part 2)

Handicap Senior Citizen U.S Military Vet Stands Up & Cucks Antifa

Is It Wrong To Bash Antifa Leftist Scum?

Berkeley Police Refuse To Stop the Riots – When Told People are Being Beaten, Officer Says “…and?”

Hannity, Alt Left Pile On, Mayhem in Berkeley, Pres Obama’s Failures

Does Free Speech Offend You?

Ann Coulter: Attorney General Jeff Sessions Needs to Investigate UC Berkeley For Cancelling Speech

Ann Coulter rejects Berkeley’s proposal to reschedule speech

Berkeley reschedules Coulter speech after backlash

Ann Coulter Discusses Berkeley w/ Prager

Ben Shapiro on Free Speech, College Campuses, and The Regressive Left

Ben Shapiro – Practical Tactics For Fighting The Left

Thomas Sowell — Dismantling America

TAKE IT TO THE LIMITS: Milton Friedman on Libertarianism

One World Government & Collectivism – G. Edward Griffin

The Quigley Formula – G. Edward Griffin lecture

The Mainstream Media Are Enemies of Freedom, Agents of Tyranny and Must Be Overthrown

Super rich are in a conspiracy to rule the world – G. Edward Griffin – 2007

Antifa and Conservatives Throw Down At ‘Battle Of Berkeley’…

battle of berkeley
In the course of history, there have been many great battles. Thermopylae. Gettysburg. Tupac and Biggie. The forces of good and douchebag have long utilized beating the crap out of each other to resolve their grievances. Well, last weekend, yet another battle was had. Conservative and leftist blood alike was shed at what shall henceforth be referred to as the Battle of Berkeley

For the third time this year, Trump supporters and Antifa clashed on the streets of Berkeley, California. The two forces met Saturday during the pro-Trump Patriot Day rally.

Berkeley Police have arrested at least 15 people this morning and afternoon, after antifascists met Trump supporters at a pro-Trump rally. Police attempted to maintain order with poles and fence mesh, but the barriers did not stop the two sides from violently engaging.

Trump supporters had organized a Patriot Day rally, starring Lauren Southern, a former reporter for conservative Canadian outlet The Rebel Media and Kyle Chapman, a man who achieved internet stardom as “Based Stickman” after assaulting a member of Antifa with a stick at the March 4 scuffle in Berkeley, among others.

Berkeley police have confiscated banned items such as knives, flagpoles, and sticks used as weapons.

https://www.louderwithcrowder.com/antifa-conservatives-battle-of-berkeley/

Berkeley Mayor Is Member of Antifa Facebook Group that Organized Riots

Berkeley Mayor Jesse Arreguin is a member of the anti-fascist Facebook group, By Any Means Necessary, which orchestrated the riots that occurred ahead of a scheduled lecture by Milo Yiannopoulos.

Berkley Mayor Jesse Arreguin was revealed to be a member of the anti-fascist group, By Any Means Necessary (BAMN), on Facebook. BAMN orchestrated the violence that shut down a scheduled lecture at UC Berkeley featuring Milo Yiannopoulos in early 2017. Arreguin is allegedly also friends with BAMN leader, Yvette Felarca, on Facebook.

They were also involved in the violent clashes earlier this month.

Felarca defended the violence that occurred ahead of Yiannopoulos’ scheduled event in a local television interview following the riots.

BAMN was investigated for engaging in terrorist activities in 2005 by the FBI. In 2009, the Department of Defense classified the group’s activities as “low-level terrorism.” In June 2016, BAMN led a violent counter-protest outside a white nationalist rally that resulted in ten people being hospitalized with stab wounds.

Often described as a “militant left-wing” activist group, BAMN frequently engages in violent forms of protests. A Berkeley newspaper noted in 2001 that the group was a front for an “an obscure Detroit-based Trotskyist political party called the Revolutionary Workers League.”

Breitbart News has reached out to Mayor Arreguin for comment.

Tom Ciccotta is a libertarian who writes about economics and higher education for Breitbart News. You can follow him on Twitter @tciccotta or email him at tciccotta@breitbart.com

http://www.breitbart.com/tech/2017/04/21/berkeley-mayor-is-member-of-antifa-facebook-group-that-organized-riots/

Antifa wants combat training and firearms after losing the ‘Battle for Berkeley’

Brandon Morse

Antifa wants combat training and firearms after losing the ‘Battle for Berkeley’

Antifa members have begun discussions about arming themselves with better training and firearms after they were routed by Trump supporters during the “Battle of Berkeley” in California.

Last week supporters of President Donald Trump clashed with members of the leftist group known as Antifa (short for anti-fascist) in Berkeley California. The meeting of the two groups soon erupted in violence, with Antifa using mace, M80’s, and various other weapons to attack Trump supporters.

According to Rebel Media’s Lauren Southern, Trump supporters were told by police not to bring any weapons, as police would protect them. Upon Anitfa’s arrival, the police retreated, leaving the Trump supporters to utilize whatever weapons they could get their hands on. Regardless, the Trump supporters routed Antifa after one of their members threw a smoke bomb, not realizing the wind was blowing in Antifa’s direction.

This loss prompted Antifa members to begin discussion about how they could better prepare themselves for future skirmishes against Trump supporters.

In the subreddit r/anarchism, one Anitfa member acknowledged the loss, and suggested that members find a way to become “better organized and better trained.” Another member agreed, saying that too many of their “comrades” went into battle “no combat training,” and suggested they start “seminars or something of that sort.”

This conversation continued, with suggestions for better equipment such as helmets and padding over the typical hoodie and facemask being worn. Another person on this r/anarchism thread suggested they rally behind a leader who can organize and direct actions. The conversation soon turned to weapons, however, and one member in particular suggested they bring firearms.

Not getting disarmed is a big part of the problem, yes, but we need more than flags and bats. We need to take notes from the John Brown Gun Club and get firearms and training. I know getting firearms in states and cities we have a presence in is usually a hassle, but even handguns would help. It would certainly put a psychological element in while holding fash back. Who do you think a fascist is more afraid of? People with only flags and bats, or people with flags, bats, and guns?”

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Antifa is known for their willingness to use violence and intimidation to silence political, and ideological opponents. An Antifa chapter at Clemson University, known as “Upstate Antifa” have made an effort to justify the violence and destruction committed against what they loosely base as “Nazis” and “fascists.”

Recently, Antifa members inadvertently turned on one of their own after his mask was forcibly removed, spraying him with pepper spray, and hitting him with a skateboard as they retreated from pro-Trump marchers.

Another instance of violence occurred while Trump supporters and Antifa were engaging in trash talk. One of Antifa’s members used a bike lock to strike a Trump supporter in the head without warning, causing him to bleed a good deal from his scalp.

http://www.theblaze.com/news/2017/04/21/antifa-wants-combat-training-and-firearms-after-losing-the-battle-for-berkely/

Conservative group threatens UC Berkeley over Ann Coulter appearance

Paige St. JohnContact Reporter

A conservative group on Friday threatened to take legal action against UC Berkeley if student sponsors are not allowed to pick the date and location for an appearance by commentator Ann Coulter.

Coulter had been scheduled to speak on the demonstration-weary campus on April 27, but Berkeley officials refused permission, citing safety concerns. Amid public criticism, the administration on Thursday agreed to set the event for May 2, at midday, in a science hall away from the central campus.

“The university’s actions violate fundamental principles of free speech, equal protection and due process guaranteed by the United States Constitution,” a letter from lawyers representing the conservative outreach group Young America’s Foundation warned.

It called Berkeley’s offer “transparently insincere” — noting that the new date falls during “dead week,” a time when most students are studying for final exams.

“UC Berkeley may not censor speech its administrators plainly disfavor, simply because a potential mob shares the administrators’ distaste,” the letter said.

In response, Berkeley answered that it does not have a “protectable” venue available on April 27 and raised concern about Coulter’s “disregard” for what police believe is required to keep her appearance safe.

“The Constitution permits the university to take such steps to protect public safety while facilitating expressive activities, and that is exactly what we are doing,” officials said in a prepared statement.

Coulter, who had been invited to speak about immigration, used her Twitter account Thursday to declare she would speak at Berkeley on April 27, “as I was invited to do and have a contract to do.”

Although the student groups hosting her appearance are the Berkeley College Republicans and BridgeCal, the contracted sponsor for the event is Young America’s Foundation.

Berkeley spokesman Dan Mogulof said administrators learned of Coulter’s planned arrival only after that contract was signed, preventing an assessment of how to avoid a replay of the violence that disrupted a scheduled Milo Yiannopoulos appearance at Berkeley on Feb. 1.

Large crowds swarmed the campus where the right-wing provocateur was to appear, and masked demonstrators in black garb tore down police barricades, smashed windows and set off explosives.

Since then, the university town has witnessed two demonstrations held by alt-right organizations that led to violent clashes.

“We were disappointed we couldn’t make an event work,” Mogulof said. “We believe it is important to expose our students to a diverse array of perspectives. … [They] can’t be educated in an echo chamber.”

http://www.latimes.com/local/california/la-me-berkeley-coulter-20170421-story.html

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National Security Agency Is Spying On All American Who Use The Internet and Telephone System and They Collect and Store All Your Communications — Includes Trump and Associates — No Warrant Required If President Obama Designates You A Target — Congress Is Enabling The Turnkey Two Party Tyranny — Warrentless Searches — Congress Does Nothing To Stop It! — Videos

Posted on March 17, 2017. Filed under: American History, Articles, Blogroll, Books, British History, Business, Central Intelligence Agency (CIA), Communications, Computers, Computers, Congress, conservatives, Constitution, Corruption, Crime, Crisis, Data, Data Storage, Defense Intelligence Agency (DIA), Defense Intelligence Agency (DIA), Demographics, Documentary, European History, External Hard Drives, External Hard Drives, Faith, Family, Federal Bureau of Investigation (FBI), Federal Bureau of Investigation (FBI), Federal Communications Commission, Federal Government, Friends, government spending, Heroes, history, Illegal, Immigration, Internal Revenue Service (IRS), IRS, Islam, Islam, Law, Legal, liberty, Life, Links, Literacy, media, Middle East, National Security Agency (NSA), National Security Agency (NSA_, Non-Fiction, People, Philosophy, Photos, Police, Politics, Press, Programming, Psychology, Radio, Radio, Rants, Raves, Raymond Thomas Pronk, Regulations, Religion, Security, Sociology, Space, Spying, Strategy, Supreme Court, Systems, Talk Radio, Taxation, Taxes, Technology, Television, Terrorism, Video, Wahhabism, War, Wealth, Welfare, Wisdom, Writing | Tags: , , , , , , , , , , , , , , , , , |

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Published on Jul 8, 2013

The NSA warrantless surveillance controversy (AKA “Warrantless Wiretapping”) concerns surveillance of persons within the United States during the collection of foreign intelligence by the U.S. National Security Agency (NSA) as part of the war on terror. Under this program, referred to by the Bush administration as the “terrorist surveillance program”, part of the broader President’s Surveillance Program, the NSA was authorized by executive order to monitor, without search warrants, the phone calls, Internet activity (Web, e-mail, etc.), text messaging, and other communication involving any party believed by the NSA to be outside the U.S., even if the other end of the communication lies within the U.S. Critics, however, claimed that it was in an effort to attempt to silence critics of the Bush Administration and their handling of several hot button issues during its tenure. Under public pressure, the Bush administration ceased the warrantless wiretapping program in January 2007 and returned review of surveillance to the FISA court. Subsequently, in 2008 Congress passed the FISA Amendments Act of 2008, which relaxed some of the original FISA court requirements.

During the Obama Administration, the NSA has officially continued operating under the new FISA guidelines. However, in April 2009 officials at the United States Department of Justice acknowledged that the NSA had engaged in “overcollection” of domestic communications in excess of the FISA court’s authority, but claimed that the acts were unintentional and had since been rectified.

All wiretapping of American citizens by the National Security Agency requires a warrant from a three-judge court set up under the Foreign Intelligence Surveillance Act. After the 9/11 attacks, Congress passed the Patriot Act, which granted the President broad powers to fight a war against terrorism. The George W. Bush administration used these powers to bypass the FISA court and directed the NSA to spy directly on al Qaeda in a new NSA electronic surveillance program. Reports at the time indicate that an “apparently accidental” “glitch” resulted in the interception of communications that were purely domestic in nature.[5] This action was challenged by a number of groups, including Congress, as unconstitutional.

The exact scope of the program is not known, but the NSA is or was provided total, unsupervised access to all fiber-optic communications going between some of the nation’s largest telecommunication companies’ major interconnected locations, including phone conversations, email, web browsing, and corporate private network traffic.[6] Critics said that such “domestic” intercepts required FISC authorization under the Foreign Intelligence Surveillance Act.[7] The Bush administration maintained that the authorized intercepts are not domestic but rather foreign intelligence integral to the conduct of war and that the warrant requirements of FISA were implicitly superseded by the subsequent passage of the Authorization for Use of Military Force Against Terrorists (AUMF).[8] FISA makes it illegal to intentionally engage in electronic surveillance under appearance of an official act or to disclose or use information obtained by electronic surveillance under appearance of an official act knowing that it was not authorized by statute; this is punishable with a fine of up to $10,000 or up to five years in prison, or both.[9] In addition, the Wiretap Act prohibits any person from illegally intercepting, disclosing, using or divulging phone calls or electronic communications; this is punishable with a fine or up to five years in prison, or both.[10]

After an article about the program, (which had been code-named Stellar Wind), was published in The New York Times on December 16, 2005, Attorney General Alberto Gonzales confirmed its existence.[11][12][13] The Times had posted the exclusive story on their website the night before, after learning that the Bush administration was considering seeking a Pentagon-Papers-style court injunction to block its publication.[14] Critics of The Times have alleged that executive editor Bill Keller had withheld the story from publication since before the 2004 Presidential election, and that the story that was ultimately published by The Times was essentially the same as reporters James Risen and Eric Lichtblau had submitted in 2004.[15] In a December 2008 interview with Newsweek, former Justice Department employee Thomas Tamm revealed himself to be the initial whistle-blower to The Times. The FBI began investigating leaks about the program in 2005, with 25 agents and 5 prosecutors on the case.

FBI’s Patriot Act Abuse of National Security Letters and illegal NSA spying

If you think you can handle the truth, well here it is folks

National Security Agency

From Wikipedia, the free encyclopedia
“NSA” redirects here. For other uses, see NSA (disambiguation) and National Security Agency (disambiguation).
Not to be confused with NASA or National Security Council.
National Security Agency
Seal of the U.S. National Security Agency.svg

Seal of the National Security Agency
Flag of the U.S. National Security Agency.svg

Flag of the National Security Agency
National Security Agency headquarters, Fort Meade, Maryland.jpg
NSA Headquarters, Fort Meade, Maryland
Agency overview
Formed November 4, 1952; 64 years ago[1]
Preceding agency
  • Armed Forces Security Agency
Headquarters Fort Meade, Maryland, U.S.
39°6′32″N 76°46′17″WCoordinates: 39°6′32″N 76°46′17″W
Motto “Defending Our Nation. Securing The Future.”
Employees Classified (30,000–40,000 estimate)[2][3][4][5]
Annual budget Classified (estimated $10.8 billion, 2013)[6][7]
Agency executives
Parent agency United States Department of Defense
Website www.nsa.gov

The National Security Agency (NSA) is an intelligence organization of the United States federal government responsible for global monitoring, collection, and processing of information and data for foreign intelligence and counterintelligence purposes, a discipline known as signals intelligence (SIGINT). NSA is concurrently charged with protection of U.S. government communications and information systems against penetration and network warfare.[8][9] Although many of NSA’s programs rely on “passive” electronic collection, the agency is authorized to accomplish its mission through active clandestine means,[10] among which are physically bugging electronic systems[11] and allegedly engaging in sabotage through subversive software.[12][13] Moreover, NSA maintains physical presence in a large number of countries across the globe, where its Special Collection Service (SCS) inserts eavesdropping devices in difficult-to-reach places. SCS collection tactics allegedly encompass “close surveillance, burglary, wiretapping, breaking and entering”.[14][15]

Unlike the Defense Intelligence Agency (DIA) and the Central Intelligence Agency (CIA), both of which specialize primarily in foreign human espionage, NSA does not unilaterally conduct human-source intelligence gathering, despite often being portrayed so in popular culture. Instead, NSA is entrusted with assistance to and coordination of SIGINT elements at other government organizations, which are prevented by law from engaging in such activities without the approval of the NSA via the Defense Secretary.[16] As part of these streamlining responsibilities, the agency has a co-located organization called the Central Security Service (CSS), which was created to facilitate cooperation between NSA and other U.S. military cryptanalysis components. Additionally, the NSA Director simultaneously serves as the Commander of the United States Cyber Command and as Chief of the Central Security Service.

Originating as a unit to decipher coded communications in World War II, it was officially formed as the NSA by President Harry S. Truman in 1952. Since then, it has become one of the largest U.S. intelligence organizations in terms of personnel and budget,[6][17] operating as part of the Department of Defense and simultaneously reporting to the Director of National Intelligence.

NSA surveillance has been a matter of political controversy on several occasions, such as its spying on anti-Vietnam-war leaders or economic espionage. In 2013, the extent of some of the NSA’s secret surveillance programs was revealed to the public by Edward Snowden. According to the leaked documents, the NSA intercepts the communications of over a billion people worldwide, many of whom are United States citizens, and tracks the movement of hundreds of millions of people using cellphones. Internationally, research has pointed to the NSA’s ability to surveil the domestic Internet traffic of foreign countries through “boomerang routing”.[18]

Contents

 [show] 

History

Army predecessor

The origins of the National Security Agency can be traced back to April 28, 1917, three weeks after the U.S. Congress declared war on Germany in World War I. A code and cipher decryption unit was established as the Cable and Telegraph Section which was also known as the Cipher Bureau. It was headquartered in Washington, D.C. and was part of the war effort under the executive branch without direct Congressional authorization. During the course of the war it was relocated in the army’s organizational chart several times. On July 5, 1917, Herbert O. Yardley was assigned to head the unit. At that point, the unit consisted of Yardley and two civilian clerks. It absorbed the navy’s cryptoanalysis functions in July 1918. World War I ended on November 11, 1918, and MI-8 moved to New York City on May 20, 1919, where it continued intelligence activities as the Code Compilation Company under the direction of Yardley.[19][20]

Black Chamber

Western Union allowed MI-8 to monitor telegraphic communications passing through the company’s wires until 1929.[21]

MI-8 also operated the so-called “Black Chamber“.[22] The Black Chamber was located on East 37th Street in Manhattan. Its purpose was to crack the communications codes of foreign governments. Jointly supported by the State Department and the War Department, the chamber persuaded Western Union, the largest U.S. telegram company, to allow government officials to monitor private communications passing through the company’s wires.[23]

Other “Black Chambers” were also found in Europe. They were established by the French and British governments to read the letters of targeted individuals, employing a variety of techniques to surreptitiously open, copy, and reseal correspondence before forwarding it to unsuspecting recipients.[24]

Despite the American Black Chamber’s initial successes, it was shut down in 1929 by U.S. Secretary of State Henry L. Stimson, who defended his decision by stating: “Gentlemen do not read each other’s mail”.[21]

World War II and its aftermath

During World War II, the Signal Security Agency (SSA) was created to intercept and decipher the communications of the Axis powers.[25] When the war ended, the SSA was reorganized as the Army Security Agency (ASA), and it was placed under the leadership of the Director of Military Intelligence.[25]

On May 20, 1949, all cryptologic activities were centralized under a national organization called the Armed Forces Security Agency (AFSA).[25]This organization was originally established within the U.S. Department of Defense under the command of the Joint Chiefs of Staff.[26] The AFSA was tasked to direct Department of Defense communications and electronic intelligence activities, except those of U.S. military intelligence units.[26] However, the AFSA was unable to centralize communications intelligence and failed to coordinate with civilian agencies that shared its interests such as the Department of State, Central Intelligence Agency (CIA) and the Federal Bureau of Investigation (FBI).[26] In December 1951, President Harry S. Truman ordered a panel to investigate how AFSA had failed to achieve its goals. The results of the investigation led to improvements and its redesignation as the National Security Agency.[27]

The agency was formally established by Truman in a memorandum of October 24, 1952, that revised National Security Council Intelligence Directive (NSCID) 9.[28] Since President Truman’s memo was a classified document,[28] the existence of the NSA was not known to the public at that time. Due to its ultra-secrecy the U.S. intelligence community referred to the NSA as “No Such Agency”.[29]

Vietnam War

In the 1960s, the NSA played a key role in expanding America’s commitment to the Vietnam War by providing evidence of a North Vietnamese attack on the American destroyer USS Maddox during the Gulf of Tonkin incident.[30]

A secret operation, code-named “MINARET“, was set up by the NSA to monitor the phone communications of Senators Frank Church and Howard Baker, as well as major civil rights leaders, including Martin Luther King, Jr., and prominent U.S. journalists and athletes who criticized the Vietnam War.[31] However, the project turned out to be controversial, and an internal review by the NSA concluded that its Minaret program was “disreputable if not outright illegal”.[31]

The NSA mounted a major effort to secure tactical communications among U.S. forces during the war with mixed success. The NESTOR family of compatible secure voice systems it developed was widely deployed during the Vietnam War, with about 30,000 NESTOR sets produced. However a variety of technical and operational problems limited their use, allowing the North Vietnamese to exploit intercepted U.S. communications.[32]:Vol I, p.79

Church Committee hearings

Further information: Watergate scandal and Church Committee

In the aftermath of the Watergate scandal, a congressional hearing in 1975 led by Sen. Frank Church[33] revealed that the NSA, in collaboration with Britain’s SIGINT intelligence agency Government Communications Headquarters (GCHQ), had routinely intercepted the international communications of prominent anti-Vietnam war leaders such as Jane Fonda and Dr. Benjamin Spock.[34] Following the resignation of President Richard Nixon, there were several investigations of suspected misuse of FBI, CIA and NSA facilities.[35] Senator Frank Church uncovered previously unknown activity,[35]such as a CIA plot (ordered by the administration of President John F. Kennedy) to assassinate Fidel Castro.[36] The investigation also uncovered NSA’s wiretaps on targeted American citizens.[37]

After the Church Committee hearings, the Foreign Intelligence Surveillance Act of 1978 was passed into law. This was designed to limit the practice of mass surveillance in the United States.[35]

From 1980s to 1990s

In 1986, the NSA intercepted the communications of the Libyan government during the immediate aftermath of the Berlin discotheque bombing. The White House asserted that the NSA interception had provided “irrefutable” evidence that Libya was behind the bombing, which U.S. President Ronald Reagan cited as a justification for the 1986 United States bombing of Libya.[38][39]

In 1999, a multi-year investigation by the European Parliament highlighted the NSA’s role in economic espionage in a report entitled ‘Development of Surveillance Technology and Risk of Abuse of Economic Information’.[40] That year, the NSA founded the NSA Hall of Honor, a memorial at the National Cryptologic Museum in Fort Meade, Maryland.[41] The memorial is a, “tribute to the pioneers and heroes who have made significant and long-lasting contributions to American cryptology”.[41] NSA employees must be retired for more than fifteen years to qualify for the memorial.[41]

NSA’s infrastructure deteriorated in the 1990s as defense budget cuts resulted in maintenance deferrals. On January 24, 2000, NSA headquarters suffered a total network outage for three days caused by an overloaded network. Incoming traffic was successfully stored on agency servers, but it could not be directed and processed. The agency carried out emergency repairs at a cost of $3 million to get the system running again. (Some incoming traffic was also directed instead to Britain’s GCHQ for the time being.) Director Michael Hayden called the outage a “wake-up call” for the need to invest in the agency’s infrastructure.[42]

War on Terror

After Osama bin Laden moved to Afghanistan in the 1980s, the NSA recorded all of his phone calls via satellite, logging over 2,000 minutes of conversation[43]

In the aftermath of the September 11 attacks, the NSA created new IT systems to deal with the flood of information from new technologies like the Internet and cellphones. ThinThread contained advanced data mining capabilities. It also had a “privacy mechanism”; surveillance was stored encrypted; decryption required a warrant. The research done under this program may have contributed to the technology used in later systems. ThinThread was cancelled when Michael Hayden chose Trailblazer, which did not include ThinThread’s privacy system.[44]

Trailblazer Project ramped up in 2002. SAIC, Boeing, CSC, IBM, and Litton worked on it. Some NSA whistleblowers complained internally about major problems surrounding Trailblazer. This led to investigations by Congress and the NSA and DoD Inspectors General. The project was cancelled in early 2004. Several whistleblowers were later arrested and charged with violating federal espionage laws.

Turbulence started in 2005. It was developed in small, inexpensive “test” pieces, rather than one grand plan like Trailblazer. It also included offensive cyber-warfare capabilities, like injecting malware into remote computers. Congress criticized Turbulence in 2007 for having similar bureaucratic problems as Trailblazer.[45] It was to be a realization of information processing at higher speeds in cyberspace.[46]

Global surveillance disclosures

The massive extent of the NSA’s spying, both foreign and domestic, was revealed to the public in a series of detailed disclosures of internal NSA documents beginning in June 2013. Most of the disclosures were leaked by former NSA contractor, Edward Snowden.

Scope of surveillance

It was revealed that the NSA intercepts telephone and Internet communications of over a billion people worldwide, seeking information on terrorism as well as foreign politics, economics[47] and “commercial secrets”.[48] In a declassified document it was revealed that 17,835 phone lines were on an improperly permitted “alert list” from 2006 to 2009 in breach of compliance, which tagged these phone lines for daily monitoring.[49][50][51] Eleven percent of these monitored phone lines met the agency’s legal standard for “reasonably articulable suspicion” (RAS).[49][52]

A dedicated unit of the NSA locates targets for the CIA for extrajudicial assassination in the Middle East.[53] The NSA has also spied extensively on the European Union, the United Nations and numerous governments including allies and trading partners in Europe, South America and Asia.[54][55]

The NSA tracks the locations of hundreds of millions of cellphones per day, allowing it to map people’s movements and relationships in detail.[56]It reportedly has access to all communications made via Google, Microsoft, Facebook, Yahoo, YouTube, AOL, Skype, Apple and Paltalk,[57] and collects hundreds of millions of contact lists from personal email and instant messaging accounts each year.[58] It has also managed to weaken much of the encryption used on the Internet (by collaborating with, coercing or otherwise infiltrating numerous technology companies), so that the majority of Internet privacy is now vulnerable to the NSA and other attackers.[59][60]

Domestically, the NSA collects and stores metadata records of phone calls,[61] including over 120 million US Verizon subscribers,[62] as well as Internet communications,[57] relying on a secret interpretation of the Patriot Act whereby the entirety of US communications may be considered “relevant” to a terrorism investigation if it is expected that even a tiny minority may relate to terrorism.[63] The NSA supplies foreign intercepts to the DEA, IRS and other law enforcement agencies, who use these to initiate criminal investigations. Federal agents are then instructed to “recreate” the investigative trail via parallel construction.[64]

The NSA also spies on influential Muslims to obtain information that could be used to discredit them, such as their use of pornography. The targets, both domestic and abroad, are not suspected of any crime but hold religious or political views deemed “radical” by the NSA.[65]

Although NSA’s surveillance activities are controversial, government agencies and private enterprises have common needs, and sometimes cooperate at subtle and complex technical levels. Big data is becoming more advantageous, justifying the cost of required computer hardware, and social media lead the trend. The interests of NSA and Silicon Valley began to converge as advances in computer storage technology drastically reduced the costs of storing enormous amounts of data and at the same time the value of the data for use in consumer marketing began to rise. On the other hand, social media sites are growing as voluntary data mining operations on a scale that rivals or exceeds anything the government could attempt on its own.[66]

According to a report in The Washington Post in July 2014, relying on information provided by Snowden, 90% of those placed under surveillance in the U.S. are ordinary Americans, and are not the intended targets. The newspaper said it had examined documents including emails, text messages, and online accounts that support the claim.[67]

Legal accountability

Despite President Obama’s claims that these programs have congressional oversight, members of Congress were unaware of the existence of these NSA programs or the secret interpretation of the Patriot Act, and have consistently been denied access to basic information about them.[68] Obama has also claimed that there are legal checks in place to prevent inappropriate access of data and that there have been no examples of abuse;[69] however, the secret FISC court charged with regulating the NSA’s activities is, according to its chief judge, incapable of investigating or verifying how often the NSA breaks even its own secret rules.[70] It has since been reported that the NSA violated its own rules on data access thousands of times a year, many of these violations involving large-scale data interceptions;[71] and that NSA officers have even used data intercepts to spy on love interests.[72] The NSA has “generally disregarded the special rules for disseminating United States person information” by illegally sharing its intercepts with other law enforcement agencies.[73] A March 2009 opinion of the FISC court, released by court order, states that protocols restricting data queries had been “so frequently and systemically violated that it can be fairly said that this critical element of the overall … regime has never functioned effectively.”[74][75] In 2011 the same court noted that the “volume and nature” of the NSA’s bulk foreign Internet intercepts was “fundamentally different from what the court had been led to believe”.[73] Email contact lists (including those of US citizens) are collected at numerous foreign locations to work around the illegality of doing so on US soil.[58]

Legal opinions on the NSA’s bulk collection program have differed. In mid-December 2013, U.S. District Court Judge Richard Leon ruled that the “almost-Orwellian” program likely violates the Constitution, and wrote, “I cannot imagine a more ‘indiscriminate’ and ‘arbitrary invasion’ than this systematic and high-tech collection and retention of personal data on virtually every single citizen for purposes of querying and analyzing it without prior judicial approval. Surely, such a program infringes on ‘that degree of privacy’ that the Founders enshrined in the Fourth Amendment. Indeed, I have little doubt that the author of our Constitution, James Madison, who cautioned us to beware ‘the abridgement of freedom of the people by gradual and silent encroachments by those in power,’ would be aghast.”[76]

Later that month, U.S. District Judge William Pauley ruled that the NSA’s collection of telephone records is legal and valuable in the fight against terrorism. In his opinion, he wrote, “a bulk telephony metadata collection program [is] a wide net that could find and isolate gossamer contacts among suspected terrorists in an ocean of seemingly disconnected data” and noted that a similar collection of data prior to 9/11 might have prevented the attack.[77]

An October 2014 United Nations report condemned mass surveillance by the United States and other countries as violating multiple international treaties and conventions that guarantee core privacy rights.[78]

Official responses

On March 20, 2013 the Director of National Intelligence, Lieutenant General James Clapper, testified before Congress that the NSA does not wittingly collect any kind of data on millions or hundreds of millions of Americans, but he retracted this in June after details of the PRISM program were published, and stated instead that meta-data of phone and Internet traffic are collected, but no actual message contents.[79] This was corroborated by the NSA Director, General Keith Alexander, before it was revealed that the XKeyscore program collects the contents of millions of emails from US citizens without warrant, as well as “nearly everything a user does on the Internet”. Alexander later admitted that “content” is collected, but stated that it is simply stored and never analyzed or searched unless there is “a nexus to al-Qaida or other terrorist groups”.[69]

Regarding the necessity of these NSA programs, Alexander stated on June 27 that the NSA’s bulk phone and Internet intercepts had been instrumental in preventing 54 terrorist “events”, including 13 in the US, and in all but one of these cases had provided the initial tip to “unravel the threat stream”.[80] On July 31 NSA Deputy Director John Inglis conceded to the Senate that these intercepts had not been vital in stopping any terrorist attacks, but were “close” to vital in identifying and convicting four San Diego men for sending US$8,930 to Al-Shabaab, a militia that conducts terrorism in Somalia.[81][82][83]

The U.S. government has aggressively sought to dismiss and challenge Fourth Amendment cases raised against it, and has granted retroactive immunity to ISPs and telecoms participating in domestic surveillance.[84][85] The U.S. military has acknowledged blocking access to parts of The Guardian website for thousands of defense personnel across the country,[86][87] and blocking the entire Guardian website for personnel stationed throughout Afghanistan, the Middle East, and South Asia.[88]

Organizational structure

Michael S. Rogers, the director of the NSA.

The NSA is led by the Director of the National Security Agency (DIRNSA), who also serves as Chief of the Central Security Service (CHCSS) and Commander of the United States Cyber Command (USCYBERCOM) and is the highest-ranking military official of these organizations. He is assisted by a Deputy Director, who is the highest-ranking civilian within the NSA/CSS.

NSA also has an Inspector General, head of the Office of the Inspector General (OIG), a General Counsel, head of the Office of the General Counsel (OGC) and a Director of Compliance, who is head of the Office of the Director of Compliance (ODOC).[89]

Unlike other intelligence organizations such as CIA or DIA, NSA has always been particularly reticent concerning its internal organizational structure.

As of the mid-1990s, the National Security Agency was organized into five Directorates:

  • The Operations Directorate, which was responsible for SIGINT collection and processing.
  • The Technology and Systems Directorate, which develops new technologies for SIGINT collection and processing.
  • The Information Systems Security Directorate, which was responsible for NSA’s communications and information security missions.
  • The Plans, Policy and Programs Directorate, which provided staff support and general direction for the Agency.
  • The Support Services Directorate, which provided logistical and administrative support activities.[90]

Each of these directorates consisted of several groups or elements, designated by a letter. There were for example the A Group, which was responsible for all SIGINT operations against the Soviet Union and Eastern Europe, and G Group, which was responsible for SIGINT related to all non-communist countries. These groups were divided in units designated by an additional number, like unit A5 for breaking Soviet codes, and G6, being the office for the Middle East, North Africa, Cuba, Central and South America.[91][92]

Structure

As of 2013, NSA has about a dozen directorates, which are designated by a letter, although not all of them are publicly known. The directorates are divided in divisions and units starting with the letter of the parent directorate, followed by a number for the division, the sub-unit or a sub-sub-unit.

The main elements of the organizational structure of the NSA are:[93]

  • F – Directorate only known from unit F6, the Special Collection Service (SCS), which is a joint program created by CIA and NSA in 1978 to facilitate clandestine activities such as bugging computers throughout the world, using the expertise of both agencies.[94]
  • G – Directorate only known from unit G112, the office that manages the Senior Span platform, attached to the U2 spy planes.[95]
  • I – Information Assurance Directorate (IAD), which ensures availability, integrity, authentication, confidentiality, and non-repudiation of national security and telecommunications and information systems (national security systems).
  • J – Directorate only known from unit J2, the Cryptologic Intelligence Unit
  • L – Installation and Logistics
  • M – Human Resources
  • Q – Security and Counterintelligence
  • R – Research Directorate, which conducts research on signals intelligence and on information assurance for the U.S. Government.[96]
  • S – Signals Intelligence Directorate (SID), which is responsible for the collection, analysis, production and dissemination of signals intelligence. This directorate is led by a director and a deputy director. The SID consists of the following divisions:
    • S1 – Customer Relations
    • S2 – Analysis and Production Centers, with the following so-called Product Lines:
      • S2A: South Asia, S2B: China and Korea, S2C: International Security, S2E: Middle East/Asia, S2F: International Crime, S2G: Counter-proliferation, S2H: Russia, S2I: Counter-terrorism, S2J: Weapons and Space, S2T: Current Threats
    • S3 – Data Acquisition, with these divisions for the main collection programs:
      • S31 – Cryptanalysis and Exploitation Services (CES)
      • S32 – Tailored Access Operations (TAO), which hacks into foreign computers to conduct cyber-espionage and reportedly is “the largest and arguably the most important component of the NSA’s huge Signal Intelligence (SIGINT) Directorate, consisting of over 1,000 military and civilian computer hackers, intelligence analysts, targeting specialists, computer hardware and software designers, and electrical engineers.”[97]
      • S33 – Global Access Operations (GAO), which is responsible for intercepts from satellites and other international SIGINT platforms.[98] A tool which details and maps the information collected by this unit is code-named Boundless Informant.
      • S34 – Collections Strategies and Requirements Center
      • S35 – Special Source Operations (SSO), which is responsible for domestic and compartmented collection programs, like for example the PRISM program.[98] Special Source Operations is also mentioned in connection to the FAIRVIEW collection program.[99]
  • T – Technical Directorate (TD)
  • Directorate for Education and Training
  • Directorate for Corporate Leadership
  • Foreign Affairs Directorate, which acts as liaison with foreign intelligence services, counter-intelligence centers and the UKUSA-partners.
  • Acquisitions and Procurement Directorate
  • Information Sharing Services (ISS), led by a chief and a deputy chief.[100]

In the year 2000, a leadership team was formed, consisting of the Director, the Deputy Director and the Directors of the Signals Intelligence (SID), the Information Assurance (IAD) and the Technical Directorate (TD). The chiefs of other main NSA divisions became associate directors of the senior leadership team.[101]

After president George W. Bush initiated the President’s Surveillance Program (PSP) in 2001, the NSA created a 24-hour Metadata Analysis Center (MAC), followed in 2004 by the Advanced Analysis Division (AAD), with the mission of analyzing content, Internet metadata and telephone metadata. Both units were part of the Signals Intelligence Directorate.[102]

A 2016 proposal would combine the Signals Intelligence Directorate with the Information Assurance Directorate into a Directorate of Operations.[103]

Watch centers

The NSA maintains at least two watch centers:

  • National Security Operations Center (NSOC), which is the NSA’s current operations center and focal point for time-sensitive SIGINT reporting for the United States SIGINT System (USSS). This center was established in 1968 as the National SIGINT Watch Center (NSWC) and renamed into National SIGINT Operations Center (NSOC) in 1973. This “nerve center of the NSA” got its current name in 1996.[104]
  • NSA/CSS Threat Operations Center (NTOC), which is the primary NSA/CSS partner for Department of Homeland Security response to cyber incidents. The NTOC establishes real-time network awareness and threat characterization capabilities to forecast, alert, and attribute malicious activity and enable the coordination of Computer Network Operations. The NTOC was established in 2004 as a joint Information Assurance and Signals Intelligence project.[105]

Employees

The number of NSA employees is officially classified[4] but there are several sources providing estimates. In 1961, NSA had 59,000 military and civilian employees, which grew to 93,067 in 1969, of which 19,300 worked at the headquarters at Fort Meade. In the early 1980s NSA had roughly 50,000 military and civilian personnel. By 1989 this number had grown again to 75,000, of which 25,000 worked at the NSA headquarters. Between 1990 and 1995 the NSA’s budget and workforce were cut by one third, which led to a substantial loss of experience.[106]

In 2012, the NSA said more than 30,000 employees worked at Fort Meade and other facilities.[2] In 2012, John C. Inglis, the deputy director, said that the total number of NSA employees is “somewhere between 37,000 and one billion” as a joke,[4] and stated that the agency is “probably the biggest employer of introverts.”[4] In 2013 Der Spiegel stated that the NSA had 40,000 employees.[5] More widely, it has been described as the world’s largest single employer of mathematicians.[107] Some NSA employees form part of the workforce of the National Reconnaissance Office (NRO), the agency that provides the NSA with satellite signals intelligence.

As of 2013 about 1,000 system administrators work for the NSA.[108]

Security issues

The NSA received criticism early on in 1960 after two agents had defected to the Soviet Union. Investigations by the House Un-American Activities Committee and a special subcommittee of the United States House Committee on Armed Services revealed severe cases of ignorance in personnel security regulations, prompting the former personnel director and the director of security to step down and leading to the adoption of stricter security practices.[109] Nonetheless, security breaches reoccurred only a year later when in an issue of Izvestia of July 23, 1963, a former NSA employee published several cryptologic secrets.

The very same day, an NSA clerk-messenger committed suicide as ongoing investigations disclosed that he had sold secret information to the Soviets on a regular basis. The reluctance of Congressional houses to look into these affairs had prompted a journalist to write, “If a similar series of tragic blunders occurred in any ordinary agency of Government an aroused public would insist that those responsible be officially censured, demoted, or fired.” David Kahn criticized the NSA’s tactics of concealing its doings as smug and the Congress’ blind faith in the agency’s right-doing as shortsighted, and pointed out the necessity of surveillance by the Congress to prevent abuse of power.[109]

Edward Snowden‘s leaking of the existence of PRISM in 2013 caused the NSA to institute a “two-man rule“, where two system administrators are required to be present when one accesses certain sensitive information.[108] Snowden claims he suggested such a rule in 2009.[110]

Polygraphin

Defense Security Service (DSS) polygraph brochure given to NSA applicants

The NSA conducts polygraph tests of employees. For new employees, the tests are meant to discover enemy spies who are applying to the NSA and to uncover any information that could make an applicant pliant to coercion.[111] As part of the latter, historically EPQs or “embarrassing personal questions” about sexual behavior had been included in the NSA polygraph.[111] The NSA also conducts five-year periodic reinvestigation polygraphs of employees, focusing on counterintelligence programs. In addition the NSA conducts periodic polygraph investigations in order to find spies and leakers; those who refuse to take them may receive “termination of employment”, according to a 1982 memorandum from the director of the NSA.[112]

File:NSApolygraphvideo.webm

NSA-produced video on the polygraph process

There are also “special access examination” polygraphs for employees who wish to work in highly sensitive areas, and those polygraphs cover counterintelligence questions and some questions about behavior.[112] NSA’s brochure states that the average test length is between two and four hours.[113] A 1983 report of the Office of Technology Assessment stated that “It appears that the NSA [National Security Agency] (and possibly CIA) use the polygraph not to determine deception or truthfulness per se, but as a technique of interrogation to encourage admissions.”[114]Sometimes applicants in the polygraph process confess to committing felonies such as murder, rape, and selling of illegal drugs. Between 1974 and 1979, of the 20,511 job applicants who took polygraph tests, 695 (3.4%) confessed to previous felony crimes; almost all of those crimes had been undetected.[111]

In 2010 the NSA produced a video explaining its polygraph process.[115] The video, ten minutes long, is titled “The Truth About the Polygraph” and was posted to the Web site of the Defense Security Service. Jeff Stein of The Washington Post said that the video portrays “various applicants, or actors playing them — it’s not clear — describing everything bad they had heard about the test, the implication being that none of it is true.”[116] AntiPolygraph.org argues that the NSA-produced video omits some information about the polygraph process; it produced a video responding to the NSA video.[115] George Maschke, the founder of the Web site, accused the NSA polygraph video of being “Orwellian“.[116]

After Edward Snowden revealed his identity in 2013, the NSA began requiring polygraphing of employees once per quarter.[117]

Arbitrary firing

The number of exemptions from legal requirements has been criticized. When in 1964 the Congress was hearing a bill giving the director of the NSA the power to fire at will any employee,The Washington Post wrote: “This is the very definition of arbitrariness. It means that an employee could be discharged and disgraced on the basis of anonymous allegations without the slightest opportunity to defend himself.” Yet, the bill was accepted by an overwhelming majority.[109]

Insignia and memorials

Seal of the U.S. National Security Agency.svg

The heraldic insignia of NSA consists of an eagle inside a circle, grasping a key in its talons.[118] The eagle represents the agency’s national mission.[118] Its breast features a shield with bands of red and white, taken from the Great Seal of the United States and representing Congress.[118] The key is taken from the emblem of Saint Peter and represents security.[118]

When the NSA was created, the agency had no emblem and used that of the Department of Defense.[119] The agency adopted its first of two emblems in 1963.[119] The current NSA insignia has been in use since 1965, when then-Director, LTG Marshall S. Carter (USA) ordered the creation of a device to represent the agency.[120]

The NSA’s flag consists of the agency’s seal on a light blue background.

National Cryptologic Memorial

Crews associated with NSA missions have been involved in a number of dangerous and deadly situations.[121] The USS Liberty incident in 1967 and USS Pueblo incident in 1968 are examples of the losses endured during the Cold War.[121]

The National Security Agency/Central Security Service Cryptologic Memorial honors and remembers the fallen personnel, both military and civilian, of these intelligence missions.[122] It is made of black granite, and has 171 names carved into it, as of 2013 .[122] It is located at NSA headquarters. A tradition of declassifying the stories of the fallen was begun in 2001.[122]

NSANet (NSA’s intranet)

Behind the Green Door – Secure communications room with separate computer terminals for access to SIPRNET, GWAN, NSANET, and JWICS

NSANet stands for National Security Agency Network and is the official NSA intranet.[123] It is a classified network,[124] for information up to the level of TS/SCI[125] to support the use and sharing of intelligence data between NSA and the signals intelligence agencies of the four other nations of the Five Eyes partnership. The management of NSANet has been delegated to the Central Security Service Texas (CSSTEXAS).[126]

NSANet is a highly secured computer network consisting of fiber-optic and satellite communication channels which are almost completely separated from the public Internet. The network allows NSA personnel and civilian and military intelligence analysts anywhere in the world to have access to the agency’s systems and databases. This access is tightly controlled and monitored. For example, every keystroke is logged, activities are audited at random and downloading and printing of documents from NSANet are recorded.[127]

In 1998, NSANet, along with NIPRNET and SIPRNET, had “significant problems with poor search capabilities, unorganized data and old information”.[128] In 2004, the network was reported to have used over twenty commercial off-the-shelf operating systems.[129] Some universities that do highly sensitive research are allowed to connect to it.[130]

The thousands of Top Secret internal NSA documents that were taken by Edward Snowden in 2013 were stored in “a file-sharing location on the NSA’s intranet site” so they could easily be read online by NSA personnel. Everyone with a TS/SCI-clearance had access to these documents and as a system administrator, Snowden was responsible for moving accidentally misplaced highly sensitive documents to more secure storage locations.[131]

National Computer Security Center

The DoD Computer Security Center was founded in 1981 and renamed the National Computer Security Center (NCSC) in 1985. NCSC was responsible for computer security throughout the federal government.[132] NCSC was part of NSA,[133] and during the late 1980s and the 1990s, NSA and NCSC published Trusted Computer System Evaluation Criteria in a six-foot high Rainbow Series of books that detailed trusted computing and network platform specifications.[134] The Rainbow books were replaced by the Common Criteria, however, in the early 2000s.[134]

Facilities

Headquarters

National Security Agency headquarters in Fort Meade, 2013

Headquarters for the National Security Agency is located at 39°6′32″N 76°46′17″W in Fort George G. Meade, Maryland, although it is separate from other compounds and agencies that are based within this same military installation. Ft. Meade is about 20 mi (32 km) southwest of Baltimore,[135] and 25 mi (40 km) northeast of Washington, DC.[136] The NSA has its own exit off Maryland Route 295 South labeled “NSA Employees Only”.[137][138] The exit may only be used by people with the proper clearances, and security vehicles parked along the road guard the entrance.[139]

NSA is the largest employer in the U.S. state of Maryland, and two-thirds of its personnel work at Ft. Meade.[140] Built on 350 acres (140 ha; 0.55 sq mi)[141] of Ft. Meade’s 5,000 acres (2,000 ha; 7.8 sq mi),[142] the site has 1,300 buildings and an estimated 18,000 parking spaces.[136][143]

NSA headquarters building in Fort Meade (left), NSOC (right)

The main NSA headquarters and operations building is what James Bamford, author of Body of Secrets, describes as “a modern boxy structure” that appears similar to “any stylish office building.”[144] The building is covered with one-way dark glass, which is lined with copper shielding in order to prevent espionage by trapping in signals and sounds.[144] It contains 3,000,000 square feet (280,000 m2), or more than 68 acres (28 ha), of floor space; Bamford said that the U.S. Capitol “could easily fit inside it four times over.”[144]

The facility has over 100 watchposts,[145] one of them being the visitor control center, a two-story area that serves as the entrance.[144] At the entrance, a white pentagonal structure,[146] visitor badges are issued to visitors and security clearances of employees are checked.[147] The visitor center includes a painting of the NSA seal.[146]

The OPS2A building, the tallest building in the NSA complex and the location of much of the agency’s operations directorate, is accessible from the visitor center. Bamford described it as a “dark glass Rubik’s Cube“.[148] The facility’s “red corridor” houses non-security operations such as concessions and the drug store. The name refers to the “red badge” which is worn by someone without a security clearance. The NSA headquarters includes a cafeteria, a credit union, ticket counters for airlines and entertainment, a barbershop, and a bank.[146] NSA headquarters has its own post office, fire department, and police force.[149][150][151]

The employees at the NSA headquarters reside in various places in the Baltimore-Washington area, including Annapolis, Baltimore, and Columbia in Maryland and the District of Columbia, including the Georgetown community.[152]

Power consumption

Due to massive amounts of data processing, NSA is the largest electricity consumer in Maryland.[140]

Following a major power outage in 2000, in 2003 and in follow-ups through 2007, The Baltimore Sun reported that the NSA was at risk of electrical overload because of insufficient internal electrical infrastructure at Fort Meade to support the amount of equipment being installed. This problem was apparently recognized in the 1990s but not made a priority, and “now the agency’s ability to keep its operations going is threatened.”[153]

Baltimore Gas & Electric (BGE, now Constellation Energy) provided NSA with 65 to 75 megawatts at Ft. Meade in 2007, and expected that an increase of 10 to 15 megawatts would be needed later that year.[154] In 2011, NSA at Ft. Meade was Maryland’s largest consumer of power.[140] In 2007, as BGE’s largest customer, NSA bought as much electricity as Annapolis, the capital city of Maryland.[153]

One estimate put the potential for power consumption by the new Utah Data Center at US$40 million per year.[155]

History of headquarters

Headquarters at Fort Meade circa 1950s

When the agency was established, its headquarters and cryptographic center were in the Naval Security Station in Washington, D.C. The COMINT functions were located in Arlington Hall in Northern Virginia, which served as the headquarters of the U.S. Army‘s cryptographic operations.[156]Because the Soviet Union had detonated a nuclear bomb and because the facilities were crowded, the federal government wanted to move several agencies, including the AFSA/NSA. A planning committee considered Fort Knox, but Fort Meade, Maryland, was ultimately chosen as NSA headquarters because it was far enough away from Washington, D.C. in case of a nuclear strike and was close enough so its employees would not have to move their families.[157]

Construction of additional buildings began after the agency occupied buildings at Ft. Meade in the late 1950s, which they soon outgrew.[157] In 1963 the new headquarters building, nine stories tall, opened. NSA workers referred to the building as the “Headquarters Building” and since the NSA management occupied the top floor, workers used “Ninth Floor” to refer to their leaders.[158] COMSEC remained in Washington, D.C., until its new building was completed in 1968.[157] In September 1986, the Operations 2A and 2B buildings, both copper-shielded to prevent eavesdropping, opened with a dedication by President Ronald Reagan.[159] The four NSA buildings became known as the “Big Four.”[159] The NSA director moved to 2B when it opened.[159]

Fort Meade shooting[edit]

On March 30, 2015, shortly before 9 am, a stolen sports utility vehicle approached an NSA police vehicle blocking the road near the gate of Fort Meade, after it was told to leave the area. NSA officers fired on the SUV, killing the 27-year-old driver, Ricky Hall (a transgender person also known as Mya), and seriously injuring his 20-year-old male passenger. An NSA officer’s arm was injured when Hall subsequently crashed into his vehicle.[160][161]

The two, dressed in women’s clothing after a night of partying at a motel with the man they’d stolen the SUV from that morning, “attempted to drive a vehicle into the National Security Agency portion of the installation without authorization”, according to an NSA statement.[162] FBI spokeswoman Amy Thoreson said the incident is not believed to be related to terrorism.[163]In June 2015 the FBI closed its investigation into the incident and federal prosecutors have declined to bring charges against anyone involved.[164]

An anonymous police official told The Washington Post, “This was not a deliberate attempt to breach the security of NSA. This was not a planned attack.” The two are believed to have made a wrong turn off the highway, while fleeing from the motel after stealing the vehicle. A small amount of cocaine was found in the SUV. A local CBS reporter initially said a gun was found,[165]but her later revision does not.[166] Dozens of journalists were corralled into a parking lot blocks away from the scene, and were barred from photographing the area.[167]

Computing[edit]

In 1995, The Baltimore Sun reported that the NSA is the owner of the single largest group of supercomputers.[168]

NSA held a groundbreaking ceremony at Ft. Meade in May 2013 for its High Performance Computing Center 2, expected to open in 2016.[169] Called Site M, the center has a 150 megawatt power substation, 14 administrative buildings and 10 parking garages.[149] It cost $3.2 billion and covers 227 acres (92 ha; 0.355 sq mi).[149] The center is 1,800,000 square feet (17 ha; 0.065 sq mi)[149] and initially uses 60 megawatts of electricity.[170]

Increments II and III are expected to be completed by 2030, and would quadruple the space, covering 5,800,000 square feet (54 ha; 0.21 sq mi) with 60 buildings and 40 parking garages.[149] Defense contractors are also establishing or expanding cybersecurity facilities near the NSA and around the Washington metropolitan area.[149]

Other U.S. facilities

Buckley Air Force Base in Colorado

Utah Data Center

As of 2012, NSA collected intelligence from four geostationary satellites.[155] Satellite receivers were at Roaring Creek Station in Catawissa, Pennsylvania and Salt Creek Station in Arbuckle, California.[155] It operated ten to twenty taps on U.S. telecom switches. NSA had installations in several U.S. states and from them observed intercepts from Europe, the Middle East, North Africa, Latin America, and Asia.[155]

NSA had facilities at Friendship Annex (FANX) in Linthicum, Maryland, which is a 20 to 25-minute drive from Ft. Meade;[171] the Aerospace Data Facility at Buckley Air Force Base in Aurora outside Denver, Colorado; NSA Texas in the Texas Cryptology Center at Lackland Air Force Base in San Antonio, Texas; NSA Georgia at Fort Gordon in Augusta, Georgia; NSA Hawaii in Honolulu; the Multiprogram Research Facility in Oak Ridge, Tennessee, and elsewhere.[152][155]

On January 6, 2011 a groundbreaking ceremony was held to begin construction on NSA’s first Comprehensive National Cyber-security Initiative (CNCI) Data Center, known as the “Utah Data Center” for short. The $1.5B data center is being built at Camp Williams, Utah, located 25 miles (40 km) south of Salt Lake City, and will help support the agency’s National Cyber-security Initiative.[172] It is expected to be operational by September 2013.[155]

In 2009, to protect its assets and to access more electricity, NSA sought to decentralize and expand its existing facilities in Ft. Meade and Menwith Hill,[173] the latter expansion expected to be completed by 2015.[174]

The Yakima Herald-Republic cited Bamford, saying that many of NSA’s bases for its Echelon program were a legacy system, using outdated, 1990s technology.[175] In 2004, NSA closed its operations at Bad Aibling Station (Field Station 81) in Bad Aibling, Germany.[176] In 2012, NSA began to move some of its operations at Yakima Research Station, Yakima Training Center, in Washington state to Colorado, planning to leave Yakima closed.[177] As of 2013, NSA also intended to close operations at Sugar Grove, West Virginia.[175]

International stations

RAF Menwith Hill has the largest NSA presence in the United Kingdom.[174]

Following the signing in 1946–1956[178] of the UKUSA Agreement between the United States, United Kingdom, Canada, Australia and New Zealand, who then cooperated on signals intelligence and ECHELON,[179] NSA stations were built at GCHQ Bude in Morwenstow, United Kingdom; Geraldton, Pine Gap and Shoal Bay, Australia; Leitrim and Ottawa, Canada; Misawa, Japan; and Waihopai and Tangimoana,[180] New Zealand.[181]

NSA operates RAF Menwith Hill in North Yorkshire, United Kingdom, which was, according to BBC News in 2007, the largest electronic monitoring station in the world.[182] Planned in 1954, and opened in 1960, the base covered 562 acres (227 ha; 0.878 sq mi) in 1999.[183]

The agency’s European Cryptologic Center (ECC), with 240 employees in 2011, is headquartered at a US military compound in Griesheim, near Frankfurt in Germany. A 2011 NSA report indicates that the ECC is responsible for the “largest analysis and productivity in Europe” and focusses on various priorities, including Africa, Europe, the Middle East and counterterrorism operations.[184]

In 2013, a new Consolidated Intelligence Center, also to be used by NSA, is being built at the headquarters of the United States Army Europe in Wiesbaden, Germany.[185] NSA’s partnership with Bundesnachrichtendienst (BND), the German foreign intelligence service, was confirmed by BND president Gerhard Schindler.[185]

Thailand

Thailand is a “3rd party partner” of the NSA along with nine other nations.[186] These are non-English-speaking countries that have made security agreements for the exchange of SIGINT raw material and end product reports.

Thailand is the site of at least two US SIGINT collection stations. One is at the US Embassy in Bangkok, a joint NSA-CIA Special Collection Service (SCS) unit. It presumably eavesdrops on foreign embassies, governmental communications, and other targets of opportunity.[187]

The second installation is a FORNSAT (foreign satellite interception) station in the Thai city of Khon Kaen. It is codenamed INDRA, but has also been referred to as LEMONWOOD.[187] The station is approximately 40 ha (100 acres) in size and consists of a large 3,700–4,600 m2 (40,000–50,000 ft2) operations building on the west side of the ops compound and four radome-enclosed parabolic antennas. Possibly two of the radome-enclosed antennas are used for SATCOM intercept and two antennas used for relaying the intercepted material back to NSA. There is also a PUSHER-type circularly-disposed antenna array (CDAA) array just north of the ops compound.[188][189]

NSA activated Khon Kaen in October 1979. Its mission was to eavesdrop on the radio traffic of Chinese army and air force units in southern China, especially in and around the city of Kunming in Yunnan Province. Back in the late 1970s the base consisted only of a small CDAA antenna array that was remote-controlled via satellite from the NSA listening post at Kunia, Hawaii, and a small force of civilian contractors from Bendix Field Engineering Corp. whose job it was to keep the antenna array and satellite relay facilities up and running 24/7.[188]

According to the papers of the late General William Odom, the INDRA facility was upgraded in 1986 with a new British-made PUSHER CDAA antenna as part of an overall upgrade of NSA and Thai SIGINT facilities whose objective was to spy on the neighboring communist nations of Vietnam, Laos, and Cambodia.[188]

The base apparently fell into disrepair in the 1990s as China and Vietnam became more friendly towards the US, and by 2002 archived satellite imagery showed that the PUSHER CDAA antenna had been torn down, perhaps indicating that the base had been closed. At some point in the period since 9/11, the Khon Kaen base was reactivated and expanded to include a sizeable SATCOM intercept mission. It is likely that the NSA presence at Khon Kaen is relatively small, and that most of the work is done by civilian contractors.[188]

Mission

NSA’s eavesdropping mission includes radio broadcasting, both from various organizations and individuals, the Internet, telephone calls, and other intercepted forms of communication. Its secure communications mission includes military, diplomatic, and all other sensitive, confidential or secret government communications.[190]

According to the Washington Post, “[e]very day, collection systems at the National Security Agency intercept and store 1.7 billion e-mails, phone calls and other types of communications. The NSA sorts a fraction of those into 70 separate databases.”[191]

Because of its listening task, NSA/CSS has been heavily involved in cryptanalytic research, continuing the work of predecessor agencies which had broken many World War II codes and ciphers (see, for instance, Purple, Venona project, and JN-25).

In 2004, NSA Central Security Service and the National Cyber Security Division of the Department of Homeland Security (DHS) agreed to expand NSA Centers of Academic Excellence in Information Assurance Education Program.[192]

As part of the National Security Presidential Directive 54/Homeland Security Presidential Directive 23 (NSPD 54), signed on January 8, 2008 by President Bush, the NSA became the lead agency to monitor and protect all of the federal government’s computer networks from cyber-terrorism.[9]

Operations

Operations by the National Security Agency can be divided in three types:

  • Collection overseas, which falls under the responsibility of the Global Access Operations (GAO) division.
  • Domestic collection, which falls under the responsibility of the Special Source Operations (SSO) division.
  • Hacking operations, which falls under the responsibility of the Tailored Access Operations (TAO) division.

Collection overseas

Echelon

Main article: ECHELON

Echelon was created in the incubator of the Cold War.[193] Today it is a legacy system, and several NSA stations are closing.[175]

NSA/CSS, in combination with the equivalent agencies in the United Kingdom (Government Communications Headquarters), Canada (Communications Security Establishment), Australia (Defence Signals Directorate), and New Zealand (Government Communications Security Bureau), otherwise known as the UKUSA group,[194] was reported to be in command of the operation of the so-called ECHELON system. Its capabilities were suspected to include the ability to monitor a large proportion of the world’s transmitted civilian telephone, fax and data traffic.[195]

During the early 1970s, the first of what became more than eight large satellite communications dishes were installed at Menwith Hill.[196] Investigative journalist Duncan Campbell reported in 1988 on the ECHELON surveillance program, an extension of the UKUSA Agreement on global signals intelligence SIGINT, and detailed how the eavesdropping operations worked.[197] In November 3, 1999 the BBC reported that they had confirmation from the Australian Government of the existence of a powerful “global spying network” code-named Echelon, that could “eavesdrop on every single phone call, fax or e-mail, anywhere on the planet” with Britain and the United States as the chief protagonists. They confirmed that Menwith Hill was “linked directly to the headquarters of the US National Security Agency (NSA) at Fort Meade in Maryland”.[198]

NSA’s United States Signals Intelligence Directive 18 (USSID 18) strictly prohibited the interception or collection of information about “… U.S. persons, entities, corporations or organizations….” without explicit written legal permission from the United States Attorney General when the subject is located abroad, or the Foreign Intelligence Surveillance Court when within U.S. borders. Alleged Echelon-related activities, including its use for motives other than national security, including political and industrial espionage, received criticism from countries outside the UKUSA alliance.[199][200]

Protesters against NSA data mining in Berlin wearing Chelsea Manning and Edward Snowden masks.

Other SIGINT operations overseas

The NSA is also involved in planning to blackmail people with “SEXINT“, intelligence gained about a potential target’s sexual activity and preferences. Those targeted had not committed any apparent crime nor were charged with one.[201]

In order to support its facial recognition program, the NSA is intercepting “millions of images per day”.[202]

The Real Time Regional Gateway is a data collection program introduced in 2005 in Iraq by NSA during the Iraq War that consisted of gathering all electronic communication, storing it, then searching and otherwise analyzing it. It was effective in providing information about Iraqi insurgents who had eluded less comprehensive techniques.[203] This “collect it all” strategy introduced by NSA director, Keith B. Alexander, is believed by Glenn Greenwald of The Guardian to be the model for the comprehensive worldwide mass archiving of communications which NSA is engaged in as of 2013.[204]

BoundlessInformant

Edward Snowden revealed in June 2013 that between February 8 and March 8, 2013, the NSA collected about 124.8 billion telephone data items and 97.1 billion computer data items throughout the world, as was displayed in charts from an internal NSA tool codenamed Boundless Informant. It was reported that some of these data reflected eavesdropping on citizens in countries like Germany, Spain and France.[205]

BoundlessInformant employs big data databases, cloud computing technology, and Free and Open Source Software (FOSS) to analyze data collected worldwide by the NSA.[206]

Bypassing encryption

In 2013, reporters uncovered a secret memo that claims the NSA created and pushed for the adoption of the Dual_EC_DRBG encryption standard that contained built-in vulnerabilities in 2006 to the United States National Institute of Standards and Technology (NIST), and the International Organization for Standardization (aka ISO).[207][208] This memo appears to give credence to previous speculation by cryptographers at Microsoft Research.[209] Edward Snowden claims that the NSA often bypasses encryption altogether by lifting information before it is encrypted or after it is decrypted.[208]

XKeyscore rules (as specified in a file xkeyscorerules100.txt, sourced by German TV stations NDR and WDR, who claim to have excerpts from its source code) reveal that the NSA tracks users of privacy-enhancing software tools, including Tor; an anonymous email service provided by the MIT Computer Science and Artificial Intelligence Laboratory (CSAIL) in Cambridge, Massachusetts; and readers of the Linux Journal.[210][211]

Domestic activity

NSA’s mission, as set forth in Executive Order 12333 in 1981, is to collect information that constitutes “foreign intelligence or counterintelligence” while not “acquiring information concerning the domestic activities of United States persons”. NSA has declared that it relies on the FBI to collect information on foreign intelligence activities within the borders of the United States, while confining its own activities within the United States to the embassies and missions of foreign nations.[212] The appearance of a ‘Domestic Surveillance Directorate’ of the NSA was soon exposed as a hoax in 2013.[213][214]

NSA’s domestic surveillance activities are limited by the requirements imposed by the Fourth Amendment to the U.S. Constitution. The Foreign Intelligence Surveillance Court for example held in October 2011, citing multiple Supreme Court precedents, that the Fourth Amendment prohibitions against unreasonable searches and seizures applies to the contents of all communications, whatever the means, because “a person’s private communications are akin to personal papers.”[215] However, these protections do not apply to non-U.S. persons located outside of U.S. borders, so the NSA’s foreign surveillance efforts are subject to far fewer limitations under U.S. law.[216] The specific requirements for domestic surveillance operations are contained in the Foreign Intelligence Surveillance Act of 1978 (FISA), which does not extend protection to non-U.S. citizens located outside of U.S. territory.[216]

George W. Bush administration

George W. Bush, president during the 9/11 terrorist attacks, approved the Patriot Act shortly after the attacks to take anti-terrorist security measures. Title 1, 2, and 9 specifically authorized measures that would be taken by the NSA. These titles granted enhanced domestic security against terrorism, surveillance procedures, and improved intelligence, respectively. On March 10, 2004, there was a debate between President Bush and White House Counsel Alberto Gonzales, Attorney General John Ashcroft, and Acting Attorney General James Comey. The Attorney Generals were unsure if the NSA’s programs could be considered constitutional. They threatened to resign over the matter, but ultimately the NSA’s programs continued.[217] On March 11, 2004, President Bush signed a new authorization for mass surveillance of Internet records, in addition to the surveillance of phone records.This allowed the president to be able to override laws such as the Foreign Intelligence Surveillance Act, which protected civilians from mass surveillance. In addition to this, President Bush also signed that the measures of mass surveillance were also retroactively in place.[218]

Warrantless wiretaps

On December 16, 2005, The New York Times reported that, under White House pressure and with an executive order from President George W. Bush, the National Security Agency, in an attempt to thwart terrorism, had been tapping phone calls made to persons outside the country, without obtaining warrants from the United States Foreign Intelligence Surveillance Court, a secret court created for that purpose under the Foreign Intelligence Surveillance Act (FISA).[219]

One such surveillance program, authorized by the U.S. Signals Intelligence Directive 18 of President George Bush, was the Highlander Project undertaken for the National Security Agency by the U.S. Army 513th Military Intelligence Brigade. NSA relayed telephone (including cell phone) conversations obtained from ground, airborne, and satellite monitoring stations to various U.S. Army Signal Intelligence Officers, including the 201st Military Intelligence Battalion. Conversations of citizens of the U.S. were intercepted, along with those of other nations.[220]

Proponents of the surveillance program claim that the President has executive authority to order such action, arguing that laws such as FISA are overridden by the President’s Constitutional powers. In addition, some argued that FISA was implicitly overridden by a subsequent statute, the Authorization for Use of Military Force, although the Supreme Court’s ruling in Hamdan v. Rumsfeld deprecates this view. In the August 2006 case ACLU v. NSA, U.S. District Court Judge Anna Diggs Taylor concluded that NSA’s warrantless surveillance program was both illegal and unconstitutional. On July 6, 2007 the 6th Circuit Court of Appeals vacated the decision on the grounds that the ACLU lacked standing to bring the suit.[221]

On January 17, 2006, the Center for Constitutional Rights filed a lawsuit, CCR v. Bush, against the George W. Bush Presidency. The lawsuit challenged the National Security Agency’s (NSA’s) surveillance of people within the U.S., including the interception of CCR emails without securing a warrant first.[222][223]

In September 2008, the Electronic Frontier Foundation (EFF) filed a class action lawsuit against the NSA and several high-ranking officials of the Bush administration,[224] charging an “illegal and unconstitutional program of dragnet communications surveillance,”[225] based on documentation provided by former AT&T technician Mark Klein.[226]

As a result of the USA Freedom Act passed by Congress in June 2015, the NSA had to shut down its bulk phone surveillance program on November 29 of the same year. The USA Freedom Act forbids the NSA to collect metadata and content of phone calls unless it has a warrant for terrorism investigation. In that case the agency has to ask the telecom companies for the record, which will only be kept for six months.

AT&T Internet monitoring

In May 2006, Mark Klein, a former AT&T employee, alleged that his company had cooperated with NSA in installing Narus hardware to replace the FBI Carnivore program, to monitor network communications including traffic between American citizens.[227]

Data mining

NSA was reported in 2008 to use its computing capability to analyze “transactional” data that it regularly acquires from other government agencies, which gather it under their own jurisdictional authorities. As part of this effort, NSA now monitors huge volumes of records of domestic email data, web addresses from Internet searches, bank transfers, credit-card transactions, travel records, and telephone data, according to current and former intelligence officials interviewed by The Wall Street Journal. The sender, recipient, and subject line of emails can be included, but the content of the messages or of phone calls are not.[228]

A 2013 advisory group for the Obama administration, seeking to reform NSA spying programs following the revelations of documents released by Edward J. Snowden.[229] mentioned in ‘Recommendation 30’ on page 37, “…that the National Security Council staff should manage an interagency process to review on a regular basis the activities of the US Government regarding attacks that exploit a previously unknown vulnerability in a computer application.” Retired cyber security expert Richard A. Clarke was a group member and stated on April 11 that NSA had no advance knowledge of Heartbleed.[230]

Illegally obtained evidence

In August 2013 it was revealed that a 2005 IRS training document showed that NSA intelligence intercepts and wiretaps, both foreign and domestic, were being supplied to the Drug Enforcement Administration (DEA) and Internal Revenue Service (IRS) and were illegally used to launch criminal investigations of US citizens. Law enforcement agents were directed to conceal how the investigations began and recreate an apparently legal investigative trail by re-obtaining the same evidence by other means.[231][232]

Barack Obama administration

In the months leading to April 2009, the NSA intercepted the communications of American citizens, including a Congressman, although the Justice Department believed that the interception was unintentional. The Justice Department then took action to correct the issues and bring the program into compliance with existing laws.[233] United States Attorney General Eric Holder resumed the program according to his understanding of the Foreign Intelligence Surveillance Act amendment of 2008, without explaining what had occurred.[234]

Polls conducted in June 2013 found divided results among Americans regarding NSA’s secret data collection.[235] Rasmussen Reports found that 59% of Americans disapprove,[236] Gallup found that 53% disapprove,[237] and Pew found that 56% are in favor of NSA data collection.[238]

Section 215 metadata collection

On April 25, 2013, the NSA obtained a court order requiring Verizon‘s Business Network Services to provide metadata on all calls in its system to the NSA “on an ongoing daily basis” for a three-month period, as reported by The Guardian on June 6, 2013. This information includes “the numbers of both parties on a call … location data, call duration, unique identifiers, and the time and duration of all calls” but not “[t]he contents of the conversation itself”. The order relies on the so-called “business records” provision of the Patriot Act.[239][240]

In August 2013, following the Snowden leaks, new details about the NSA’s data mining activity were revealed. Reportedly, the majority of emails into or out of the United States are captured at “selected communications links” and automatically analyzed for keywords or other “selectors”. Emails that do not match are deleted.[241]

The utility of such a massive metadata collection in preventing terrorist attacks is disputed. Many studies reveal the dragnet like system to be ineffective. One such report, released by the New America Foundation concluded that after an analysis of 225 terrorism cases, the NSA “had no discernible impact on preventing acts of terrorism.”[242]

Defenders of the program say that while metadata alone can’t provide all the information necessary to prevent an attack, it assures the ability to “connect the dots”[243] between suspect foreign numbers and domestic numbers with a speed only the NSA’s software is capable of. One benefit of this is quickly being able to determine the difference between suspicious activity and real threats.[citation needed] As an example, NSA director General Keith Alexander mentioned at the annual Cybersecurity Summit in 2013, that metadata analysis of domestic phone call records after the Boston Marathon bombing helped determine that[clarification needed] another attack in New York was baseless.[243]

In addition to doubts about its effectiveness, many people argue that the collection of metadata is an unconstitutional invasion of privacy. As of 2015, the collection process remains legal and grounded in the ruling from Smith v. Maryland (1979). A prominent opponent of the data collection and its legality is U.S. District Judge Richard J. Leon, who issued a report in 2013[244] in which he stated: “I cannot imagine a more ‘indiscriminate’ and ‘arbitrary invasion’ than this systematic and high tech collection and retention of personal data on virtually every single citizen for purposes of querying and analyzing it without prior judicial approval…Surely, such a program infringes on ‘that degree of privacy’ that the founders enshrined in the Fourth Amendment”.

The PRISM program[edit]

PRISM: a clandestine surveillance program under which the NSA collects user data from companies like Microsoft and Facebook.

Under the PRISM program, which started in 2007,[245][246] NSA gathers Internet communications from foreign targets from nine major U.S. Internet-based communication service providers: Microsoft,[247] Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube and Apple. Data gathered include email, video and voice chat, videos, photos, VoIP chats such as Skype, and file transfers.

June 2015 – WikiLeaks: Industrial espionage

In June 2015, Wikileaks published documents, which showed that NSA spied on French companies.[248]

July 2015 – WikiLeaks: Espionage against German federal ministries[edit]

In July 2015, WikiLeaks published documents, which showed that NSA spied on federal German ministries since 1990s.[249][250] Even Germany’s Chancellor Angela Merkel‘s cellphones and phone of her predecessors had been intercepted.[251]

Claims of prevented terrorist attacks

Former NSA director General Keith Alexander claimed that in September 2009 the NSA prevented Najibullah Zazi and his friends from carrying out a terrorist attack.[252] However, this claim has been debunked and no evidence has been presented demonstrating that the NSA has ever been instrumental in preventing a terrorist attack.[253][254][255][256]

Hacking operations

Besides the more traditional ways of eavesdropping in order to collect signals intelligence, NSA is also engaged in hacking computers, smartphones and their networks. These operations are conducted by the Tailored Access Operations (TAO) division.

NSA’s China hacking group

According to the Foreign Policy magazine, “… the Office of Tailored Access Operations, or TAO, has successfully penetrated Chinese computer and telecommunications systems for almost 15 years, generating some of the best and most reliable intelligence information about what is going on inside the People’s Republic of China.”[257][258]

Syrian internet blackout

In an interview with Wired magazine, Edward Snowden said the Tailored Access Operations division accidentally caused Syria‘s internet blackout in 2012.[259]

Suspected responsibility for hacking operations by the Equation Group[edit]

The espionage group named the Equation Group, described by discoverers Kaspersky Labs as one of the most advanced (if not the most advanced) in the world as of 2015,[260]:31 and connected to over 500 malware infections in at least 42 countries over many years, is suspected of being a part of NSA.[261][262] The group’s known espionage methods have been documented to include interdiction (interception of legitimate CDs sent by a scientific conference organizer by mail),[260]:15 and the “unprecedented” ability to infect and be transmitted through the hard drive firmware of several of the major hard drive manufacturers, and create and use hidden disk areas and virtual disk systems for its purposes, a feat demanding access to the manufacturer’s source code of each to achieve.[260]:16–18 The methods used to deploy the tools demonstrated “surgical precision”, going so far as to exclude specific countries by IP and allow targeting of specific usernames on discussion forums.[260]:23–26 The techniques and knowledge used by the Equation Group are considered in summary to be “out of the reach of most advanced threat groups in the world except [this group].[260]:31

Software backdoors

Linux kerne

Linus Torvalds, the founder of Linux kernel, joked during a LinuxCon keynote on September 18, 2013 that the NSA, who are the founder of SELinux, wanted a backdoor in the kernel.[263]However, later, Linus’ father, a Member of the European Parliament (MEP), revealed that the NSA actually did this.[264]

When my oldest son [Linus Torvalds] was asked the same question: “Has he been approached by the NSA about backdoors?” he said “No”, but at the same time he nodded. Then he was sort of in the legal free. He had given the right answer, [but] everybody understood that the NSA had approached him.

— Nils Torvalds, LIBE Committee Inquiry on Electronic Mass Surveillance of EU Citizens – 11th Hearing, 11 November 2013[265]
Microsoft Windows
Main article: _NSAKEY

_NSAKEY was a variable name discovered in Microsoft‘s Windows NT 4 Service Pack 5 (which had been released unstripped of its symbolic debugging data) in August 1999 by Andrew D. Fernandes of Cryptonym Corporation. That variable contained a 1024-bit public key.

IBM Notes

IBM Notes was the first widely adopted software product to use public key cryptography for client–server and server–server authentication and for encryption of data. Until US laws regulating encryption were changed in 2000, IBM and Lotus were prohibited from exporting versions of Notes that supported symmetric encryption keys that were longer than 40 bits. In 1997, Lotus negotiated an agreement with the NSA that allowed export of a version that supported stronger keys with 64 bits, but 24 of the bits were encrypted with a special key and included in the message to provide a “workload reduction factor” for the NSA. This strengthened the protection for users of Notes outside the US against private-sector industrial espionage, but not against spying by the US government.[266][267]

Boomerang routing

While it is assumed that foreign transmissions terminating in the U.S. (such as a non-U.S. citizen accessing a U.S. website) subject non-U.S. citizens to NSA surveillance, recent research into boomerang routing has raised new concerns about the NSA’s ability to surveil the domestic Internet traffic of foreign countries.[18] Boomerang routing occurs when an Internet transmission that originates and terminates in a single country transits another. Research at the University of Toronto has suggested that approximately 25% of Canadian domestic traffic may be subject to NSA surveillance activities as a result of the boomerang routing of Canadian Internet service providers.[18]

Hardware implanting

Intercepted packages are opened carefully by NSA employees
A “load station” implanting a beacon

A document included in NSA files released with Glenn Greenwald‘s book No Place to Hide details how the agency’s Tailored Access Operations (TAO) and other NSA units gain access to hardware. They intercept routers, servers and other network hardware being shipped to organizations targeted for surveillance and install covert implant firmware onto them before they are delivered. This was described by an NSA manager as “some of the most productive operations in TAO because they preposition access points into hard target networks around the world.”[268]

Computers seized by the NSA due to interdiction are often modified with a physical device known as Cottonmouth.[269]Cottonmouth is a device that can be inserted in the USB port of a computer in order to establish remote access to the targeted machine. According to NSA’s Tailored Access Operations (TAO) group implant catalog, after implanting Cottonmouth, the NSA can establish Bridging (networking) “that allows the NSA to load exploit software onto modified computers as well as allowing the NSA to relay commands and data between hardware and software implants.”[270]

Role in scientific research and development[

NSA has been involved in debates about public policy, both indirectly as a behind-the-scenes adviser to other departments, and directly during and after Vice Admiral Bobby Ray Inman‘s directorship. NSA was a major player in the debates of the 1990s regarding the export of cryptography in the United States. Restrictions on export were reduced but not eliminated in 1996.

Its secure government communications work has involved the NSA in numerous technology areas, including the design of specialized communications hardware and software, production of dedicated semiconductors (at the Ft. Meade chip fabrication plant), and advanced cryptography research. For 50 years, NSA designed and built most of its computer equipment in-house, but from the 1990s until about 2003 (when the U.S. Congress curtailed the practice), the agency contracted with the private sector in the fields of research and equipment.[271]

Data Encryption Standard

FROSTBURG was the NSA’s first supercomputer, used from 1991 to 1997

NSA was embroiled in some minor controversy concerning its involvement in the creation of the Data Encryption Standard (DES), a standard and public block cipher algorithm used by the U.S. government and banking community. During the development of DES by IBM in the 1970s, NSA recommended changes to some details of the design. There was suspicion that these changes had weakened the algorithm sufficiently to enable the agency to eavesdrop if required, including speculation that a critical component—the so-called S-boxes—had been altered to insert a “backdoor” and that the reduction in key length might have made it feasible for NSA to discover DES keys using massive computing power. It has since been observed that the S-boxes in DES are particularly resilient against differential cryptanalysis, a technique which was not publicly discovered until the late 1980s, but which was known to the IBM DES team.

The United States Senate Select Committee on Intelligence reviewed NSA’s involvement, and concluded that while the agency had provided some assistance, it had not tampered with the design.[272][273] In late 2009 NSA declassified information stating that “NSA worked closely with IBM to strengthen the algorithm against all except brute force attacks and to strengthen substitution tables, called S-boxes. Conversely, NSA tried to convince IBM to reduce the length of the key from 64 to 48 bits. Ultimately they compromised on a 56-bit key.”[274][275]

Advanced Encryption Standard

The involvement of NSA in the selection of a successor to Data Encryption Standard (DES), the Advanced Encryption Standard (AES), was limited to hardware performance testing (see AES competition).[276] NSA has subsequently certified AES for protection of classified information (for at most two levels, e.g. SECRET information in an unclassified environment[clarification needed]) when used in NSA-approved systems.[277]

NSA encryption systems

STU-III secure telephones on display at the National Cryptologic Museum

The NSA is responsible for the encryption-related components in these legacy systems:

  • FNBDT Future Narrow Band Digital Terminal[278]
  • KL-7 ADONIS off-line rotor encryption machine (post-WWII – 1980s)[279][280]
  • KW-26 ROMULUS electronic in-line teletypewriter encryptor (1960s–1980s)[281]
  • KW-37 JASON fleet broadcast encryptor (1960s–1990s)[280]
  • KY-57 VINSON tactical radio voice encryptor[281]
  • KG-84 Dedicated Data Encryption/Decryption[281]
  • STU-III secure telephone unit,[281] phased out by the STE[282]

The NSA oversees encryption in following systems which are in use today:

The NSA has specified Suite A and Suite B cryptographic algorithm suites to be used in U.S. government systems; the Suite B algorithms are a subset of those previously specified by NIST and are expected to serve for most information protection purposes, while the Suite A algorithms are secret and are intended for especially high levels of protection.[277]

SHA

The widely used SHA-1 and SHA-2 hash functions were designed by NSA. SHA-1 is a slight modification of the weaker SHA-0 algorithm, also designed by NSA in 1993. This small modification was suggested by NSA two years later, with no justification other than the fact that it provides additional security. An attack for SHA-0 that does not apply to the revised algorithm was indeed found between 1998 and 2005 by academic cryptographers. Because of weaknesses and key length restrictions in SHA-1, NIST deprecates its use for digital signatures, and approves only the newer SHA-2 algorithms for such applications from 2013 on.[287]

A new hash standard, SHA-3, has recently been selected through the competition concluded October 2, 2012 with the selection of Keccak as the algorithm. The process to select SHA-3 was similar to the one held in choosing the AES, but some doubts have been cast over it,[288][289] since fundamental modifications have been made to Keccak in order to turn it into a standard.[290] These changes potentially undermine the cryptanalysis performed during the competition and reduce the security levels of the algorithm.[288]

Dual_EC_DRBG random number generator

Main article: Dual_EC_DRBG

NSA promoted the inclusion of a random number generator called Dual_EC_DRBG in the U.S. National Institute of Standards and Technology‘s 2007 guidelines. This led to speculation of a backdoor which would allow NSA access to data encrypted by systems using that pseudo random number generator.[291]

This is now deemed to be plausible based on the fact that the output of the next iterations of the PRNG can provably be determined if the relation between two internal elliptic curve points is known.[292][293] Both NIST and RSA are now officially recommending against the use of this PRNG.[294][295]

Clipper chip

Main article: Clipper chip

Because of concerns that widespread use of strong cryptography would hamper government use of wiretaps, NSA proposed the concept of key escrow in 1993 and introduced the Clipper chip that would offer stronger protection than DES but would allow access to encrypted data by authorized law enforcement officials.[296] The proposal was strongly opposed and key escrow requirements ultimately went nowhere.[297] However, NSA’s Fortezza hardware-based encryption cards, created for the Clipper project, are still used within government, and NSA ultimately declassified and published the design of the Skipjack cipher used on the cards.[298][299]

Perfect Citizen

Main article: Perfect Citizen

Perfect Citizen is a program to perform vulnerability assessment by the NSA on U.S. critical infrastructure.[300][301] It was originally reported to be a program to develop a system of sensors to detect cyber attacks on critical infrastructure computer networks in both the private and public sector through a network monitoring system named Einstein.[302][303] It is funded by the Comprehensive National Cybersecurity Initiative and thus far Raytheon has received a contract for up to $100 million for the initial stage.

Academic research

NSA has invested many millions of dollars in academic research under grant code prefix MDA904, resulting in over 3,000 papers (as of 2007-10-11). NSA/CSS has, at times, attempted to restrict the publication of academic research into cryptography; for example, the Khufu and Khafre block ciphers were voluntarily withheld in response to an NSA request to do so. In response to a FOIA lawsuit, in 2013 the NSA released the 643-page research paper titled, “Untangling the Web: A Guide to Internet Research,[304] ” written and compiled by NSA employees to assist other NSA workers in searching for information of interest to the agency on the public Internet.[305]

Patents

NSA has the ability to file for a patent from the U.S. Patent and Trademark Office under gag order. Unlike normal patents, these are not revealed to the public and do not expire. However, if the Patent Office receives an application for an identical patent from a third party, they will reveal NSA’s patent and officially grant it to NSA for the full term on that date.[306]

One of NSA’s published patents describes a method of geographically locating an individual computer site in an Internet-like network, based on the latency of multiple network connections.[307] Although no public patent exists, NSA is reported to have used a similar locating technology called trilateralization that allows real-time tracking of an individual’s location, including altitude from ground level, using data obtained from cellphone towers.[308]

Legality

File:Ron Wyden and James Clapper - 12 March 2013.webm

Excerpt of James Clapper‘s false testimony to Congress on NSA surveillance programs

In the United States, at least since 2001,[309] there has been legal controversy over what signal intelligence can be used for and how much freedom the National Security Agency has to use signal intelligence.[310] The government has made, in 2015, slight changes in how it uses and collects certain types of data,[311] specifically phone records. President Barack Obama has asked lawyers and his national security team to look at the tactics that are being used by the NSA. President Obama made a speech on January 17, 2014 where he defended the national security measures, including the NSA, and their intentions for keeping the country safe through surveillance. He said that it is difficult to determine where the line should be drawn between what is too much surveillance and how much is needed for national security because technology is ever changing and evolving. Therefore, the laws cannot keep up with the rapid advancements.

President Obama did make some changes to national security regulations and how much data can be collected and surveyed.[citation needed] The first thing he added, was more presidential directive and oversight so that privacy and basic rights are not violated. The president would look over requests on behalf of American citizens to make sure that their personal privacy is not violated by the data that is being requested. Secondly, surveillance tactics and procedures are becoming more public, including over 40 rulings of the FISC that have been declassified.[citation needed] Thirdly, further protections are being placed on activities that are justified under Section 702, such as the ability to retain, search and use data collected in investigations, which allows the NSA to monitor and intercept interaction of targets overseas. Finally, national security letters, which are secret requests for information that the FBI uses in their investigations, are becoming less secretive. The secrecy of the information requested will not be indefinite and will terminate after a set time if future secrecy is not required.[citation needed] Concerning the bulk surveillance of American’s phone records, President Obama also ordered a transition from bulk surveillance under Section 215 to a new policy that will eliminate unnecessary bulk collection of metadata.

As of May 7, 2015, the U.S. Court of Appeals for the Second Circuit ruled that the interpretation of Section 215 of the Patriot Act was wrong and that the NSA program that has been collecting Americans’ phone records in bulk is illegal.[312] It stated that Section 215 cannot be clearly interpreted to allow government to collect national phone data and, as a result, expired on June 1, 2015. This ruling “is the first time a higher-level court in the regular judicial system has reviewed the N.S.A. phone records program.” [313] The new bill getting passed later in May taking its place is known as the U.S.A. Freedom Act, which will enable the NSA to continue hunting for terrorists by analyzing telephone links between callers but “keep the bulk phone records in the hands of phone companies.”[313] This would give phone companies the freedom to dispose the records in an 18-month period. The White House argued that this new ruling validated President Obama’s support of the government being extracted from bulk data collection and giving power to the telecommunications companies.

Previously, the NSA paid billions of dollars to telecommunications companies in order to collect data from them.[314] While companies such as Google and Yahoo! claim that they do not provide “direct access” from their servers to the NSA unless under a court order,[315] the NSA had access to emails, phone calls and cellular data users.[316] With this new ruling, telecommunications companies would not provide the NSA with bulk information. The companies would allow the disposal of data in every 18 months,[313] which is arguably putting the telecommunications companies at a higher advantage.

This ruling made the collecting of phone records illegal, but it did not rule on Section 215’s constitutionality. Senate Majority Leader Mitch McConnell has already put forth a new bill to re-authorize the Patriot Act.[317] Defenders of this surveillance program are claiming that judges who sit on the Foreign Intelligence Surveillance Court (FISC) had ruled 37 times that this kind of collection of data is, in fact, lawful.[317] The FISC is the court specifically mandated to grant surveillance orders in the name of foreign intelligence. The new ruling made by the Second District Court of Appeals now retroactively dismisses the findings of the FISC on this program.

See also

Notes

https://en.wikipedia.org/wiki/National_Security_Agency

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Progressive Interventionist Neoconservative Warmonger Senator John McCain — Let The NATO Nations Defend Themselves and Pay For Their Own Defense — Progressive Democrats and Republicans Have Given The American People The Warfare and Welfare State and Replaced The Constitutional American Republic With A Declining and Falling American Empire of The Two Party Tyranny — $20 Trillion in Debt and Unfunced Liabilities Exceeding $210 Trillion and Growing — A Day of Reckoning — United States Is Bankrupt — Steve Bannon and President Trump Know It — Videos

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 “It is our true policy to steer clear of permanent alliance with any portion of the foreign world”

~George Washington

 “Peace, commerce, and honest friendship with all nations-entangling alliances with none.”

~Thomas Jefferson

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Image result for NATO list of countries and date joined

Image result for NATO list of countries and date joined

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National Debt Clock

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Sen McCain on Sen. Paul: “The Senator from Kentucky is now working for Vladimir Putin.” (C-SPAN)

Rand Paul ‘John McCain is proof we need term limits’

[youtube3=https://www.youtube.com/watch?v=AGT4wCmKjas]

RAND PAUL VS. JOHN MCCAIN: RAND REACTS TO MCCAIN’S RUSSIAN AGENT CLAIM!!

Rand Paul: McCain ‘past his prime,’ maybe ‘unhinged’

Pence: Time For Allies To Pay Fair Share For NATO

Other NATO members need to pay their fair share?

Trump complains at NATO countries for not paying defense share

Congressman Ron Paul, MD – We’ve Been NeoConned

Steve Bannon Lays Out His AMAZING Political Philosophy

Published on Nov 18, 2016

Speech by Stephen K. Bannon (Steve Bannon), Donald Trump’s senior strategic advisor and architect of his winning 2016 election. In this speech delivered to the Liberty Restoration Foundation, Bannon layed out the poliitical philosophy both he and Trump embrace, and which appealed to the American people in the election. It is conservative, perhaps explaining why the political liberal left has resorted to evidently incorrect allegations of antisemitism or racism to try to derail his appointment. Bannon was a Hollywood producer who invested in the Seinfeld comedy TV series, and later became the chair of the Brietbart News Service, expanding it into one of the leading news sources nationally, as an alternative to liberal media outlets that previously dominated US media. He joined the Trump campaign in June 2016, leading him to victory and the White House. Do you think that Bannon is racist, as the democrats have alleged?

Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending

Uploaded on May 10, 2010

Huge budget deficits and record levels of national debt are getting a lot of attention, but this video explains that unfunded liabilities for entitlement programs are Americas real red-ink challenge. More important, this CF&P mini-documentary reveals that deficits and debt are symptoms of the real problem of an excessive burden of government spending. http://www.freedomandprosperity.org

III – Unfunded Liabilities

Rhett Talks – Is the United States Bankrupt?

Laurence Kotlikoff at MTSU November 5, 2015

‘US hides real debt, in worse shape than Greece’

Unfunded Liabilities: James Cox of Silver Bullion interviews Professor Kotlikoff

The Actual Fiscal Gap Is Approximately $210 Trillion Dollars With All The Unfunded Liabilities, The Average Person, Every Man, Woman, And Child Owes……$666,666.667

8 years ago, when Obama took office, the Debt Clock was at 9 TRILLION Dollars.
Today, the US Debt Clock at almost 20 TRILLION Dollars.
http://www.usdebtclock.org/

This is an 87% increase.

The actual Fiscal Gap is approximately $210 TRILLION Dollars.
with all the unfunded liabilities.

With the population of the US is over 315 MILLION People, this means that the average person, every man, woman, and child owes……$666,666.667

Where does this lead?
Look at Brazil, Argentina, Cyprus, Greece, Italy,……

Who ends up with the bill?
THE TAXPAYER!

http://investmentwatchblog.com/the-actual-fiscal-gap-is-approximately-210-trillion-dollars-with-all-the-unfunded-liabilities-the-average-person-every-man-woman-and-child-owes-666666-667/

17 Nobel Laureates and 1200+ Economists Agree with Ben Carson re U.S. Fiscal Gap

I cover economics, personal, national, and international.

Michelle Lee, a fact checker with the Washington Post, just posted a long and, to my mind, highly political column. Her column, read carefully, undermines Presidential candidate Ben Carson’s absolutely correct claim, made in announcing his candidacy, that the true measure of U.S. fiscal debt is not the $13 trillion our government reports as its debt. Instead, our true debt is over $200 trillion. Obviously, most of this true debt has been kept off the books by our politicians.

In this column, I’m going to defend Dr. Carson’s statement. But I want to point out that I don’t know Dr. Carson. I have never spoken with him. And I don’t yet know enough about Dr. Carson’s positions to have a view about his overall suitability for President. I am, however, impressed that out of the gate he is talking about the right measure of our nation’s fiscal condition.

I spoke at length to Michelle Lee prior to her writing her column. She told me she was a fact checker. But when fact checking turns into disguised political commentary, there’s a problem. Fact checkers are supposed to check the facts with experts. When it comes to economics, the experts are PhD economists, not political organizations or people, without real economics training, parading as economists, both of which she quotes in undermining Dr. Carson’s credibility.

Now let me turn to the substance. In referring to $211 trillion in unfunded mandates, Dr. Carson was referencing my calculation of the U.S. fiscal gap. As I explained in a NY Times op ed, the U.S. fiscal gap is $210 trillion. So Dr. Carson was off by $1 trillion – by less than one half of one percent.

The fiscal gap is the present value of all projected future expenditures less the present value of all projected future taxes. The fiscal gap is calculated over the infinite horizon. But since future expenditures and taxes far off in the future are being discounted, their contribution to the fiscal gap is smaller the farther out one goes. The $210 trillion figure is based on the Congressional Budget Office’s July 2014 Alternative Fiscal Scenario projections, which I extended beyond their 75-year horizon.

Dr. Carson referenced $211 trillion as the size of “unfunded mandates.” Michelle Lee correctly points out that Dr. Carson was referencing the U.S. fiscal gap, not the present value of mandatory spending. What she knew (because I told her), but failed to say, is that the present value of mandatory spending is far larger than $210 trillion because the fiscal gap is a net, not a gross number.

Michelle Lee is not a PhD economist. Nor is Bruce Barlett, whose truly absurd statement about the debt being an asset she quotes. Yes, it’s an asset, but it’s an asset that young and future generations must pay off. Social Security benefits are also an asset to their recipients, but again, they must be paid off by people who aren’t getting the benefits.

Michelle Lee apparently takes Bruce Bartell’s views more seriously than the views of 17 Nobel Laureates in economics and over 1200 PhD economists from MIT, Harvard, Stanford, Chicago, Berkeley, Yale, Columbia, Penn, and lesser known universities and colleges around the country. Each of these economists has endorsed The Inform Act, a bi-partisan bill that requires the CBO, GAO, and OMB to do infinite horizon fiscal gap accounting on a routine and ongoing basis.

https://www.forbes.com/sites/kotlikoff/2015/05/13/17-nobel-laureates-and-1200-economists-agree-with-ben-carson-re-u-s-fiscal-gap/#46c13e954d17

National Debt

What You’ll Find

Comprehensive and meticulously documented facts about the national debt. Learn about various measures of the national debt, contributing factors, consequences, and more. For example:


Citation Generator

Introductory Notes

In keeping with the practice of the Congressional Budget Office and other federal agencies that deal with budget policy, many of the federal debt, spending, and revenue figures in this research are expressed as a portion of gross domestic product (GDP). This is because debates about the size of government and the effects of its debt are frequently centered upon how much of a nation’s economy is consumed by government. This measure also accounts for population growth, some of the effects of inflation, and the relative capacity of government to service its debt.

However, the federal government does not have the entire U.S. economy at its disposal to service federal debt. The private sector, which produces the goods and services that comprise most of the economy, utilizes some of these resources, and local and state governments also consume some of the nation’s GDP. Hence, this research sometimes expresses federal debt as a portion of annual federal revenues. This is a more direct measure of the federal government’s capacity to service its debt.

In keeping with Just Facts’ Standards of Credibility, all graphs in this research show the full range of available data, and all facts are cited based upon availability and relevance, not to slant results by singling out specific years that are different from others.

Click here for a video that summarizes some of the key facts in this research.

Quantifying the National Debt

* As of March 1, 2017, the official debt of the United States government is $19.9 trillion ($19,920,418,771,289).[1] This amounts to:

  • $61,365 for every person living in the U.S.[2]
  • $158,326 for every household in the U.S.[3]
  • 106% of the U.S. gross domestic product.[4]
  • 560% of annual federal revenues.[5]
Debt as a Portion of the Economy

[6]

* Publicly traded companies are legally required to account for “explicit” and “implicit” future obligations such as employee pensions and retirement benefits.[7] [8] [9] The federal budget, which is the “government’s primary financial planning and control tool,” is not bound by this rule.[10] [11]

* At the close of the federal government’s 2016 fiscal year (September 30, 2016), the federal government had roughly:

  • $8.5 trillion ($8,542,000,000,000) in liabilities that are not accounted for in the publicly held national debt, such as federal employee retirement benefits, accounts payable, and environmental/disposal liabilities.[12]
  • $29.0 trillion ($29,038,000,000,000) in obligations for current Social Security participants above and beyond projected revenues from their payroll and benefit taxes, certain transfers from the general fund of the U.S. Treasury, and assets of the Social Security trust fund.[13] [14]
  • $32.9 trillion ($32,900,000,000,000) in obligations for current Medicare participants above and beyond projected revenues from their payroll taxes, benefit taxes, premium payments, and assets of the Medicare trust fund.[15] [16]

* The figures above are determined in a manner that approximates how publicly traded companies are required to calculate their liabilities and obligations.[17] [18] [19] The obligations for Social Security and Medicare represent how much money must be immediately placed in interest-bearing investments to cover the projected shortfalls between dedicated revenues and expenditures for all current participants in these programs (both taxpayers and beneficiaries).[20] [21] [22]

* Combining the figures above with the national debt and subtracting the value of federal assets, the federal government had about $84.3 trillion ($84,306,000,000,000) in debts, liabilities, and unfunded obligations at the close of its 2016 fiscal year.[23]

* This $84.3 trillion shortfall is 93% of the combined net worth of all U.S. households and nonprofit organizations, including all assets in savings, real estate, corporate stocks, private businesses, and consumer durable goods such as automobiles and furniture.[24] [25]

* This shortfall equates to:

  • $260,382 for every person living in the U.S.[26]
  • $670,058 for every household in the U.S.[27]
  • 451% of the U.S. gross domestic product.[28]
  • 2,370% of annual federal revenues.[29]

* These figures do not account for the future costs implied by any current policies except those of the Social Security and Medicare programs.[30]

* These figures are based upon current federal law and “a wide range of complex assumptions” made by federal agencies.[31] Regarding this:

  • The Board of Social Security Trustees has stated that “significant uncertainty” surrounds the “best estimates” of future circumstances.”[32]
  • The Board of Medicare Trustees has stated that the program’s financial projections “are highly uncertain, especially when looking out more than several decades.”
  • The Board of Medicare Trustees has stated that the program’s long-term costs may be “substantially higher” than projected under current law. This is because current law includes the effects of the Affordable Care Act, which will cut Medicare prices for “many” healthcare services to “less than half of their level” under prior law. Per the Trustees:
Absent an unprecedented change in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services will fall increasingly short of the costs of providing these services. … Before such an outcome would occur, lawmakers would likely intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.[33]

Causes of the National Debt

Spending and Taxes

Current Expenditures and Receipts

† To measure the entirety of government expenditures and receipts, “total” instead of “current” figures are preferable, but such data (shown in the next graph) only extends back to 1960.[34]

‡ In 2015, receipts consisted of: 97% taxes; 2% premiums, settlements, donations, fines, fees, & penalties; 1% interest & dividends.[35]

[36]

* Data from the graph above:

Year Receipts
(Portion of GDP)
Expenditures
(Portion of GDP)
1930 3% 3%
1940 8% 9%
1950 16% 16%
1960 17% 17%
1970 17% 20%
1980 19% 22%
1990 18% 22%
2000 20% 19%
2010 16% 25%
2015 19% 22%

Total Expenditures and Receipts

[37]

* Data from the graph above:

Year Receipts
(Portion of GDP)
Expenditures
(Portion of GDP)
1960 18% 19%
1970 18% 21%
1980 19% 23%
1990 18% 22%
2000 20% 19%
2010 16% 27%
2015 19% 22%

Spending Distribution

Current Expenditures by Function

† Social programs include income security, healthcare, education, housing, and recreation.

‡ National defense includes military spending and veterans’ benefits.

§ General government and debt service includes the executive & legislative branches, tax collection, financial management, and interest payments.

# Economic affairs includes transportation, general economic & labor affairs, agriculture, natural resources, energy, and space. (This excludes spending for infrastructure projects such as new highways, which is not accounted for in this graph.[38])

£ Public order and safety includes police, fire, law courts, prisons, and immigration enforcement.

[39]

* Data from the graph above:

Category Portion of Total Federal Spending
1960 1970 1980 1990 2000 2010 2015
Social Programs 21% 32% 45% 44% 54% 61% 63%
National Defense 53% 42% 26% 25% 19% 20% 19%
General Government & Debt Service 19% 18% 21% 25% 21% 13% 13%
Economic Affairs & Infrastructure 6% 7% 7% 5% 5% 4% 4%
Public Order & Safety 0% 0% 1% 1% 1% 1% 1%

Tax Distribution

Effective Tax Rates by Income

NOTE: This data does not account for 7% of federal revenues that could not be allocated to households by income group.

[40]

* Data from the graph above:

Average Effective Federal Tax Burdens (2013)
Income Group Household Income Tax Rate Taxes Paid
Lowest 20% $25,400 3.3% $838
Second 20% $47,400 8.4% $3,982
Middle 20% $69,700 12.8% $8,922
Fourth 20% $103,700 17.0% $17,629
Highest 20% $265,000 26.3% $69,695

* Breakdown of the highest 20%:

Income Group Household Income Tax Rate Taxes Paid
81st – 90th $147,100 20.7% $30,450
91st – 95th $201,400 23.0% $46,322
96th – 99th $326,800 26.3% $85,948
Top 1 % $1,571,600 34.0% $534,344

Consequences

* As detailed in publications of the Congressional Budget Office, the Brookings Institution, and Princeton University Press, the following are some potential consequences of unchecked government debt:

  • reduced “future national income and living standards.”[41] [42] [43]
  • “reductions in spending” on “government programs.”[44]
  • “higher marginal tax rates.”[45]
  • “higher inflation” that increases “the size of future budget deficits” and decreases the “the purchasing power” of citizens’ savings and income.”[46] [47]
  • restricted “ability of policymakers to use fiscal policy to respond to unexpected challenges, such as economic downturns or international crises.”[48]
  • “losses for mutual funds, pension funds, insurance companies, banks, and other holders of federal debt.”[49]
  • increased “probability of a fiscal crisis in which investors would lose confidence in the government’s ability to manage its budget, and the government would be forced to pay much more to borrow money.”[50] [51]

* In 2012, the Journal of Economic Perspectives published a paper about the economic consequences of government debt. Using 2,000+ data points on national debt and economic growth in 20 advanced economies (such as the United States, France, and Japan) from 1800–2009, the authors found that countries with national debts above 90% of GDP averaged 34% less real annual economic growth than when their debts were below 90% of GDP.[52]

* The United States exceeded a debt/GDP level of 90% in the second quarter of 2010.[53]

* Per the textbook Microeconomics for Today:

GDP per capita provides a general index of a country’s standard of living. Countries with low GDP per capita and slow growth in GDP per capita are less able to satisfy basic needs for food, shelter, clothing, education, and health.[54]

* In 2013, the Political Economy Research Institute at the University of Massachusetts, Amherst, published a working paper about the economic consequences of government debt. Using data on national debt and economic growth in 20 advanced economies from 1946-2009, the authors found that countries with national debts over 90% of GDP averaged:

  • 31% less real annual economic growth than countries with debts from 60% to 90% of GDP,
  • 29% less real annual economic growth than countries with debts from 30% to 60% of GDP,
  • and 48% less real annual economic growth than countries with debts from 0% to 30% of GDP.[55]

* The authors of the above-cited papers have engaged in a heated dispute about the results of their respective papers and the effects of government debt on economic growth. Facts about these issues can be found in the Just Facts Daily article, “Do large national debts harm economies?

Politics

Responsibility

* The U.S. Constitution vests Congress with the powers to tax, spend, and pay the debts of the federal government. Legislation to carry out these functions must either be:

  • passed by majorities in both houses of Congress and approved by the President; or
  • passed by majorities in both houses of Congress, vetoed by the President, and then passed by two-thirds of both houses of Congress; or
  • passed by majorities in both houses of Congress and left unaddressed by the President for ten days.[56]

* Other factors impacting the national debt include but are not limited to legislation passed by previous congresses and presidents,[57] economic cycles, terrorist attacks, natural disasters, demographics, and the actions of U.S. citizens and foreign governments.[58]


Current Policies

* In 2014, the Congressional Budget Office (CBO) projected the debt that the U.S. government would accumulate under current federal policies.[59] The projection used the following assumptions:

  • Unemployment will incrementally decline from 6.8% in 2014 to 5.8% in 2018 and 5.3% in 2027, where it will remain thereafter.[60] (For reference, the average of the previous 40 years is 6.5%.[61])
  • GDP growth will incrementally decline from an average rate of 3.4% above the rate of inflation in 2015 to 1.9% in 2021 and remain constant thereafter.[62] (The average of the previous 40 years is 2.9%.[63])
  • Federal revenues (i.e., taxes) will incrementally increase from 17.4% of GDP in 2014 to 18.0% in 2024 and remain constant thereafter.[64] (The average of the previous 40 years is 17.4%.[65])
  • Federal spending will incrementally increase from 20.4% of GDP in 2014 to 23.6% in 2025 and 31.8% in 2040.[66] (The average of the previous 40 years is 20.5%.[67])
  • Payments for Medicare services will undergo scheduled reductions that would likely cause “severe problems with beneficiary access to care.”[68] [69]

* Combining these projections with historical data yields the following results:

Revenues and Spending Under Current Policies

[70]

Debt Under Current Policies

† To measure the entirety of the national debt, it would be preferable to show “gross” debt instead of “publicly held” debt, but this data is not presented in this report. Nonetheless, it would make little difference because the excluded debt primarily resides in federal government trust funds that dwindle and become insolvent during the projection period.[71] Facts regarding why and how the federal government keeps its books in this manner are covered in the section of this research entitled “Government Accounting.”

[72]

* Per CBO, postponing action to stabilize the debt will:

  • punish younger generations of Americans, because most of the burden would fall on them.
  • reward older generations of Americans, because “they would partly or entirely avoid the policy changes needed to stabilize the debt.”
  • “substantially increase the size of the policy adjustments needed to put the budget on a sustainable course.”[73] [74]

* The following Ph.D. economists and political scientists have claimed that the level of national debt during World War II is a good reason to not be overly concerned about the modern national debt:

  • Paul Davidson, editor of the Journal of Post Keynesian Economics and author of The Keynes Solution: The Path to Global Economic Prosperity:[75]
Rather than bankrupting the nation, this large growth in the national debt [during World War II] promoted a prosperous economy. By 1946, the average American household was living much better economically than in the prewar days. Moreover, the children of that Depression–World War II generation were not burdened by having to pay off what then was considered a huge national debt. Instead, for the next quarter century, the economy continued on a path of unprecedented economic growth and prosperity….[76]
  • Douglas J. Amy, professor of politics at Mount Holyoke College:[77]
Conservatives are also wrong when they argue that deficit spending and a large national debt will inevitably undermine economic growth. To see why, we need to simply look back at times when we have run up large deficits and increased the national debt. The best example is World War II when the national debt soared to 120% of GDP—nearly twice the size of today’s debt. This spending not only got us out of the Great Depression but set the stage for a prolonged period of sustained economic growth in the 50s and 60s.[78]
  • Paul Krugman, Nobel Prize-winning economist and Princeton University professor:[79]
Right now, federal debt is about 50% of GDP. So even if we do run these deficits, federal debt as a share of GDP will be substantially less than it was at the end of World War II.
Again, the debt outlook is bad. But we’re not looking at something inconceivable, impossible to deal with; we’re looking at debt levels that a number of advanced countries, the U.S. included, have had in the past, and dealt with.[80]

* In the 40 years that followed the end of World War II (1946–1985):

  • federal spending as a percent of GDP averaged 42% lower than the last year of the war.[81]
  • publicly held debt as a percent of GDP decreased by 72 percentage points.[82]

* In 2010, around the time when the statements above were written, the Congressional Budget Office projected that under current policy and a sustained economic recovery over the next 40 years:

  • federal spending as a percent of GDP will average over 78% higher than in the four decades that followed World War II.[83]
  • publicly held debt as a percent of GDP will rise by 277 percentage points.[84]

Alternative Policies

* As alternatives to the CBO’s current policy projections detailed above, the CBO also ran projections for scenarios such as these:

1) Current law:[85]

  • Federal revenues will incrementally increase from 17.6% of GDP in 2014 to 18.0% in 2020, 19.9% in 2044, and 23.5% in 2084.[86] [87] At this point, federal revenues (i.e., taxes) will be 35% higher than the average of the previous 40 years.[88]
  • Federal spending on all government functions will incrementally increase from 20.4% of GDP in 2014 to 21.5% in 2020, and 26.0% in 2040.[89] At this point, spending will be 27% higher than the average of the previous 40 years.[90]
  • Payments for Medicare services will undergo reductions that will likely cause “severe problems with beneficiary access to care.”[91] [92]

2) Republican Congressman Paul Ryan’s 2014 budget resolution, called the “The Path to Prosperity”:[93]

  • Starting in 2024, Medicare beneficiaries will have a choice to enroll in private plans paid for by Medicare or remain in the traditional Medicare program.[94] Also starting in 2024, the eligibility age for Medicare benefits will incrementally rise to correspond with Social Security’s retirement age.[95] Compared to the projections under the current policy scenario, Medicare spending will be 0.5% lower in 2016, 2% lower in 2020, and 4% lower in 2024.[96]
  • Federal Medicaid spending will be converted to an “allotment that each state could tailor to meet its needs, indexed for inflation and population growth.”[97] The expansion of Medicaid manadated by the Affordable Care Act (a.k.a. Obamacare) will be repealed.[98] Compared to the projections under the current policy scenario, Medicaid spending will be 9% lower in 2016, 19% lower in 2020, and 24% lower in 2024.[99]
  • All federal spending related to Obamacare’s exchange subsidies will be repealed.[100]
  • Spending on all government functions except for interest payments on the national debt will incrementally decline from 18.9% of GDP in 2015 to 16% in 2025 before increasing to 16.4% in 2035.[101] (The average of the previous 40 years is 18.3%).[102]
  • Revenues will increase from 18.2% of GDP in 2015 to 18.4% in 2025, 19% in 2032 and stay constant thereafter.[103] (The average of the previous 40 years is 17.4%.[104])

* Combining historical data on the national debt with CBO’s projections for current policy, current law, and the Ryan plan yields the following results:

Debt Under Different Policies

[105] [106]


Public Opinion

* A poll conducted by NBC News and the Wall Street Journal in February 2011 found that:

  • 80% of Americans are concerned “a great deal” or “quite a bit” about federal budget deficits and the national debt.
  • if the deficit cannot be eliminated by cutting wasteful spending, 35% of Americans prefer to cut important programs while 33% prefer to raise taxes.
  • 22% think cuts in Social Security spending will be needed to “significantly reduce the federal budget deficit,” 49% do not, and 29% have no opinion or are not sure.
  • 18% think cuts in Medicare spending will be needed to “significantly reduce the federal budget deficit,” 54% do not, and 28% have no opinion or are not sure.[107]

* Other than interest on the national debt, most of the long-term growth in federal spending (as a percent of GDP) under the CBO’s current policy and current law scenarios stems from Social Security, Medicare, Medicaid, the Children’s Health Insurance Program, and Affordable Care Act (a.k.a. Obamacare) subsidies.[108]

* A poll conducted in November 2010 by the Associated Press and CNBC found that:

  • 85% of Americans are worried that the national debt “will harm future generations.”
  • 56% think “the shortfalls will spark a major economic crisis in the coming decade.”
  • when asked to choose between two options to balance the budget, 59% prefer to cut unspecified government services, while 30% prefer to raise unspecified taxes.[109]

* A poll conducted in July 2005 by the Associated Press and Ipsos found that:

  • 70% of Americans were worried about the size of the federal deficit.
  • 35% were willing to cut government spending.
  • 18% were willing to raise taxes.
  • 1% were willing to cut government spending and raise taxes.[110]

Congresses

* During the first session of the 113th Congress (January–December 2013), U.S. Representatives and Senators introduced 168 bills that would have reduced spending and 828 bills that would have raised spending.[111]

* The table below quantifies the costs and savings of these bills by political party. This data is provided by the National Taxpayers Union Foundation:

Costs/Savings of Bills Sponsored or Cosponsored

in 2013 by Typical Congressman (in Billions)

Increases Decreases Net Agenda
House Democrats $407 $10 $397
Senate Democrats $22 $3 $18
House Republicans $9 $91 -$83
Senate Republicans $6 $165 -$159

[112] [113]

* Click here to look up any member of Congress and see the annual costs or savings from the legislation he or she has sponsored or cosponsored.

* The table below quantifies the net agendas of the political parties in previous Congresses:

Costs/Savings of Bills Sponsored or Cosponsored in the First

Sessions of Congress by Typical Congressman (in Billions)

2011 2009 2007 2005 2003 2001 1999
House Democrats $497 $500 $547 $547 $402 $262 $34
Senate Democrats $24 $134 $59 $52 $174 $88 $15
House Republicans -$130 -$45 $7 $12 $31 $20 -$5
Senate Republicans -$239 $51 $7 $11 $26 $19 -$324
NOTE: Data not adjusted for inflation.

[114]


Presidents

* In February 2001, Republican President George W. Bush stated:

Many of you have talked about the need to pay down our national debt. I listened, and I agree. We owe it to our children and grandchildren to act now, and I hope you will join me to pay down $2 trillion in debt during the next 10 years. At the end of those 10 years, we will have paid down all the debt that is available to retire. That is more debt, repaid more quickly than has ever been repaid by any nation at any time in history.[115]

* From the time that Congress enacted Bush’s first major economic proposal (June 7, 2001[116]) until the time that he left office (January 20, 2009), the national debt rose from 53% of GDP to 74%, or an average of 2.7 percentage points per year.[117]

* During eight years in office, President Bush vetoed 12 bills, four of which were overridden by Congress and thus enacted without his approval.[118] These bills were projected by the Congressional Budget Office to increase the deficit by $26 billion during 2008–2022.[119]


* In February 2009, Democratic President Barack Obama stated:

I refuse to leave our children with a debt that they cannot repay—and that means taking responsibility right now, in this administration, for getting our spending under control.[120]

* From the time that Congress enacted Obama’s first major economic proposal (February 17, 2009[121]) until September 30, 2016, the national debt rose from 74% of GDP to 105%, or an average of 4.0 percentage points per year.[122]

* As of November 4, 2016, President Obama has vetoed twelve bills, one of which has been overridden by Congress and thus enacted without his approval.[123] This bill is projected by the Congressional Budget Office to “have no significant effect on the federal budget.”[124]

Government Accounting

Trust Funds and the Two Main Categories of Debt

* Some federal programs (such as Social Security) have “trust funds” that are legally separated from the rest of the federal government.[125]

* When these programs spend less than the federal government allocates to them, their surpluses are loaned to the federal government. This creates a legal obligation for the federal government to pay money and interest to these programs, thus adding to the national debt.[126] [127] [128] [129] [130]

* The federal government divides the national debt into two main categories:[131] [132]

  1. Money that it owes to federal entities such as the Social Security program.
  2. Money that it owes to non-federal entities such as individuals, corporations, local governments, and foreign governments.[133] Also, money owed to the Federal Reserve is classified under this category, even though the Federal Reserve is a federal entity.[134] [135]

NOTE: Just Facts has identified numerous instances in which politicians and journalists have used terms that technically refer to the overall national debt, when in fact, they are only referring to a portion of it. In order to clear up some of the confusion this has created, below are common terms for the national debt categorized by their proper meanings:

  • Overall national debt: gross debt, federal debt, public debt[136]
  • Portion of the national debt owed to federal entities: debt held by government accounts, government-held debt, intragovernmental holdings[137] [138] [139]
  • Portion of the national debt owed to non-federal entities: debt held by the public, publicly held debt[140][141]

* On September 30, 2016, the national debt consisted of:

  • $5.4 trillion owed to federal entities
  • $14.2 trillion owed to non-federal entities
  • $19.6 trillion owed in total[142]

* The federal law that governs the repayment of the national debt draws no distinction between the debt owed to federal and non-federal entities. Both must be repaid with interest.[143]

* The White House Office,[144] [145] Congressional Budget Office,[146] and other federal agencies[147] sometimes exclude the debt owed to federal entities in their reckonings of the national debt because this portion of the debt “represents internal transactions of the government and thus has no effect on credit markets.”

* Federal programs to which this money is owed, such as Social Security and Medicare, include this money and the interest it generates in their assets and financial projections.[148] [149] [150]

* In the 2000 presidential race, the Gore-Liebermann campaign released a 192-page economic plan that contains over 150 uses of the word “debt.” In none of these instances does the plan mention or account for any of the debt owed to federal entities.[151] The same plan includes the debt owed to federal entities in the assets of the Social Security and Medicare programs.[152]


“Deficits” and “Surpluses”

* During the federal government’s 2010 fiscal year (October 1, 2009 to September 30, 2010[153]), the national debt rose from $12.0 trillion to $13.6 trillion, thus increasing by $1.6 trillion.[154]

* The White House,[155] USA Today,[156] Reuters,[157] and other government and media entities reported that the 2010 federal “deficit” was $1.3 trillion.

* The difference between the national debt increase of $1.6 trillion and the reported deficit of $1.3 trillion is attributable to the following accounting practices:

  • When calculating the reported deficit, the federal government merges the finances of all federal programs into what is called the “unified budget.” Hence, the deficit does not account for the intergovernmental debt that arises when programs such as Social Security loan their surpluses to the federal government.[158]
  • When the federal government lays out money for programs such as TARP and student loans, the outgo is not fully counted in the deficit. The deficit reflects only what the government expects to lose or gain on these loans.[159] [160]

* PolitiFact, a Pulitzer Prize-winning project of the Tampa Bay Times to “help you find the truth in politics,”[161] has stated that there were “several years of budget surpluses” during Bill Clinton’s presidency. This same article cites the rise in “national debt” during the tenure of George W. Bush.[162]

* Using the same criterion PolitiFact applied to Bush’s presidency (change in gross national debt), the national debt rose every year of Clinton’s presidency:

Year National Debt on Inauguration Date†

(billions)

1993 $4,188
1994 $4,501
1995 $4,797
1996 $4,988
1997 $5,310
1998 $5,496
1999 $5,624
2000 $5,706
2001 $5,728
† NOTE: PolitiFact used the inauguration date for its debt baseline.

The national debt also rose every fiscal year of Clinton’s presidency.

[163] [164]

Ownership

* As of September 30, 2016, the national debt consists of:

Amount Owed To: Portion of Total
$14.2 trillion owed to non-federal entities (i.e., publicly held debt) 72%
$5.4 trillion owed to federal entities (i.e., intragovernmental debt) 28%

[165]


Debt Owed to Non-Federal Entities

* Ownership of publicly held debt as of September 30, 2016:

Debt Owed to Non-Federal Entities

* Data from the chart above:

Entities Amount (billions) Portion of Total
Foreign & International $6,148 45%
Federal Reserve[166] $2,462 18%
Other Investors $1,343 10%
Mutual Funds $1,315 10%
State & Local Governments $687 5%
Banks & Savings Institutions $547 4%
Private Pension Funds $540 4%
Insurance Companies $297 2%
U.S. Savings Bonds $172 1%
State and Local Government Pension Funds $164 1%

[167]


Debt Owed to Foreign Entities

* Per the White House Office of Management and Budget (2016):

During most of American history, the Federal debt was held almost entirely by individuals and institutions within the United States. In the late 1960s, foreign holdings were just over $10 billion, less than 5 percent of the total Federal debt held by the public. Foreign holdings began to grow significantly starting in the 1970s and now represent almost half of outstanding [publicly held] debt.[168]

* Ownership of U.S. government debt by foreign creditors as of August 31, 2016:

Debt Owed to Foreign Entities

* Data from the chart above:

Country Amount (billions) Portion of Total
China, Mainland $1,185 19%
Japan $1,144 18%
Ireland $266 4%
Cayman Islands $264 4%
Brazil $256 4%
Switzerland $238 4%
Luxembourg $220 4%
United Kingdom $205 3%
Hong Kong $192 3%
Taiwan $190 3%
Others $2,037 33%
Total $6,196 100%

[169]

* Foreign purchases of U.S. government debt increase the demand for this debt, thus putting downward pressure on U.S. interest rates. Conversely, foreign sales of U.S. government debt place upward pressure on U.S. interest rates.[170] [171]

* Per a 2008 Congressional Research Service report, a “potentially serious short-term problem would emerge if China decided to suddenly” sell its holding of U.S. government debt. Possible effects could include:

  • “a more general financial reaction (or panic), in which all foreigners responded by reducing their holdings of U.S. assets”;
  • “a sudden and large depreciation in the value of the dollar”;
  • “a sudden and large increase in U.S. interest rates”;
  • a stock market fall; and/or
  • “a recession.”[172]

* The same report states:

The likelihood that China would suddenly reduce its holdings of U.S. securities is questionable because it is unlikely that doing so would be in China’s economic interests. First, a large sell-off of China’s U.S. holdings could diminish the value of these securities in international markets…. Second, such a move would diminish U.S. demand for Chinese imports…. A sharp reduction of U.S. imports from China could have a significant impact on China’s economy….[173]

* During a visit to China in February 2009, Secretary of State Hillary Clinton said:

By continuing to support American Treasury instruments [i.e., buy U.S. government debt] the Chinese are recognizing our interconnection. … We have to incur more debt. It would not be in China’s interest if we were unable to get our economy moving again. … The U.S. needs the investment in Treasury bonds to shore up its economy to continue to buy Chinese products.[174]

* In August 2007 during a currency dispute between the U.S. and China, two leading officials of Chinese Communist Party bodies suggested that China use the threat of selling U.S. debt as a “bargaining chip.”[175]

* In February 2009 during a dispute over U.S. arms sales to Taiwan, a Chinese general made the following statements in the state-run magazine Outlook Weekly:

Our retaliation should not be restricted to merely military matters, and we should adopt a strategic package of counterpunches covering politics, military affairs, diplomacy and economics to treat both the symptoms and root cause of this disease. … [W]e could sanction them using economic means, such as dumping some U.S. government bonds.[176]

* One month later while appearing before China’s parliament, the head of China’s State Administration of Foreign Exchange said:

the U.S. Treasury market is important to us. … This is purely market-driven investment behavior. I would hope not to see this matter politicized.[177]

Debt Owed to Federal Entities

* Ownership of intergovernmental debt as of September 30, 2016:

Debt Owed to Federal Entities

* Data from the chart above:

Funds Amount (billions) Portion of Total
Social Security $2,843 53%
Civil Service Retirement and Disability $874 16%
Military Retirement $591 11%
Medicare $256 5%
Department of Defense Retiree Healthcare $213 4%
Postal Service Retiree Health Benefits $51 1%
Other $572 11%

[178]

Media

Budget Cuts

* In April 2011, journalists reported on a $38 billion federal budget cut agreement with the following headlines and phraseology:

  • “New Cuts Detailed in Agreement for $38 Billion in Reductions”; “deep budget cuts in programs for the poor, law enforcement, the environment and civic projects” – Los Angeles Times[179]
  • “Congress Sends Budget Cut Bill to Obama”; “cutting a record $38 billion from domestic spending” – Associated Press[180]
  • “Budget Deal to Cut $38 Billion Averts Shutdown”; “Republicans were able to force significant spending concessions from Democrats….” – New York Times[181]

* None of these articles reported that this figure of $38 billion in cuts was primarily relative to a portion of the budget called “discretionary non-emergency appropriations.”[182] Relative to the entire federal budget, this cut left a projected spending increase of $135 billion from 2010 to 2011. This equates to an inflation-adjusted increase of $49 billion or 0.1 percentage points of GDP:[183]

Federal Outlays

[184]

* None of the articles quoted above contains a budget-wide frame of reference for the cuts. A spending reduction of $38 billion equates to 1.0% of the estimated 2011 budget or 2.7% of the projected deficit:

Budget Cut

[185]


Bush Tax Cuts

* In February 2010, Fareed Zakaria of CNN stated:

Now, please understand that the Bush tax cuts are the single largest part of the black hole that is the federal budget deficit.[186]

* In 2010, the Bush tax cuts lowered federal revenues by about $283 billion.[187] [188] This was equivalent to 8% of the federal budget or 22% of the deficit.[189]

* Per the Congressional Budget Office (CBO), “Most parameters of the tax code are not indexed for real income growth, and some are not indexed for inflation.” Thus, if tax cuts are not periodically implemented, average federal tax rates “increase in the long run.”[190]

* In 2000, the year before the first Bush tax cuts were passed,[191] the federal government collected revenues equal to 20.4% of the nation’s gross domestic product (GDP), the highest level in the history of the United States.[192] Over the previous 30 years, federal revenues averaged 18.3% of GDP.[193]

* In 2000, the stock market “dot.com” bubble burst,[194] the NASDAQ lost 39% of its value,[195] and profits for nonfinancial corporations fell by 18%.[196] In the first quarter of 2001, the nation’s GDP contracted and a recession began.[197] [198]

* In June 2001 and May 2003, Congress passed and President Bush signed laws that implemented various tax cuts.[199] [200]

* After the Bush tax cuts were fully implemented, federal revenues were 17.8% of GDP in 2005, 18.5% in 2006, and 18.6% in 2007.[201] Average federal revenues for the 30 years preceding the Bush tax cuts were 18.4%.[202]

* The Great Recession began in December 2007,[203] and federal revenues declined to 17.7% of GDP in 2008.[204]

* In February 2009, Congress passed and President Obama signed a law that implemented various tax cuts.[205]

* Federal revenues declined to 15.7% of GDP in 2009 and 16.4% in 2010.[206]

* Federal spending rose from 21.0% of GDP in 2007 to 26.5% in 2010.[207] Average federal spending for the 30 years preceding the Great Recession was 21.8%.[208]


The “Do Nothing” Plan

* In April 2011, Ezra Klein of the Washington Post posted a graph of spending and revenue projections based upon CBO’s “current law” scenario and wrote that it:

shows what happens if we do … nothing. The answer, as you can see, is that the budget comes roughly into balance.[209]

* Klein’s graph and commentary omitted the interest and outcome of the national debt under this plan.[210] In the “do nothing” scenario, outlays were projected to exceed revenues every year through 2084, and the publicly held debt was projected to increase from 62% of GDP in 2010, to 74% in 2030, 90% in 2050, and 113% in 2084.[211]

* In the same commentary, Klein wrote that the “current law” scenario is “a pretty good plan” that contains:

a balanced mix of revenues, through returning tax rates to Clinton-era levels and implementing the taxes in the Affordable Care Act, and program cuts … in Medicare….[212]

* Under this scenario:

  • Certain elements of the tax code are not indexed for inflation or wage growth. Consequently, taxpayers are shifted over time into higher tax brackets.
  • According to the Congressional Budget Office, by 2020 revenues “reach higher levels relative to the size of the economy than ever recorded in the nation’s history.”
  • Revenues as a portion of GDP continue climbing through 2084, rising 69% higher than the average of the past 40 years and 47% higher than ever recorded in the history of the United States.[213] [214]
  • As a portion of GDP, federal spending without interest on the national debt rises by 2084 to 68% higher than the average of the past 40 years.[215]

Context

* Without mentioning the role of Congress in taxes, spending, or the national debt,[216] [217] PolitiFact (in the same article cited above) wrote that the national debt increased by $5.73 trillion “under” George W. Bush whereas there were budget surpluses “at the end of the Clinton administration.”[218]

* Below are the fluctuations in national debt organized by the tenures of recent presidents and congressional majorities:

Political Power

Dates

Average Annual Change in National Debt

(Percentage Points of GDP)

Bill Clinton with Democratic House and Senate 1/20/93 – 1/4/95 0.9
Bill Clinton with Republican House and Senate 1/4/95 – 1/19/01 -1.6
George W. Bush with Republican House and Senate 1/19/01 – 6/6/01, 11/12/02 – 1/4/07 0.8
George W. Bush with Republican House and Democratic Senate 6/6/01 – 11/12/02 2.3
George W. Bush with Democratic House and Senate 1/4/07 – 1/20/09 6.5
Barack Obama with Democratic House and Senate 1/20/09 – 1/4/11 9.3
Barack Obama with Republican House and Democratic Senate 1/5/11 – 1/6/15 1.9

[219]

* Other factors impacting the national debt include but are not limited to: legislation passed by previous congresses and presidents,[220] economic cycles, terrorist attacks, natural disasters, demographics, and the actions of U.S. citizens and foreign governments.[221]

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Three Years Behind The Curve Too Late Federal Open Market Committee (FOMC) Increases Target Federal Funds Rate to .75-1.0% — Financial Repression of Savers Slowly Continues — Videos

Posted on March 15, 2017. Filed under: American History, Articles, Banking, Blogroll, Books, Business, College, Communications, Congress, conservatives, Constitution, Corruption, Crisis, Documentary, Economics, Education, Employment, Faith, Family, Federal Government, Federal Government Budget, Fiscal Policy, Food, Foreign Policy, Freedom, government, government spending, history, History of Economic Thought, Language, liberty, Life, Links, Literacy, Macroeconomics, media, Monetary Policy, Money, Movies, Non-Fiction, People, Philosophy, Photos, Police, Politics, Radio, Rants, Raves, Raymond Thomas Pronk, Sociology, Speech, Strategy, Television, Trade Policiy, Tutorials, Video, Water, Wealth, Welfare, Wisdom, Work, Writing | Tags: , , , , , , , , , , , , , , , , , , , , , , , , |

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Yellen Calms Fears Fed’s Policy Trigger Finger Is Getting Itchy

March 15, 2017, 1:00 PM CDT March 15, 2017, 5:02 PM CDT
  • Policy makers still project three total rate hikes for 2017
  • FOMC sticks with ‘gradual’ plan for removing accommodation

Fed Raises Benchmark Lending Rate a Quarter Point

Federal Reserve Chair Janet Yellen sought to reassure investors that the central bank’s latest interest-rate increase wasn’t a paradigm shift to a trigger-happy policy driven by fears of faster inflation.

Speaking to reporters after the Fed’s quarter percentage-point move on Wednesday, Yellen said the central bank was willing to tolerate inflation temporarily overshootingits 2 percent goal and that it intended to keep its policy accommodative for “some time.”

“The simple message is the economy’s doing well. We have confidence in the robustness of the economy and its resilience to shocks,” she said.

As a result, the Fed is sticking with its policy of gradually raising interest rates, Yellen said. In their first forecasts in three months, Fed policy makers penciled in two more quarter-point rate increases this year and three in 2018, unchanged from their projections in December.

Today’s decision “does not represent a reassessment of the economic outlook or of the appropriate course for monetary policy,” the Fed chief said.

Speculation of a more aggressive Fed had mounted in recent days after a host of central bank officials, including Yellen herself, went out of their way to telegraph to financial markets that a rate hike was imminent. The expectations were further fueled by news of rising inflation.

Stocks Advance

Stocks rose and bond yields fell as investors viewed the statement from the Federal Open Market Committee and Yellen’s remarks afterward as a sign that the Fed isn’t in a hurry to remove monetary stimulus. The FOMC raised the target range for the federal funds rate to 0.75 percent to 1 percent, as expected, but Yellen’s lack of urgency to snuff out inflation was a surprise.

R.J. Gallo, a fixed-income investment manager at Federated Investors in Pittsburgh, said the chorus of Fed speakers before this meeting led investors to expect a move up in the number of projected rate hikes this year, and even upgrades by Fed officials in the levels of inflation and growth they anticipated.

None of that materialized.

“You didn’t get any of those things,” Gallo said, which explains why Treasury yields quickly dropped after the Fed released the FOMC statement and a new set of economic projections. “The expectation that Fed was getting more hawkish had to come out of the market.”

The U.S. economy has mostly met the central bank’s goals of full employment and stable prices, and may get further support if President Donald Trump delivers promised fiscal stimulus. Investor and business confidence has soared since Trump won the presidency in November, buoyed by his vows to cut taxes, lift infrastructure spending and ease regulations.

Still, the data don’t show an economy that’s heating up rapidly — a point Yellen herself made after the third rate hike since the 2007-2009 recession ended. In fact, the economy may have “more room to run,” she said.

Stronger business and consumer confidence hasn’t yet translated into increased investment and spending, said Yellen.

“It’s uncertain just how much sentiment actually impacts spending decisions, and I wouldn’t say at this point that I have seen hard evidence of any change in spending decisions,” said the Fed Chair. “Most of the business people that we’ve talked to also have a wait-and-see attitude.”

Retail sales in February grew at the slowest pace since August, a government report showed earlier Wednesday. The Atlanta Fed’s model for GDP predicts an expansion of 0.9 percent in the first quarter, less than a third the pace Trump is aiming for.

Fiscal Stimulus

Asked about the potential for a fiscal boost, Yellen made clear the Fed is still waiting for more concrete policy plans to emerge from the Trump administration before adapting monetary policy in reaction.

“There is great uncertainty about the timing, the size and the character of policy changes that may be put in place,” Yellen said. “I don’t think that’s a decision or set of decisions that we need to make until we know more about what policy changes will go into effect.”

Yellen disputed suggestions that the Fed was on a collision course with the Trump administration over its plans to foster faster economic growth through tax cuts and deregulation. “We would welcome stronger economic growth in the context of price stability,” she said.

She said she had met Trump briefly and had gotten together a couple of times with Treasury Secretary Steven Mnuchin to discuss the economy and financial regulation.

Further underscoring their lack of urgency, Fed officials repeated a commitment to maintain their balance-sheet reinvestment policy until rate increases were well under way. Yellen said officials had discussed the process of reducing the balance sheet gradually, but had made no decisions and would continue to debate the topic.

Policy makers forecast inflation will reach 1.9 percent in the fourth quarter this year, and 2 percent in both 2018 and 2019, according to quarterly median estimates released with the FOMC statement. The Fed’s preferred measure of inflation rose 1.9 percent in the 12 months through January, just shy of its target.

Yellen pointed out, though, that core inflation continues to run somewhat further below 2 percent. That rate, which strips out food and energy costs, stood at 1.7 percent in January. The Fed’s new forecast for the core rate at the end of this year edged up to 1.9 percent, from 1.8 percent in December.

“The committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal,” the Fed said. Discussing the word symmetric in the statement, Yellen said during her press conference that the Fed was not shooting to push inflation over 2 percent but recognized that it could temporarily go above it. Two percent is a target, she reiterated, not a ceiling.

https://www.bloomberg.com/news/articles/2017-03-15/fed-raises-benchmark-rate-as-inflation-approaches-2-target

Changes in the federal funds rate will always affect the U.S. dollar. When the Federal Reserve increases the federal funds rate, it normally reduces inflationary pressure and works to appreciate the dollar.

Since June 2006, however, the Fed has maintained a federal funds rate of close to 0%. In the wake of the 2008 financial crisis, the federal funds rate fluctuated between 0-0.25%, and is now 0.75%.

The Fed used this monetary policy to help achieve maximum employment and stable prices. Now that the 2008 financial crisis has largely subsided, the Fed will look to increase interest rates to continue to achieve employment and to stabilize prices.

Inflation of the U.S. Dollar

The best way to achieve full employment and stable prices is to set the inflation rate of the dollar at 2%. In 2011, the Fed officially adopted a 2% annual increase in the price index for personal consumption expenditures as its target. When the economy is weak, inflation naturally falls; when the economy is strong, rising wages increase inflation. Keeping inflation at a growth rate of 2% helps the economy grow at a healthy rate.

Adjustments to the federal funds rate can also affect inflation in the United States. The Fed controls the economy by increasing interest rates when the economy is growing too fast. This encourages people to save more and spend less, reducing inflationary pressure. Conversely, when the economy is in a recession or growing too slowly, the Fed reduces interest rates to stimulate spending, which increases inflation.

During the 2008 financial crisis, the low federal funds rate should have increased inflation. Over this period, the federal funds rate was set near 0%, which encouraged spending and would normally increase inflation.

However, inflation is still well below the 2% target, which is contrary to the normal effects of low interest rates. The Fed cites one-off factors, such as falling oil prices and the strengthening dollar, as the reasons why inflation has remained low in a low interest environment.

The Fed believes that these factors will eventually fade and that inflation will increase above the target 2%. To prevent this eventual increase in inflation, hiking the federal funds rate reduces inflationary pressure and cause inflation of the dollar to remain around 2%.

Appreciation of the U.S. Dollar

Increases in the federal funds rate also result in a strengthening of the U.S. dollar. Other ways that the dollar can appreciate include increases in average wages and increases in overall consumption. However, although jobs are being created, wage rates are stagnant.

Without an increase in wage rates to go along with a strengthening job market, consumption won’t increase enough to sustain economic growth. Additionally, consumption remains subdued due to the fact that the labor force participation rate was close to its 35-year low in 2015. The Fed has kept interest rates low because a lower federal funds rate supports business expansions, which leads to more jobs and higher consumption. This has all worked to keep appreciation of the U.S. dollar low.

However, the U.S. is ahead of the other developed markets in terms of its economic recovery. Although the Fed raises rates cautiously, the U.S. could see higher interest rates before the other developed economies.

Overall, under normal economic conditions, increases in the federal funds rate reduce inflation and increase the appreciation of the U.S. dollar.

http://www.investopedia.com/articles/investing/101215/how-fed-fund-rate-hikes-affect-us-dollar.asp

Financial repression

From Wikipedia, the free encyclopedia
Not to be confused with economic repression, a type of political repression.

Financial repression refers to “policies that result in savers earning returns below the rate of inflation” in order to allow banks to “provide cheap loans to companies and governments, reducing the burden of repayments”.[1] It can be particularly effective at liquidating government debt denominated in domestic currency.[2] It can also lead to a large expansions in debt “to levels evoking comparisons with the excesses that generated Japan’s lost decade and the Asian financial crisis” in 1997.[1]

The term was introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I. McKinnon[3][4] in order to “disparage growth-inhibiting policies in emerging markets“.

Mechanism

Financial repression consists of the following:[5]

  1. Explicit or indirect capping of interest rates, such as on government debt and deposit rates (e.g., Regulation Q).
  2. Government ownership or control of domestic banks and financial institutions with barriers that limit other institutions from entering the market.
  3. High reserve requirements.
  4. Creation or maintenance of a captive domestic market for government debt, achieved by requiring banks to hold government debt via capital requirements, or by prohibiting or disincentivising alternatives.
  5. Government restrictions on the transfer of assets abroad through the imposition of capital controls.

These measures allow governments to issue debt at lower interest rates. A low nominal interest rate can reduce debt servicing costs, while negative real interest rates erodes the real value of government debt.[5] Thus, financial repression is most successful in liquidating debts when accompanied by inflation and can be considered a form of taxation,[6] or alternatively a form of debasement.[7]

The size of the financial repression tax for 24 emerging markets from 1974 to 1987. Their results showed that financial repression exceeded 2% of GDP for seven countries, and greater than 3% for five countries. For five countries (India, Mexico, Pakistan, Sri Lanka, and Zimbabwe) it represented approximately 20% of tax revenue. In the case of Mexico financial repression was 6% of GDP, or 40% of tax revenue.[8]

Financial repression is categorized as “macroprudential regulation“—i.e., government efforts to “ensure the health of an entire financial system.[2]

Examples

After World War II

Financial repression “played an important role in reducing debt-to-GDP ratios after World War II” by keeping real interest rates for government debt below 1% for two-thirds of the time between 1945 and 1980, the United States was able to “inflate away” the large debt (122% of GDP) left over from the Great Depression and World War II.[2] In the UK, government debt declined from 216% of GDP in 1945 to 138% ten years later in 1955.[9]

China

China‘s economic growth has been attributed to financial repression thanks to “low returns on savings and the cheap loans that it makes possible”. This has allowed China to rely on savings-financed investments for economic growth. However, because low returns also dampens consumer spending, household expenditures account for “a smaller share of GDP in China than in any other major economy”.[1] However, as of December 2014, the People’s Bank of China “started to undo decades of financial repression” and the government now allows Chinese savers to collect up to a 3.3% return on one-year deposits. At China’s 1.6% inflation rate, this is a “high real-interest rate compared to other major economies”.[1]

After the 2008 economic recession

In a 2011 NBER working paper, Carmen Reinhart and Maria Belen Sbrancia speculate on a possible return by governments to this form of debt reduction in order to deal with high debt levels following the 2008 economic crisis.[5]

“To get access to capital, Austria has restricted capital flows to foreign subsidiaries in central and eastern Europe. Select pension funds have also been transferred to governments in France, Portugal, Ireland and Hungary, enabling them to re-allocate toward sovereign bonds.”[10]

Criticism

Critics[who?] argue that if this view was true, investors (i.e., capital-seeking parties) would be inclined to demand capital in large quantities and would be buying capital goods from this capital. This high demand for capital goods would certainly lead to inflation and thus the central banks would be forced to raise interest rates again. As a boom pepped by low interest rates fails to appear these days in industrialized countries, this is a sign that the low interest rates seem to be necessary to ensure an equilibrium on the capital market, thus to balance capital-supply—i.e., savers—on one side and capital-demand—i.e., investors and the government—on the other. This view argues that interest rates would be even lower if it were not for the high government debt ratio (i.e., capital demand from the government).

Free-market economists argue that financial repression crowds out private-sector investment, thus undermining growth. On the other hand, “postwar politicians clearly decided this was a price worth paying to cut debt and avoid outright default or draconian spending cuts. And the longer the gridlock over fiscal reform rumbles on, the greater the chance that ‘repression’ comes to be seen as the least of all evils”.[11]

Also, financial repression has been called a “stealth tax” that “rewards debtors and punishes savers—especially retirees” because their investments will no longer generate the expected return, which is income for retirees.[10][12] “One of the main goals of financial repression is to keep nominal interest rates lower than they would be in more competitive markets. Other things equal, this reduces the government’s interest expenses for a given stock of debt and contributes to deficit reduction. However, when financial repression produces negative real interest rates (nominal rates below the inflation rate), it reduces or liquidates existing debts and becomes the equivalent of a tax—a transfer from creditors (savers) to borrowers, including the government.”[2]

See also

Reform:

General:

References

  1. ^ Jump up to:a b c d “China Savers Prioritized Over Banks by PBOC”. Bloomberg. November 25, 2014.
  2. ^ Jump up to:a b c d Carmen M. Reinhart, Jacob F. Kirkegaard, and M. Belen Sbrancia, “Financial Repression Redux”, IMF Finance and Development, June 2011, p. 22-26
  3. Jump up^ Shaw, Edward S. Financial Deepening in Economic Development. New York: Oxford University Press, 1973
  4. Jump up^ McKinnon, Ronald I. Money and Capital in Economic Development. Washington, D.C.: Brookings Institution, 1973
  5. ^ Jump up to:a b c Carmen M. Reinhart and M. Belen Sbrancia, “The Liquidation of Government Debt”, IMF, 2011, p. 19
  6. Jump up^ Reinhart, Carmen M. and Rogoff, Kenneth S., This Time is Different: Eight Centuries of Financial Folly. Princeton and Oxford: Princeton University Press, 2008, p. 143
  7. Jump up^ Bill Gross, “The Caine Mutiny Part 2”, PIMCO
  8. Jump up^ Giovannini, Alberto and de Melo, Martha, “Government Revenue from Financial Repression”, The American Economic Review, Vol. 83, No. 4 Sep. 1993 (pp. 953-963)
  9. Jump up^ “The great repression”. The Economist. 16 June 2011.
  10. ^ Jump up to:a b “Financial Repression 101”. Allianz Global Investors. Retrieved 2 December 2014.
  11. Jump up^ Gillian Tett, “Policymakers learn a new and alarming catchphrase”, Financial Times, May 9, 2011
  12. Jump up^ Amerman, Daniel (September 12, 2011). “The 2nd Edge of Modern Financial Repression: Manipulating Inflation Indexes to Steal from Retirees & Public Wor

https://en.wikipedia.org/wiki/Financial_repression

Federal funds rate

From Wikipedia, the free encyclopedia

10 year treasury compared to the Federal Funds Rate

Federal funds rate and capacity utilization in manufacturing.

In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight, on an uncollateralized basis. Reserve balances are amounts held at the Federal Reserve to maintain depository institutions’ reserve requirements. Institutions with surplus balances in their accounts lend those balances to institutions in need of larger balances. The federal funds rate is an important benchmark in financial markets.[1][2]

The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The federal funds target rate is determined by a meeting of the members of the Federal Open Market Committee which normally occurs eight times a year about seven weeks apart. The committee may also hold additional meetings and implement target rate changes outside of its normal schedule.

The Federal Reserve uses open market operations to influence the supply of money in the U.S. economy[3] to make the federal funds effective rate follow the federal funds target rate.

Mechanism

Financial Institutions are obligated by law to maintain certain levels of reserves, either as reserves with the Fed or as vault cash. The level of these reserves is determined by the outstanding assets and liabilities of each depository institution, as well as by the Fed itself, but is typically 10%[4] of the total value of the bank’s demand accounts (depending on bank size). In the range of $9.3 million to $43.9 million, for transaction deposits (checking accounts, NOWs, and other deposits that can be used to make payments) the reserve requirement in 2007-2008 was 3 percent of the end-of-the-day daily average amount held over a two-week period. Transaction deposits over $43.9 million held at the same depository institution carried a 10 percent reserve requirement.

For example, assume a particular U.S. depository institution, in the normal course of business, issues a loan. This dispenses money and decreases the ratio of bank reserves to money loaned. If its reserve ratio drops below the legally required minimum, it must add to its reserves to remain compliant with Federal Reserve regulations. The bank can borrow the requisite funds from another bank that has a surplus in its account with the Fed. The interest rate that the borrowing bank pays to the lending bank to borrow the funds is negotiated between the two banks, and the weighted average of this rate across all such transactions is the federal funds effective rate.

The nominal rate is a target set by the governors of the Federal Reserve, which they enforce by open market operations and adjusting the interest paid on required and excess reserve balances. That nominal rate is almost always what is meant by the media referring to the Federal Reserve “changing interest rates.” The actual federal funds rate generally lies within a range of that target rate, as the Federal Reserve cannot set an exact value through open market operations.

Another way banks can borrow funds to keep up their required reserves is by taking a loan from the Federal Reserve itself at the discount window. These loans are subject to audit by the Fed, and the discount rate is usually higher than the federal funds rate. Confusion between these two kinds of loans often leads to confusion between the federal funds rate and the discount rate. Another difference is that while the Fed cannot set an exact federal funds rate, it does set the specific discount rate.

The federal funds rate target is decided by the governors at Federal Open Market Committee (FOMC) meetings. The FOMC members will either increase, decrease, or leave the rate unchanged depending on the meeting’s agenda and the economic conditions of the U.S. It is possible to infer the market expectations of the FOMC decisions at future meetings from the Chicago Board of Trade (CBOT) Fed Funds futures contracts, and these probabilities are widely reported in the financial media.

Applications

Interbank borrowing is essentially a way for banks to quickly raise money. For example, a bank may want to finance a major industrial effort but may not have the time to wait for deposits or interest (on loan payments) to come in. In such cases the bank will quickly raise this amount from other banks at an interest rate equal to or higher than the Federal funds rate.

Raising the federal funds rate will dissuade banks from taking out such inter-bank loans, which in turn will make cash that much harder to procure. Conversely, dropping the interest rates will encourage banks to borrow money and therefore invest more freely.[5] This interest rate is used as a regulatory tool to control how freely the U.S. economy operates.

By setting a higher discount rate the Federal Bank discourages banks from requisitioning funds from the Federal Bank, yet positions itself as a lender of last resort.

Comparison with LIBOR

Though the London Interbank Offered Rate (LIBOR) and the federal funds rate are concerned with the same action, i.e. interbank loans, they are distinct from one another, as follows:

  • The target federal funds rate is a target interest rate that is set by the FOMC for implementing U.S. monetary policies.
  • The (effective) federal funds rate is achieved through open market operations at the Domestic Trading Desk at the Federal Reserve Bank of New York which deals primarily in domestic securities (U.S. Treasury and federal agencies’ securities).[6]
  • LIBOR is based on a questionnaire where a selection of banks guess the rates at which they could borrow money from other banks.
  • LIBOR may or may not be used to derive business terms. It is not fixed beforehand and is not meant to have macroeconomic ramifications.[7]

Predictions by the market

Considering the wide impact a change in the federal funds rate can have on the value of the dollar and the amount of lending going to new economic activity, the Federal Reserve is closely watched by the market. The prices of Option contracts on fed funds futures (traded on the Chicago Board of Trade) can be used to infer the market’s expectations of future Fed policy changes. Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy, the CME Group FedWatch tool allows market participants to view the probability of an upcoming Fed Rate hike. One set of such implied probabilities is published by the Cleveland Fed.

Historical rates

As of December 16, 2008, the most recent change the FOMC has made to the funds target rate is a 75 to 100 basis point cut from 1.0% to a range of zero to 0.25%. According to Jack A. Ablin, chief investment officer at Harris Private Bank, one reason for this unprecedented move of having a range, rather than a specific rate, was because a rate of 0% could have had problematic implications for money market funds, whose fees could then outpace yields.[8] This followed the 50 basis point cut on October 29, 2008, and the unusually large 75 basis point cut made during a special January 22, 2008 meeting, as well as a 50 basis point cut on January 30, 2008, a 75 basis point cut on March 18, 2008, and a 50 basis point cut on October 8, 2008.[9]

Federal funds rate history and recessions.png

Explanation of federal funds rate decisions

When the Federal Open Market Committee wishes to reduce interest rates they will increase the supply of money by buying government securities. When additional supply is added and everything else remains constant, price normally falls. The price here is the interest rate (cost of money) and specifically refers to the Federal Funds Rate. Conversely, when the Committee wishes to increase the Fed Funds Rate, they will instruct the Desk Manager to sell government securities, thereby taking the money they earn on the proceeds of those sales out of circulation and reducing the money supply. When supply is taken away and everything else remains constant, price (or in this case interest rates) will normally rise.[10]

The Federal Reserve has responded to a potential slow-down by lowering the target federal funds rate during recessions and other periods of lower growth. In fact, the Committee’s lowering has recently predated recessions,[9] in order to stimulate the economy and cushion the fall. Reducing the Fed Funds Rate makes money cheaper, allowing an influx of credit into the economy through all types of loans.

The charts linked below show the relation between S&P 500 and interest rates.

  • July 13, 1990 — Sept 4, 1992: 8.00%–3.00% (Includes 1990–1991 recession)[11][12]
  • Feb 1, 1995 — Nov 17, 1998: 6.00–4.75 [13][14][15]
  • May 16, 2000 — June 25, 2003: 6.50–1.00 (Includes 2001 recession)[16][17][18]
  • June 29, 2006 — (Oct. 29 2008): 5.25–1.00[19]
  • Dec 16, 2008 — 0.0–0.25[20]
  • Dec 16, 2015 — 0.25-0.50[21]
  • Dec 14, 2016 — 0.50-0.75[22]
  • Mar 15, 2017 — 0.75-1.00[23]

Bill Gross of PIMCO suggested that in the prior 15 years ending in 2007, in each instance where the fed funds rate was higher than the nominal GDP growth rate, assets such as stocks and/or housing fell.[24]

See also

References

  1. Jump up^ “Fedpoints: Federal Funds”. Federal Reserve Bank of New York. August 2007. Retrieved 2 October 2011.
  2. Jump up^ “The Implementation of Monetary Policy”. The Federal Reserve System: Purposes & Functions (PDF). Washington, D.C.: Federal Reserve Board. 24 August 2011. p. 4. Retrieved 2 October 2011.
  3. Jump up^ “Monetary Policy, Open Market Operations”. Federal Reserve Bank. 2008-01-30. Retrieved 2008-01-30.
  4. Jump up^ “Reserve Requirements”. Board of Governors of The Federal Reserve System. December 16, 2015.
  5. Jump up^ “Fed funds rate”. Bankrate, Inc. March 2016.
  6. Jump up^ Cheryl L. Edwards (November 1997). Gerard Sinzdak. “Open Market Operations in the 1990s” (PDF). Federal Reserve Bulletin (PDF).
  7. Jump up^ “BBA LIBOR – Frequently asked questions”. British Bankers’ Association. March 21, 2006. Archived from the original on 2007-02-16.
  8. Jump up^ “4:56 p.m. US-Closing Stocks”. Associated Press. December 16, 2008.[dead link]
  9. ^ Jump up to:a b “Historical Changes of the Target Federal Funds and Discount Rates, 1971 to present”. New York Federal Reserve Branch. February 19, 2010. Archived from the original on December 21, 2008.
  10. Jump up^ David Waring (2008-02-19). “An Explanation of How The Fed Moves Interest Rates”. InformedTrades.com. Archived from the original on 2015-05-05. Retrieved 2009-07-20.
  11. Jump up^ “$SPX 1990-06-12 1992-10-04 (rate drop chart)”. StockCharts.com.
  12. Jump up^ “$SPX 1992-08-04 1995-03-01 (rate rise chart)”. StockCharts.com.
  13. Jump up^ “$SPX 1995-01-01 1997-01-01 (rate drop chart)”. StockCharts.com.
  14. Jump up^ “$SPX 1996-12-01 1998-10-17 (rate drop chart)”. StockCharts.com.
  15. Jump up^ “$SPX 1998-09-17 2000-06-16 (rate rise chart)”. StockCharts.com.
  16. Jump up^ “$SPX 2000-04-16 2002-01-01 (rate drop chart)”. StockCharts.com.
  17. Jump up^ “$SPX 2002-01-01 2003-07-25 (rate drop chart)”. StockCharts.com.
  18. Jump up^ “$SPX 2003-06-25 2006-06-29 (rate rise chart)”. StockCharts.com.
  19. Jump up^ “$SPX 2006-06-29 2008-06-01 (rate drop chart)”. StockCharts.com.
  20. Jump up^ “Press Release”. Board of Governors of The Federal Reserve System. December 16, 2008.
  21. Jump up^ “Open Market Operations”. Board of Governors of The Federal Reserve System. December 16, 2015.
  22. Jump up^ “Decisions Regarding Monetary Policy Implementation”. Board of Governors of The Federal Reserve System.
  23. Jump up^ Cox, Jeff (2017-03-15). “Fed raises rates at March meeting”. CNBC. Retrieved 2017-03-15.
  24. Jump up^ Shaw, Richard (January 7, 2007). “The Bond Yield Curve as an Economic Crystal Ball”. Retrieved 3 April 2011.

External links

https://en.wikipedia.org/wiki/Federal_funds_rate

Monetary policy of the United States

From Wikipedia, the free encyclopedia
  (Redirected from U.S. monetary policy)
United States M2 money supply
% change in money supply
Money supply changes monthly basis

Monetary policy concerns the actions of a central bank or other regulatory authorities that determine the size and rate of growth of the money supply.

In the United States, the Federal Reserve is in charge of monetary policy, and implements it primarily by performing operations that influence short-term interest rates.

Money supply[edit]

Main article: Money supply

The money supply has different components, generally broken down into “narrow” and “broad” money, reflecting the different degrees of liquidity (‘spendability’) of each different type, as broader forms of money can be converted into narrow forms of money (or may be readily accepted as money by others, such as personal checks).[1]

For example, demand deposits are technically promises to pay on demand, while savings deposits are promises to pay subject to some withdrawal restrictions, and Certificates of Deposit are promises to pay only at certain specified dates; each can be converted into money, but “narrow” forms of money can be converted more readily. The Federal Reserve directly controls only the most narrow form of money, physical cash outstanding along with the reserves of banks throughout the country (known as M0 or the monetary base); the Federal Reserve indirectly influences the supply of other types of money.[1]

Broad money includes money held in deposit balances in banks and other forms created in the financial system. Basic economics also teaches that the money supply shrinks when loans are repaid;[2][3] however, the money supply will not necessarily decrease depending on the creation of new loans and other effects. Other than loans, investment activities of commercial banks and the Federal Reserve also increase and decrease the money supply.[4] Discussion of “money” often confuses the different measures and may lead to misguided commentary on monetary policy and misunderstandings of policy discussions.[5]

Structure of modern US institutions[edit]

Federal Reserve[edit]

Monetary policy in the US is determined and implemented by the US Federal Reserve System, commonly referred to as the Federal Reserve. Established in 1913 by the Federal Reserve Act to provide central banking functions,[6] the Federal Reserve System is a quasi-public institution. Ostensibly, the Federal Reserve Banks are 12 private banking corporations;[7][8][9] they are independent in their day-to-day operations, but legislatively accountable to Congress through the auspices of Federal Reserve Board of Governors.

The Board of Governors is an independent governmental agency consisting of seven officials and their support staff of over 1800 employees headquartered in Washington, D.C.[10] It is independent in the sense that the Board currently operates without official obligation to accept the requests or advice of any elected official with regard to actions on the money supply,[11]and its methods of funding also preserve independence. The Governors are nominated by the President of the United States, and nominations must be confirmed by the U.S. Senate.[12]

The presidents of the Federal Reserve Banks are nominated by each bank’s respective Board of Directors, but must also be approved by the Board of Governors of the Federal Reserve. The Chairman of the Federal Reserve Board is generally considered to have the most important position, followed by the president of the Federal Reserve Bank of New York.[12] The Federal Reserve System is primarily funded by interest collected on their portfolio of securities from the US Treasury, and the Fed has broad discretion in drafting its own budget,[13] but, historically, nearly all the interest the Federal Reserve collects is rebated to the government each year.[14]

The Federal Reserve has three main mechanisms for manipulating the money supply. It can buy or sell treasury securities. Selling securities has the effect of reducing the monetary base (because it accepts money in return for purchase of securities), taking that money out of circulation. Purchasing treasury securities increases the monetary base (because it pays out hard currency in exchange for accepting securities). Secondly, the discount rate can be changed. And finally, the Federal Reserve can adjust the reserve requirement, which can affect the money multiplier; the reserve requirement is adjusted only infrequently, and was last adjusted in 1992.[15]

In practice, the Federal Reserve uses open market operations to influence short-term interest rates, which is the primary tool of monetary policy. The federal funds rate, for which the Federal Open Market Committee announces a target on a regular basis, reflects one of the key rates for interbank lending. Open market operations change the supply of reserve balances, and the federal funds rate is sensitive to these operations.[16]

In theory, the Federal Reserve has unlimited capacity to influence this rate, and although the federal funds rate is set by banks borrowing and lending funds to each other, the federal funds rate generally stays within a limited range above and below the target (as participants are aware of the Fed’s power to influence this rate).

Assuming a closed economy, where foreign capital or trade does not affect the money supply, when money supply increases, interest rates go down. Businesses and consumers have a lower cost of capital and can increase spending and capital improvement projects. This encourages short-term growth. Conversely, when the money supply falls, interest rates go up, increasing the cost of capital and leading to more conservative spending and investment. The Federal reserve increases interest rates to combat Inflation.

U.S. Treasury[edit]

Private commercial banks[edit]

When money is deposited in a bank, it can then be lent out to another person. If the initial deposit was $100 and the bank lends out $100 to another customer the money supply has increased by $100. However, because the depositor can ask for the money back, banks have to maintain minimum reserves to service customer needs. If the reserve requirement is 10% then, in the earlier example, the bank can lend $90 and thus the money supply increases by only $90. The reserve requirement therefore acts as a limit on this multiplier effect. Because the reserve requirement only applies to the more narrow forms of money creation (corresponding to M1), but does not apply to certain types of deposits (such as time deposits), reserve requirements play a limited role in monetary policy.[17]

Money creation[edit]

Main article: Money creation

Currently, the US government maintains over US$800 billion in cash money (primarily Federal Reserve Notes) in circulation throughout the world,[18][19] up from a sum of less than $30 billion in 1959. Below is an outline of the process which is currently used to control the amount of money in the economy. The amount of money in circulation generally increases to accommodate money demanded by the growth of the country’s production. The process of money creation usually goes as follows:

  1. Banks go through their daily transactions. Of the total money deposited at banks, significant and predictable proportions often remain deposited, and may be referred to as “core deposits.” Banks use the bulk of “non-moving” money (their stable or “core” deposit base) by loaning it out.[20] Banks have a legal obligation to keep a certain fraction of bank deposit money on-hand at all times.[21]
  2. In order to raise additional money to cover excess spending, Congress increases the size of the National Debt by issuing securities typically in the form of a Treasury Bond[22] (see United States Treasury security). It offers the Treasury security for sale, and someone pays cash to the government in exchange. Banks are often the purchasers of these securities, and these securities currently play a crucial role in the process.
  3. The 12-person Federal Open Market Committee, which consists of the heads of the Federal Reserve System (the seven Federal governors and five bank presidents), meets eight times a year to determine how they would like to influence the economy.[23] They create a plan called the country’s “monetary policy” which sets targets for things such as interest rates.[24]
  4. Every business day, the Federal Reserve System engages in Open market operations.[25] If the Federal Reserve wants to increase the money supply, it will buy securities (such as U.S. Treasury Bonds) anonymously from banks in exchange for dollars. If the Federal Reserve wants to decrease the money supply, it will sell securities to the banks in exchange for dollars, taking those dollars out of circulation.[26][27] When the Federal Reserve makes a purchase, it credits the seller’s reserve account (with the Federal Reserve). The money that it deposits into the seller’s account is not transferred from any existing funds, therefore it is at this point that the Federal Reserve has created High-powered money.
  5. By means of open market operations, the Federal Reserve affects the free reserves of commercial banks in the country.[28] Anna Schwartz explains that “if the Federal Reserve increases reserves, a single bank can make loans up to the amount of its excess reserves, creating an equal amount of deposits”.[26][27][29]
  6. Since banks have more free reserves, they may loan out the money, because holding the money would amount to accepting the cost of foregone interest[28][30] When a loan is granted, a person is generally granted the money by adding to the balance on their bank account.[31]
  7. This is how the Federal Reserve’s high-powered money is multiplied into a larger amount of broad money, through bank loans; as written in a particular case study, “as banks increase or decrease loans, the nation’s (broad) money supply increases or decreases.”[3] Once granted these additional funds, the recipient has the option to withdraw physical currency (dollar bills and coins) from the bank, which will reduce the amount of money available for further on-lending (and money creation) in the banking system.[32]
  8. In many cases, account-holders will request cash withdrawals, so banks must keep a supply of cash handy. When they believe they need more cash than they have on hand, banks can make requests for cash with the Federal Reserve. In turn, the Federal Reserve examines these requests and places an order for printed money with the US Treasury Department.[33] The Treasury Department sends these requests to the Bureau of Engraving and Printing (to make dollar bills) and the Bureau of the Mint (to stamp the coins).
  9. The U.S. Treasury sells this newly printed money to the Federal Reserve for the cost of printing.[citation needed] This is about 6 cents per bill for any denomination.[34] Aside from printing costs, the Federal Reserve must pledge collateral (typically government securities such as Treasury bonds) to put new money, which does not replace old notes, into circulation.[35]This printed cash can then be distributed to banks, as needed.

Though the Federal Reserve authorizes and distributes the currency printed by the Treasury (the primary component of the narrow monetary base), the broad money supply is primarily created by commercial banks through the money multiplier mechanism.[29][31][36][37] One textbook summarizes the process as follows:

“The Fed” controls the money supply in the United States by controlling the amount of loans made by commercial banks. New loans are usually in the form of increased checking account balances, and since checkable deposits are part of the money supply, the money supply increases when new loans are made …[38]

This type of money is convertible into cash when depositors request cash withdrawals, which will require banks to limit or reduce their lending.[39][32] The vast majority of the broad money supply throughout the world represents current outstanding loans of banks to various debtors.[38][40][41] A very small amount of U.S. currency still exists as “United States Notes“, which have no meaningful economic difference from Federal Reserve notes in their usage, although they departed significantly in their method of issuance into circulation. The currency distributed by the Federal Reserve has been given the official designation of “Federal Reserve Notes.”[42]

Significant effects[edit]

Main article: Monetary policy

In 2005, the Federal Reserve held approximately 9% of the national debt[43] as assets against the liability of printed money. In previous periods, the Federal Reserve has used other debt instruments, such as debt securities issued by private corporations. During periods when the national debt of the United States has declined significantly (such as happened in fiscal years 1999 and 2000), monetary policy and financial markets experts have studied the practical implications of having “too little” government debt: both the Federal Reserve and financial markets use the price information, yield curve and the so-called risk free rate extensively.[44]

Experts are hopeful that other assets could take the place of National Debt as the base asset to back Federal Reserve notes, and Alan Greenspan, long the head of the Federal Reserve, has been quoted as saying, “I am confident that U.S. financial markets, which are the most innovative and efficient in the world, can readily adapt to a paydown of Treasury debt by creating private alternatives with many of the attributes that market participants value in Treasury securities.”[45] In principle, the government could still issue debt securities in significant quantities while having no net debt, and significant quantities of government debt securities are also held by other government agencies.

Although the U.S. government receives income overall from seigniorage, there are costs associated with maintaining the money supply.[41][46] Leading ecological economist and steady-state theorist Herman Daly, claims that “over 95% of our [broad] money supply [in the United States] is created by the private banking system (demand deposits) and bears interest as a condition of its existence,”[41] a conclusion drawn from the Federal Reserve’s ultimate dependence on increased activity in fractional reserve lending when it exercises open market operations.[47]Economist Eric Miller criticizes Daly’s logic because money is created in the banking system in response to demand for the money,[48] which justifies cost.[citation needed]

Thus, use of expansionary open market operations typically generates more debt in the private sector of society (in the form of additional bank deposits).[49] The private banking system charges interest to borrowers as a cost to borrow the money.[3][31][50] The interest costs are borne by those that have borrowed,[3][31] and without this borrowing, open market operations would be unsuccessful in maintaining the broad money supply,[30] though alternative implementations of monetary policy could be used. Depositors of funds in the banking system are paid interest on their savings (or provided other services, such as checking account privileges or physical security for their “cash”), as compensation for “lending” their funds to the bank.

Increases (or contractions) of the money supply corresponds to growth (or contraction) in interest-bearing debt in the country.[3][30][41] The concepts involved in monetary policy may be widely misunderstood in the general public, as evidenced by the volume of literature on topics such as “Federal Reserve conspiracy” and “Federal Reserve fraud.”[51]

Uncertainties

A few of the uncertainties involved in monetary policy decision making are described by the federal reserve:[52]

  • While these policy choices seem reasonably straightforward, monetary policy makers routinely face certain notable uncertainties. First, the actual position of the economy and growth in aggregate demand at any time are only partially known, as key information on spending, production, and prices becomes available only with a lag. Therefore, policy makers must rely on estimates of these economic variables when assessing the appropriate course of policy, aware that they could act on the basis of misleading information. Second, exactly how a given adjustment in the federal funds rate will affect growth in aggregate demand—in terms of both the overall magnitude and the timing of its impact—is never certain. Economic models can provide rules of thumb for how the economy will respond, but these rules of thumb are subject to statistical error. Third, the growth in aggregate supply, often called the growth in potential output, cannot be measured with certainty.
  • In practice, as previously noted, monetary policy makers do not have up-to-the-minute information on the state of the economy and prices. Useful information is limited not only by lags in the collection and availability of key data but also by later revisions, which can alter the picture considerably. Therefore, although monetary policy makers will eventually be able to offset the effects that adverse demand shocks have on the economy, it will be some time before the shock is fully recognized and—given the lag between a policy action and the effect of the action on aggregate demand—an even longer time before it is countered. Add to this the uncertainty about how the economy will respond to an easing or tightening of policy of a given magnitude, and it is not hard to see how the economy and prices can depart from a desired path for a period of time.
  • The statutory goals of maximum employment and stable prices are easier to achieve if the public understands those goals and believes that the Federal Reserve will take effective measures to achieve them.
  • Although the goals of monetary policy are clearly spelled out in law, the means to achieve those goals are not. Changes in the FOMC’s target federal funds rate take some time to affect the economy and prices, and it is often far from obvious whether a selected level of the federal funds rate will achieve those goals.

Opinions of the Federal Reserve

The Federal Reserve is lauded by some economists, while being the target of scathing criticism by other economists, legislators, and sometimes members of the general public. The former Chairman of the Federal Reserve Board, Ben Bernanke, is one of the leading academic critics of the Federal Reserve’s policies during the Great Depression.[53]

Achievements

One of the functions of a central bank is to facilitate the transfer of funds through the economy, and the Federal Reserve System is largely responsible for the efficiency in the banking sector. There have also been specific instances which put the Federal Reserve in the spotlight of public attention. For instance, after the stock market crash in 1987, the actions of the Fed are generally believed to have aided in recovery. Also, the Federal Reserve is credited for easing tensions in the business sector with the reassurances given following the 9/11 terrorist attacks on the United States.[54]

Criticisms

The Federal Reserve has been the target of various criticisms, involving: accountability, effectiveness, opacity, inadequate banking regulation, and potential market distortion. Federal Reserve policy has also been criticized for directly and indirectly benefiting large banks instead of consumers. For example, regarding the Federal Reserve’s response to the 2007–2010 financial crisis, Nobel laureate Joseph Stiglitz explained how the U.S. Federal Reserve was implementing another monetary policy —creating currency— as a method to combat the liquidity trap.[55]

By creating $600 billion and inserting this directly into banks the Federal Reserve intended to spur banks to finance more domestic loans and refinance mortgages. However, banks instead were spending the money in more profitable areas by investing internationally in emerging markets. Banks were also investing in foreign currencies which Stiglitz and others point out may lead to currency wars while China redirects its currency holdings away from the United States.[56]

Auditing

The Federal Reserve is subject to different requirements for transparency and audits than other government agencies, which its supporters claim is another element of the Fed’s independence. Although the Federal Reserve has been required by law to publish independently audited financial statements since 1999, the Federal Reserve is not audited in the same way as other government agencies. Some confusion can arise because there are many types of audits, including: investigative or fraud audits; and financial audits, which are audits of accounting statements; there are also compliance, operational, and information system audits.

The Federal Reserve’s annual financial statements are audited by an outside auditor. Similar to other government agencies, the Federal Reserve maintains an Office of the Inspector General, whose mandate includes conducting and supervising “independent and objective audits, investigations, inspections, evaluations, and other reviews of Board programs and operations.”[57] The Inspector General’s audits and reviews are available on the Federal Reserve’s website.[58][59]

The Government Accountability Office (GAO) has the power to conduct audits, subject to certain areas of operations that are excluded from GAO audits; other areas may be audited at specific Congressional request, and have included bank supervision, government securities activities, and payment system activities.[60][61] The GAO is specifically restricted any authority over monetary policy transactions;[60] the New York Times reported in 1989 that “such transactions are now shielded from outside audit, although the Fed influences interest rates through the purchase of hundreds of billions of dollars in Treasury securities.”[62] As mentioned above, it was in 1999 that the law governing the Federal Reserve was amended to formalize the already-existing annual practice of ordering independent audits of financial statements for the Federal Reserve Banks and the Board;[63] the GAO’s restrictions on auditing monetary policy continued, however.[61]

Congressional oversight on monetary policy operations, foreign transactions, and the FOMC operations is exercised through the requirement for reports and through semi-annual monetary policy hearings.[61] Scholars have conceded that the hearings did not prove an effective means of increasing oversight of the Federal Reserve, perhaps because “Congresspersons prefer to bash an autonomous and secretive Fed for economic misfortune rather than to share the responsibility for that misfortune with a fully accountable Central Bank,” although the Federal Reserve has also consistently lobbied to maintain its independence and freedom of operation.[64]

Fulfillment of wider economic goals

By law, the goals of the Fed’s monetary policy are: high employment, sustainable growth, and stable prices.[65]

Critics say that monetary policy in the United States has not achieved consistent success in meeting the goals that have been delegated to the Federal Reserve System by Congress. Congress began to review more options with regard to macroeconomic influence beginning in 1946 (after World War II), with the Federal Reserve receiving specific mandates in 1977 (after the country suffered a period of stagflation).

Throughout the period of the Federal Reserve following the mandates, the relative weight given to each of these goals has changed, depending on political developments.[citation needed] In particular, the theories of Keynesianism and monetarism have had great influence on both the theory and implementation of monetary policy, and the “prevailing wisdom” or consensus view of the economic and financial communities has changed over the years.[66]

  • Elastic currency (magnitude of the money multiplier): the success of monetary policy is dependent on the ability to strongly influence the supply of money available to the citizens. If a currency is highly “elastic” (that is, has a higher money multiplier, corresponding to a tendency of the financial system to create more broad money for a given quantity of base money), plans to expand the money supply and accommodate growth are easier to implement. Low elasticity was one of many factors that contributed to the depth of the Great Depression: as banks cut lending, the money multiplier fell, and at the same time the Federal Reserve constricted the monetary base. The depression of the late 1920s is generally regarded as being the worst in the country’s history, and the Federal Reserve has been criticized for monetary policy which worsened the depression.[67] Partly to alleviate problems related to the depression, the United States transitioned from a gold standard and now uses a fiat currency; elasticity is believed to have been increased greatly.[68]

The value of $1 over time, in 1776 dollars.[70]

  • Stable prices – While some economists would regard any consistent inflation as a sign of unstable prices,[71] policymakers could be satisfied with 1 or 2%;[72] the consensus of “price stability” constituting long-run inflation of 1-2% is, however, a relatively recent development, and a change that has occurred at other central banks throughout the world. Inflation has averaged a 4.22% increase annually following the mandates applied in 1977; historic inflation since the establishment of the Federal Reserve in 1913 has averaged 3.4%.[73] In contrast, some research indicates that average inflation for the 250 years before the system was near zero percent, though there were likely sharper upward and downward spikes in that timeframe as compared with more recent times.[74] Central banks in some other countries, notably the German Bundesbank, had considerably better records of achieving price stability drawing on experience from the two episodes of hyperinflation and economic collapse under the country’s previous central bank.

Inflation worldwide has fallen significantly since former Federal Reserve Chairman Paul Volcker began his tenure in 1979, a period which has been called the Great Moderation; some commentators attribute this to improved monetary policy worldwide, particularly in the Organisation for Economic Co-operation and Development.[75][76]BusinessWeek notes that inflation has been relatively low since mid-1980s[77] and it was during this time that Volcker wrote (in 1995), “It is a sobering fact that the prominence of central banks [such as the Federal Reserve] in this century has coincided with a general tendency towards more inflation, not less. By and large, if the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with ‘free banking.'”.

  • Sustainable growth – The growth of the economy may not be sustainable as the ability for households to save money has been on an overall decline[78] and household debt is consistently rising.[79]

Cause of The Great Depression

Money supply decreased significantly between Black Tuesday and the Bank Holiday in March 1933 when there were massive bank runs

Monetarists who believe that the Great Depression started as an ordinary recession but significant policy mistakes by monetary authorities (especially the Federal Reserve) caused a shrinking of the money supply which greatly exacerbated the economic situation, causing a recession to descend into the Great Depression.

Public confusion

The Federal Reserve has established a library of information on their websites, however, many experts have spoken about the general level of public confusion that still exists on the subject of the economy; this lack of understanding of macroeconomic questions and monetary policy, however, exists in other countries as well. Critics of the Fed widely regard the system as being “opaque“, and one of the Fed’s most vehement opponents of his time, Congressman Louis T. McFadden, even went so far as to say that “Every effort has been made by the Federal Reserve Board to conceal its powers….”[80]

There are, on the other hand, many economists who support the need for an independent central banking authority, and some have established websites that aim to clear up confusion about the economy and the Federal Reserve’s operations. The Federal Reserve website itself publishes various information and instructional materials for a variety of audiences.

Criticism of government interference

Some economists, especially those belonging to the heterodox Austrian School, criticize the idea of even establishing monetary policy, believing that it distorts investment. Friedrich Hayek won the Nobel Prize for his elaboration of the Austrian business cycle theory.

Briefly, the theory holds that an artificial injection of credit, from a source such as a central bank like the Federal Reserve, sends false signals to entrepreneurs to engage in long-term investments due to a favorably low interest rate. However, the surge of investments undertaken represents an artificial boom, or bubble, because the low interest rate was achieved by an artificial expansion of the money supply and not by savings. Hence, the pool of real savings and resources have not increased and do not justify the investments undertaken.

These investments, which are more appropriately called “malinvestments”, are realized to be unsustainable when the artificial credit spigot is shut off and interest rates rise. The malinvestments and unsustainable projects are liquidated, which is the recession. The theory demonstrates that the problem is the artificial boom which causes the malinvestments in the first place, made possible by an artificial injection of credit not from savings.

According to Austrian economics, without government intervention, interest rates will always be an equilibrium between the time-preferences of borrowers and savers, and this equilibrium is simply distorted by government intervention. This distortion, in their view, is the cause of the business cycle. Some Austrian economists—but by no means all—also support full reserve banking, a hypothetical financial/banking system where banks may not lend deposits. Others may advocate free banking, whereby the government abstains from any interference in what individuals may choose to use as money or the extent to which banks create money through the deposit and lending cycle.

Reserve requirement

The Federal Reserve regulates banking, and one regulation under its direct control is the reserve requirement which dictates how much money banks must keep in reserves, as compared to its demand deposits. Banks use their observation that the majority of deposits are not requested by the account holders at the same time.

Currently, the Federal Reserve requires that banks keep 10% of their deposits on hand.[81] Some countries have no nationally mandated reserve requirements—banks use their own resources to determine what to hold in reserve, however their lending is typically constrained by other regulations.[82] Other factors being equal, lower reserve percentages increases the possibility of Bank runs, such as the widespread runs of 1931. Low reserve requirements also allow for larger expansions of the money supply by actions of commercial banks—currently the private banking system has created much of the broad money supply of US dollars through lending activity. Monetary policy reform calling for 100% reserves has been advocated by economists such as: Irving Fisher,[83] Frank Knight,[84] many ecological economists along with economists of the Chicago School and Austrian School. Despite calls for reform, the nearly universal practice of fractional-reserve banking has remained in the United States.

Criticism of private sector involvement

Historically and to the present day, various social and political movements (such as social credit) have criticized the involvement of the private sector in “creating money”, claiming that only the government should have the power to “make money”. Some proponents also support full reserve banking or other non-orthodox approaches to monetary policy. Various terminology may be used, including “debt money”, which may have emotive or political connotations. These are generally considered to be akin to conspiracy theories by mainstream economists and ignored in academic literature on monetary policy.

See also

https://en.wikipedia.org/wiki/Monetary_policy_of_the_United_States

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Non-accelarating Inflation Rate of Unemployment (NAIRU) — Phillips Curve — Money and Inflation — No Real Tradeoff Between Price Increases and Unemployment Rate In The Long Run — States and Nations Cutting Taxes Resulted In Higher Growth and Lower Unemployment — Videos

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NAIRU

From Wikipedia, the free encyclopedia

NAIRU is an acronym for non-accelerating inflation rate of unemployment,[1] and refers to a level of unemployment below which inflation rises. It was first introduced as NIRU (non-inflationary rate of unemployment) by Franco Modigliani and Lucas Papademos in 1975, as an improvement over the “natural rate of unemployment” concept,[2][3][4] which was proposed earlier by Milton Friedman.[5]

Monetary policy conducted under the assumption of a NAIRU involves allowing just enough unemployment in the economy to prevent inflation rising above a given target figure. Prices are allowed to increase gradually and some unemployment is tolerated.

Contents

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Origins

An early form of NAIRU is found in the work of Abba P. Lerner (Lerner 1951, Chapter 14), who referred to it as “low full employment” attained via the expansion of aggregate demand, in contrast with the “high full employment” which adds incomes policies (wage and price controls) to demand stimulation.

The concept arose in the wake of the popularity of the Phillips curve which summarized the observed negative correlation between the rate of unemployment and the rate of inflation (measured as annual nominal wage growth of employees) for number of industrialised countries with more or less mixed economies. This correlation (previously seen for the U.S. by Irving Fisher) persuaded some analysts that it was impossible for governments simultaneously to target both arbitrarily low unemployment and price stability, and that, therefore, it was government’s role to seek a point on the trade-off between unemployment and inflation which matched a domestic social consensus.

During the 1970s in the United States and several other industrialized countries, Phillips curve analysis became less popular, because inflation rose at the same time that unemployment rose (see stagflation).

Worse, as far as many economists were concerned, was that the Phillips curve had little or no theoretical basis. Critics of this analysis (such as Milton Friedman and Edmund Phelps) argued that the Phillips curve could not be a fundamental characteristic of economic general equilibrium because it showed a correlation between a real economic variable (the unemployment rate) and a nominal economic variable (the inflation rate). Their counter-analysis was that government macroeconomic policy (primarily monetary policy) was being driven by a low unemployment target and that this caused expectations of inflation to change, so that steadily accelerating inflation rather than reduced unemployment was the result. The resulting prescription was that government economic policy (or at least monetary policy) should not be influenced by any level of unemployment below a critical level – the “natural rate” or NAIRU.[6]

The natural rate hypothesis

The idea behind the natural rate hypothesis put forward by Friedman was that any given labor market structure must involve a certain amount of unemployment, including frictional unemployment associated with individuals changing jobs and possibly classical unemployment arising from real wages being held above the market-clearing level by minimum wage laws, trade unions or other labour market institutions. Unexpected inflation might allow unemployment to fall below the natural rate by temporarily depressing real wages, but this effect would dissipate once expectations about inflation were corrected. Only with continuously accelerating inflation could rates of unemployment below the natural rate be maintained.

The analysis supporting the natural rate hypothesis was controversial, and empirical evidence suggested that the natural rate varied over time in ways that could not easily be explained by changes in labor market structures. As a result, the “natural rate” terminology was largely supplanted by that of the NAIRU, which referred to a rate of unemployment below which inflation would accelerate, but did not imply a commitment to any particular theoretical explanation, or a prediction that the rate would be stable over time.

Properties

If {\displaystyle U*}U* is the NAIRU and {\displaystyle U}U is the actual unemployment rate, the theory says that:

if {\displaystyle U<U*}U<U* for a few years, inflationary expectations rise, so that the inflation rate tends to increase;
if {\displaystyle U>U*}U>U* for a few years, inflationary expectations fall, so that the inflation rate tends to slow (there is disinflation); and
if {\displaystyle U=U*}U=U*, the inflation rate tends to stay the same, unless there is an exogenous shock.

Okun’s law can be stated as saying that for every one percentage point by which the actual unemployment rate exceeds the so-called “natural” rate of unemployment, real gross domestic product is reduced by 2% to 3%.

Criticism

The NAIRU analysis assumes that if inflation increases, workers and employers can create contracts that take into account expectations of higher inflation and agree on a level of wage inflation that matches the expected level of price inflation to maintain constant real wages. Therefore, the analysis requires inflation to accelerate to maintain low unemployment. However, this argument implicitly assumes that workers and employers cannot contract to incorporate accelerating inflation into wage expectations, but there is no clear justification for assuming that expectations or contract structures are limited in this way aside from the fact that such wage arrangements are not commonly observed.

The NAIRU analysis is especially problematic if the Phillips curve displays hysteresis, that is, if episodes of high unemployment raise the NAIRU.[7] This could happen, for example, if unemployed workers lose skills so that employers prefer to bid up of the wages of existing workers when demand increases, rather than hiring the unemployed.

Others, such as Abba Lerner (1951, 1967) and Hyman Minsky (1965) have argued that a similar effect can be achieved without the human costs of unemployment via a job guarantee, where rather than being unemployed, those who cannot find work in the private sector should be employed by the government. This theory, and the policy of the job guarantee replaces the NAIRU with the NAIBER (non-accelerating-inflation-buffer employment ratio).[8]

Relationship to other economic theories

Most economists do not see the NAIRU theory as explaining all inflation. Instead, it is possible to move along a short run Phillips Curve (even though the NAIRU theory says that this curve shifts in the longer run) so that unemployment can rise or fall due to changes in inflation. Exogenous supply-shock inflation is also possible, as with the “energy crises” of the 1970s or the credit crunch of the early 21st century.

The NAIRU theory was mainly intended as an argument against active Keynesian demand management and in favor of free markets (at least on the macroeconomic level). There is, for instance, no theoretical basis for predicting the NAIRU. Monetarists instead support the generalized assertion that the correct approach to unemployment is through microeconomic measures (to lower the NAIRU whatever its exact level), rather than macroeconomic activity based on an estimate of the NAIRU in relation to the actual level of unemployment. Monetary policy, they maintain, should aim instead at stabilizing the inflation rate.

Naming

The NAIRU, non-accelerating inflation rate of unemployment, is actually misnamed. It is the price level that is accelerating (or decelerating), not the inflation rate. The inflation rate is just changing, not accelerating.[9]

See also

References

  1. Jump up^ Coe, David T, Nominal Wages. The NAIRU and Wage Flexibility. (PDF), Organisation for Economic Co-operation and Development
  2. Jump up^ Modigliani, Franco; Papademos, Lucas (1975). “Targets for Monetary Policy in the Coming Year”. Brookings Papers on Economic Activity. The Brookings Institution. 1975 (1): 141–165. doi:10.2307/2534063. JSTOR 2534063.
  3. Jump up^ Robert M. Solow, Modigliani and Monetarism, p. 6.
  4. Jump up^ Snowdon, Brian; Vane, Howard R. (2005). Modern Macroeconomics: Its Origins, Development and Current State. Cheltenham: E. Elgar. p. 187. ISBN 1-84376-394-X.
  5. Jump up^ Friedman, Milton (1968). “The Role of Monetary Policy”. American Economic Review. 58 (1): 1–17. JSTOR 1831652.
  6. Jump up^ Hoover, Kevin D, “Phillips Curve”, The Concise Encyclopedia of Economics, The Library of Economics and Liberty, retrieved 16 July 2007
  7. Jump up^ Ball, Laurence (2009), Hysteresis in Unemployment: Old and New Evidence (PDF)
  8. Jump up^ William Mitchell, J. Muysken (2008), Full employment abandoned: shifting sands and policy failures, Edward Elgar Publishing, ISBN 1-85898-507-2
  9. Jump up^ Case, K.E. and Fair, R.C. and Oster, S.M. (2016). Principles of Macroeconomics. Pearson. ISBN 9780133023671.

Further reading

External links

https://en.wikipedia.org/wiki/NAIRU

Phillips curve

From Wikipedia, the free encyclopedia
For the Phillips curve in supernova astrophysics, see Phillips relationship.

The Phillips curve is a single-equation empirical model, named after A. W. Phillips, describing a historical inverse relationship between rates of unemployment and corresponding rates of inflation that result within an economy. Stated simply, decreased unemployment, (i.e., increased levels of employment) in an economy will correlate with higher rates of inflation.

While there is a short run tradeoff between unemployment and inflation, it has not been observed in the long run.[1] In 1968, Milton Friedman asserted that the Phillips curve was only applicable in the short-run and that in the long-run, inflationary policies will not decrease unemployment.[2][3] Friedman then correctly predicted that, in the 1973–75 recession, both inflation and unemployment would increase.[3] The long-run Phillips curve is now seen as a vertical line at the natural rate of unemployment, where the rate of inflation has no effect on unemployment.[4] Accordingly, the Phillips curve is now seen as too simplistic, with the unemployment rate supplanted by more accurate predictors of inflation based on velocity of moneysupply measures such as the MZM (“money zero maturity”) velocity,[5] which is affected by unemployment in the short but not the long term.[6]

Contents

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History

Rate of Change of Wages against Unemployment, United Kingdom 1913–1948 from Phillips (1958)

William Phillips, a New Zealand born economist, wrote a paper in 1958 titled The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861-1957, which was published in the quarterly journal Economica.[7] In the paper Phillips describes how he observed an inverse relationship between money wage changes and unemployment in the British economy over the period examined. Similar patterns were found in other countries and in 1960 Paul Samuelson and Robert Solow took Phillips’ work and made explicit the link between inflation and unemployment: when inflation was high, unemployment was low, and vice versa.[8]

In the 1920s, an American economist Irving Fisher noted this kind of Phillips curve relationship. However, Phillips’ original curve described the behavior of money wages.[9]

In the years following Phillips’ 1958 paper, many economists in the advanced industrial countries believed that his results showed that there was a permanently stable relationship between inflation and unemployment.[citation needed] One implication of this for government policy was that governments could control unemployment and inflation with a Keynesian policy. They could tolerate a reasonably high rate of inflation as this would lead to lower unemployment – there would be a trade-off between inflation and unemployment. For example, monetary policy and/or fiscal policy could be used to stimulate the economy, raising gross domestic product and lowering the unemployment rate. Moving along the Phillips curve, this would lead to a higher inflation rate, the cost of enjoying lower unemployment rates.[citation needed] Economist James Forder argues that this view is historically false and that neither economists nor governments took that view and that the ‘Phillips curve myth’ was an invention of the 1970s.[10]

Since 1974, seven Nobel Prizes have been given to economists for, among other things, work critical of some variations of the Phillips curve. Some of this criticism is based on the United States’ experience during the 1970s, which had periods of high unemployment and high inflation at the same time. The authors receiving those prizes include Thomas Sargent, Christopher Sims, Edmund Phelps, Edward Prescott, Robert A. Mundell, Robert E. Lucas, Milton Friedman, and F.A. Hayek.[11]

Stagflation

In the 1970s, many countries experienced high levels of both inflation and unemployment also known as stagflation. Theories based on the Phillips curve suggested that this could not happen, and the curve came under a concerted attack from a group of economists headed by Milton Friedman.[citation needed] Friedman argued that the Phillips curve relationship was only a short-run phenomenon. In this he followed eight years after Samuelson and Solow [1960] who wrote ” All of our discussion has been phrased in short-run terms, dealing with what might happen in the next few years. It would be wrong, though, to think that our Figure 2 menu that related obtainable price and unemployment behavior will maintain its same shape in the longer run. What we do in a policy way during the next few years might cause it to shift in a definite way.”[8] As Samuelson and Solow had argued 8 years earlier, he argued that in the long run, workers and employers will take inflation into account, resulting in employment contracts that increase pay at rates near anticipated inflation. Unemployment would then begin to rise back to its previous level, but now with higher inflation rates. This result implies that over the longer-run there is no trade-off between inflation and unemployment. This implication is significant for practical reasons because it implies that central banks should not set employment targets above the natural rate.[1]

More recent research has shown that there is a moderate trade-off between low-levels of inflation and unemployment. Work by George Akerlof, William Dickens, and George Perry,[12]implies that if inflation is reduced from two to zero percent, unemployment will be permanently increased by 1.5 percent. This is because workers generally have a higher tolerance for real wage cuts than nominal ones. For example, a worker will more likely accept a wage increase of two percent when inflation is three percent, than a wage cut of one percent when the inflation rate is zero.

Today

U.S. Inflation and Unemployment 1/2000 to 4/2013

Most economists no longer use the Phillips curve in its original form because it was shown to be too simplistic.[6] This can be seen in a cursory analysis of US inflation and unemployment data from 1953–92. There is no single curve that will fit the data, but there are three rough aggregations—1955–71, 1974–84, and 1985–92—each of which shows a general, downwards slope, but at three very different levels with the shifts occurring abruptly. The data for 1953–54 and 1972–73 do not group easily, and a more formal analysis posits up to five groups/curves over the period.[1]

But still today, modified forms of the Phillips Curve that take inflationary expectations into account remain influential. The theory goes under several names, with some variation in its details, but all modern versions distinguish between short-run and long-run effects on unemployment. Modern Phillips curve models include both a short-run Phillips Curve and a long-run Phillips Curve. This is because in the short run, there is generally an inverse relationship between inflation and the unemployment rate; as illustrated in the downward sloping short-run Phillips curve. In the long run, that relationship breaks down and the economy eventually returns to the natural rate of unemployment regardless of the inflation rate.[13]

The “short-run Phillips curve” is also called the “expectations-augmented Phillips curve”, since it shifts up when inflationary expectations rise, Edmund Phelps and Milton Friedman argued. In the long run, this implies that monetary policy cannot affect unemployment, which adjusts back to its “natural rate“, also called the “NAIRU” or “long-run Phillips curve”. However, this long-run “neutrality” of monetary policy does allow for short run fluctuations and the ability of the monetary authority to temporarily decrease unemployment by increasing permanent inflation, and vice versa. The popular textbook of Blanchard gives a textbook presentation of the expectations-augmented Phillips curve.[14]

An equation like the expectations-augmented Phillips curve also appears in many recent New Keynesiandynamic stochastic general equilibrium models. In these macroeconomic models with sticky prices, there is a positive relation between the rate of inflation and the level of demand, and therefore a negative relation between the rate of inflation and the rate of unemployment. This relationship is often called the “New Keynesian Phillips curve.” Like the expectations-augmented Phillips curve, the New Keynesian Phillips curve implies that increased inflation can lower unemployment temporarily, but cannot lower it permanently. Two influential papers that incorporate a New Keynesian Phillips curve are Clarida, Galí, and Gertler (1999),[15] and Blanchard and Galí (2007).[16]

Mathematics

There are at least two different mathematical derivations of the Phillips curve. First, there is the traditional or Keynesian version. Then, there is the new Classical version associated with Robert E. Lucas, Jr.

The traditional Phillips curve

The original Phillips curve literature was not based on the unaided application of economic theory. Instead, it was based on empirical generalizations. After that, economists tried to develop theories that fit the data.

Money wage determination

The traditional Phillips curve story starts with a wage Phillips Curve, of the sort described by A.W. Phillips himself. This describes the rate of growth of money wages (gW). Here and below, the operator g is the equivalent of “the percentage rate of growth of” the variable that follows.

{\displaystyle gW=gW^{T}-f(U)}gW=gW^{{T}}-f(U)

The “money wage rate” (W) is shorthand for total money wage costs per production employee, including benefits and payroll taxes. The focus is on only production workers’ money wages, because (as discussed below) these costs are crucial to pricing decisions by the firms.

This equation tells us that the growth of money wages rises with the trend rate of growth of money wages (indicated by the superscript “T”) and falls with the unemployment rate (U). The function f() is assumed to be monotonically increasing with U so that the dampening of money-wage increases by unemployment is shown by the negative sign in the equation above.

There are several possible stories behind this equation. A major one is that money wages are set by bilateral negotiations under partial bilateral monopoly: as the unemployment rate rises, all else constant worker bargaining power falls, so that workers are less able to increase their wages in the face of employer resistance.

During the 1970s, this story had to be modified, because (as the late Abba Lerner had suggested in the 1940s) workers try to keep up with inflation. Since the 1970s, the equation has been changed to introduce the role of inflationary expectations (or the expected inflation rate, gPex). This produces the expectations-augmented wage Phillips curve:

{\displ