Rand Paul's Righteous NSA Lawsuit

Senator Rand Paul (R-KY) is suing the federal government on behalf of everyone who has a mobile phone. For this, he should be thanked. Paul’s spirited opposition to the National Security Agency’s collection of Americans’ electronic communications, which his lawsuit seeks to curtail, is consistent with the ideals of individual liberty on which America was founded.

Even so, Paul’s lawsuit has been denounced as self-promoting and frivolous by his many detractors. Prominent among these is Andrew C. McCarthy, prosecutor and columnist of note. An accomplished man, worthy of respect, McCarthy is out where the buses don’t run on this particular issue. His defense of government surveillance has been eloquent and wrongheaded, much like his criticism of NSA opponents in general and Paul in particular.

Typical of our over-lawyered age, McCarthy offers a legalistic rejoinder that does violence to common sense. Specifically, he and other proponents of NSA surveillance point to the 1979 Smith v. Maryland case, wherein the Supreme Court ruled that telephone records belong to the phone company, rather than the person using the phone.

Consequently, the NSA’s collection of so-called metadata – records of which phone numbers call each other, for how long, etc. – does not trespass the Constitution’s Fourth Amendment prohibition of unreasonable searches, since these are property of a third party.

McCarthy displays this argument more brazenly than most, waggling the Smith precedent about in the breeze as though the sheer majesty of this court decision from the era of rotary phones completely overwhelms any modern dispute. With exasperation, he laments that he has not yet received an adequate response on this point, daring anyone to disagree with his cocksure reasoning.

Challenge accepted, Counselor.

In particular, McCarthy demands to know how phone records can be considered among the “persons, houses, papers, and effects” protected by the Fourth Amendment, in light of the Smith decision.

Even if one concedes the Smith decision to be so impeccable that it is beyond question, a phone record is nowhere near the same thing today as it was in 1979. McCarthy acknowledges this facet of the Paul suit, only to dismiss the personal, identifying nature of mobile phone use by saying the NSA “generally” does not seek cell-phone records, claiming “strict” rules require their decoupling from location information, and citing a Wall Street Journal report that the NSA collects only 20 percent of call data anyway.

This is at odds with other reports and defiant of common sense. Are we to believe that a massive government surveillance program, capable of electronic omniscience, ostensibly designed to stop terrorism, opts to focus on landlines, as though the next suicide bomber is waiting for orders beside the wall phone in his mum’s kitchen?

Even if that were true (and when have they lied to us before?), and the NSA “generally” eschews cell-phone records, the instances where such records are sought can identify your location, your personal and business contacts, and most or all of your private communications.

Today’s argument, therefore, is rather different from that of 35 years ago, such that while Smith may relate to the Paul suit, it is far from dispositive.

And Smith is, of course, not beyond dispute (or, as McCarthy puts it, “settled”), just as any decision can be revisited and revised. By McCarthy’s logic, for example, would a Supreme Court decision in 1973 mean that the right to partial-birth abortion is “settled”?

Indeed, in considering America’s legacy of liberty from its genesis to today, it is Smith that is the outlier.

That is, from the 1791 ratification of the Fourth Amendment, to the 1979 Smith decision, to the Paul suit of 2014, the first and the third are consistent in their respect for personal privacy, while the second is out of place.

Remember that the Fourth Amendment, as part of the Bill of Rights, represents the supreme law of the land, whereas the 1979 Smith decision is an interpretation thereof. Isn’t it just possible that James Madison had it right, but the Burger Court got it wrong?

That McCarthy will not even countenance this possibility reveals why ostensible conservatives like him (and, frankly, the publication for which he writes) are losing the support of personal sovereignty advocates across America.

Again and again, as the Bill of Rights itemizes negative liberty – things the government may not or must not do – its bias is toward maximizing individual freedom while thwarting the state’s ability to interfere. Whose actions are more consistent with that philosophy – Rand Paul’s or the NSA’s?

McCarthy’s willful blindness to this, preferring to re-state the Smith principle through ever more abstract analogies, evinces the disconnect between the modern legal caste and the plain sense of everyday people.

Moreover, his unblinking faith in the benign strength of the state and America’s security apparatus demonstrates why prosecutors often make poor interpreters of public policy (Chris Christie, please call your office).

Beyond the Smith precedent (which, as demonstrated, is far from the Hulk Hogan leg-drop finishing move he imagines it to be), McCarthy’s secondary arguments become weaker still. In what McCarthy calls a “devastating” admission, the Paul brief notes that the NSA program collects phone numbers, but not the names associated with them.

On what temporal plain do McCarthy and other NSA proponents reside, wherein our policy on phone record proprietorship remains “settled” from a few decades past Pennsylvania 6-500 and the space between getting a phone number and finding out who owns it is like the Great Gulf between the Old Testament Lazarus and the rich man in torment?

Are we to believe that, while the NSA can collect and track every phone number in the country, when it comes to finding out who each number belongs to, they will cluster at an impasse like the marching band at the end of Animal House?

Or do McCarthy et al. insist the NSA will stop short of applying names to collected phone numbers because, well, that’s what the rules say they should do?

In either case, the argument is preposterous, and it is dispiriting to see estimable men like McCarthy, Charles Krauthammer and others advancing it.

Remember, we are speaking of a program which, apart from its antipathy to personal privacy, has been found on a bi-partisan basis never to have thwarted a single terrorist plot.

In McCarthy’s case, it is not even that he favors the letter of the law over its spirit. Rather, he relies upon an outdated interpretation of the letter of the law to justify a willful disregard of its spirit.

Let us start from scratch, asking one simple and honest question: Do you believe the Framers of the Constitution, and particularly the Bill of Rights, would be content with the tracking and storage of the private communications of every American by the federal government?

In launching his lawsuit, Rand Paul is doing two things that are very American: suing, and standing up for freedom. The latter, at least, is worthy of commendation.

Theo Caldwell, an investor and broadcaster, can be contacted at theo@theocaldwell.com

Canada's FATCA Capitulation

As of this past week, the Canada Revenue Agency works for the Internal Revenue Service. The subordination of Canada's tax authority to its American counterpart came in the form of a euphemistically named "Intergovernmental Agreement" pursuant to the US Foreign Accounts Tax Compliance Act (FATCA).

The result is that starting Canada Day (July 1), Canadian banks and other financial institutions will be required to comb through client accounts containing $50,000 or more to determine if they are “US Reportable.”  They must then inform CRA, which will pass the information along to the United States.

Notwithstanding that Canada’s leaders have subjected their citizens to the most rapacious and malevolent tax department in the world in the form of the IRS, they have committed a craven surrender of national sovereignty.

FATCA, passed by the US Congress in 2010, is an extension of America’s anomalous and larcenous practice of demanding taxes from people, regardless of where they reside in the world.  The United States is one of only two countries that engage in this disgraceful conduct (Eritrea being the other).

Let us eliminate a deliberate misconception: This agreement is not about catching "tax cheats" as its proponents aver and journalists obediently repeat.

It is about expanding America’s oversight of global commerce, while increasing its ability to confiscate funds to which it has no legitimate claim.

Indeed, the only apparent cheating is that of the United States, which assumes the power to demand taxes from people who do not live in that country, do not use any of its public services, and in many cases have never been there.

This is international theft, effected by the threat of fines, prosecution and imprisonment.

Most people, including Americans, are unaware of the United States' criminal practice of worldwide taxation. Consequently, when breast-beating yahoos proclaim "America, love it or leave it," they evince ignorance that, as a practical and financial matter, leaving is not an option.

Renouncing US citizenship is no clear solution (although record numbers have done so in recent months), since the American government broadly defines its tax subjects as "US Persons."  This may include people who have studied or worked in the United States, or who have never set foot on American soil yet have family or business associates with roots there.

Why, then, would Canada acquiesce to such an absurd arrangement?

Some might suggest the deal was struck as a political quid pro quo, to convince President Barack Obama to approve the stalled Keystone XL oil pipeline from Alberta to Texas.  But the prevailing politics of the president’s hesitation have always been domestic, rather than international.

After years of studies and reports, Keystone is the most scrutinized conveyance in the history of running liquid, and its delay persists to appease the environmental left of Obama's Democratic base, not to force Canada to sell out its own people to the IRS.

If, after November’s congressional elections, Obama at last approves the pipeline, Canadian politicians might claim credit.  But this would strain credulity.

More likely, Canada caved to America’s overt threat that nations not complying with FATCA would face a 30 percent withholding tax on all US-based investments.  Herein lay a true test of character which, for the moment, Canada’s leaders have failed.

It's easy to be tough with Eritrea, but when the world’s largest economy demands submission to its will and quantifies a sobering sum for non-compliance, real courage is required.

Herewith, therefore, a policy for estimable Canadian leadership: When another country comes along and says their laws will henceforth be your laws, tell them to cram it with maple syrup.

That goes for Eritrea, the United States, and all imperious interlopers in between.

As a dual citizen of Canada and the United States, I appreciate and have benefited from the unique trading relationship of these two countries. But in this case, the United States is being a bully and, like many bullies, needs a smack in the nose.  Canada, meanwhile, needs a leader with the sand to deliver it.

A simple no would suffice. Call America's bluff, if indeed that's what it is. If, however, the US means what it says and really were to begin slapping a 30 percent withholding tax on Canadian investors, Canada should respond by granting an immediate tax credit in that amount to affected individuals and institutions.

This may take a bite out of federal tax receipts, but right is right. If America's largest trading partner were willing to stand up against such preposterous demands, other countries would have the courage and blueprint to do the same.

It also bears mentioning that such a move could make Canada more attractive to international investors. That is, those wanting access to North American markets, yet wary of US tax overreach, would be pleased to see Canada will not go along with it.

Every country has the right to craft and enforce its own laws within its borders.  But when a nation insists that its laws must apply in other countries – as the United States does in this and other instances – that’s a problem.

Through this agreement, Canada has shown the world it lacks the courage to govern itself.  This cannot stand.

Theo Caldwell, an investor and broadcaster, is a dual citizen of Canada and the United States.  He can be contacted at theo@theocaldwell.com

Theo Caldwell, an investor and broadcaster, is a dual citizen of Canada and the United States.  He can be contacted at theo@theocaldwell.com

Canada's Complicity in the US Surveillance State

In Canadian political debate, accusing one’s opponent of advocating “American-style” policies used to be the equivalent of launching a nuclear missile.

The trajectory of these attacks was usually left to right, with some earnest advocate of the Canadian welfare state blasting a heartless proponent of free markets and individual responsibility, as though a slight reduction in subsidies for public broadcasters or allowing citizens to pay out-of-pocket for medical expenses were one step removed from leaving the elderly on ice floes to die.

Much has changed in recent years, however.  For one thing, the American health care system is now more beholden to the government than its “socialized” Canadian counterpart ever was.  Relatedly, the ideological leadership of the countries has reversed.  Whereas Liberal prime ministers like Pierre Trudeau and Jean Chretien once sat opposite Republican presidents like Ronald Reagan and George W. Bush, Canada now has its most right-wing prime minister in at least a generation, while the United States is in the second term of arguably the most left-wing president in its history.

But one issue on which an ostensible rightist like Prime Minister Stephen Harper and an unapologetic leftist like President Barack Obama seem to agree is that the surveillance capacity of the state must know no limits, citizens of both countries must be constantly tracked and monitored, and the two governments must synchronize their efforts in this regard.

If ever there was a time when Canada should act on its aversion to “American-style” policies, this is it.

From banking to taxes to travel to personal communications, Canada has signed on to the most appalling excesses of America’s growing surveillance state.  The rationale is usually found among the catch-all phrases deployed to justify today’s creeping totalitarianism: the “War on Terror” or “keeping us safe” or the “War on Drugs” or “money laundering” or “tax evasion.”

Whatever the stated reason, such policies are born of the institutional panic that someone, somewhere, is doing something the government doesn’t know about and has not had the chance to regulate, mandate or ban.

Most recently, CTV News reports, the Canadian and American governments have agreed to compile a shared, biographic database of residents’ border-crossings, starting this June.  The new system will be used to verify eligibility for Medicare and other benefits (and, of course, will “combat terrorism”), but it evinces Canada’s disquieting modern tendency to surrender its citizens’ information to a rapacious US government.  It is most certainly an “American-style” presumption that people need to be watched at all times, their communications monitored, their comings and goings tracked and recorded.

This accompanies revelations  by National Security Agency whistleblower Edward Snowden that Canada’s electronic spy agency, in conjunction with the NSA, has used Canadian airport Internet service to track the wireless devices of thousands of travelers for days after they left the terminal.

The freedom to travel has been one of the most conspicuous casualties of the US “War on Terror” and Canada should be ashamed of its complicity.  In response to edicts issued by the Obama administration, Canadian travelers are subjected to a homegrown version of the pornographic fraud that is American airport security.

(As to Snowden, they want to fry this kid for breaking the first two rules of Fight Club, but he has done more to preserve the cause of freedom than those who get paid to snoop on their fellow citizens.)

Canadians need not travel to become entangled in the web of US surveillance.  Canada’s acquiescence to America’s Foreign Accounts Tax Compliance Act (FATCA) will see to that. 

Beginning on July 1 (ironically, Canada Day), Canadian banks and financial institutions will be required to review all client accounts containing $50,000 or more to determine if they are “US Reportable.”

This transcends the infamous and larcenous practice of the Internal Revenue Service demanding tax returns and payments from “US persons” worldwide.  Under the FATCA regime, not only will US Persons (broadly and capriciously defined by the US Treasury) be required to file taxes with the IRS even if they have never set foot on US soil, their assets must be reported to American authorities.

The closest Canada has come to effective resistance is a meaningless bureaucratic tweak: rather than report directly to the IRS, Canadian banks would report to the Canadian tax authority, which then forwards the information to its American counterpart.

In each of these cases, Canada has gone along through a national self-interest no more considered than, simply, the United States said so.

Canada and the United States enjoy the largest bilateral trading relationship in the history of the planet.  It is in the interests of both countries to keep that going.  Canada, as a resource-rich, exporter nation, enjoys unique access to the largest consumer market in the world.

Nevertheless, economic comity is not everything, and there would be much to be said for a prime minster who, like Hugh Grant at the end of Love Actually, has the courage to stand up and announce he is unhappy with important aspects of the relationship. 

Can such leadership be found, or has Canada made peace with an “American-style” future?

Theo Caldwell, an investor and broadcaster, is a dual citizen of Canada and the United States.  He can be contacted at theo@theocaldwell.com