Annals of the Great Recession II.

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The Great Recession that began in 2007 ended in 2009.[1] Five years afterward, New York Times reporters asked how the recession had altered the American economy.[2] How was the economy different from before the recession began?

There were 1.5 million fewer construction jobs. Construction isn’t likely to fully revive. Even now, almost 20 percent of homeowners with mortgages owe more on their houses than the current market value of those homes. On average, these jobs had paid $55K a year.

There were 1.7 million fewer manufacturing jobs. Before the recession there were about 14 million Americans employed in manufacturing. That means that manufacturing employment fell by about 12 percent.

However, pre-recession manufacturing amounted to only about 10 percent of the labor force. Manufacturing jobs have been deserting America for decades. The loss of manufacturing jobs has been much more pronounced than the loss of manufacturing production. Manufacturers have used technology to increase production while cutting their work force. Overall, the loss of these high-wage jobs is probably permanent. On average, these jobs had paid $51K a year.

There were 1.5 million more health services jobs than before the recession.

The recession didn’t even dent technology companies. Technology companies both generated wealth for owners and created well-paying jobs. For example, the number of smartphones shipped rose from 20.1 million in 2007 to 136.6 million in 2013.

“Fracking” has boosted employment and income in states where it has been developed. It also has lowered energy costs. Chemicals and plastics consume a lot of energy, so cheap natural gas has given these industries a leg up. It also has improved the trade balance by reducing energy imports.

Health-related fields, energy, and technology appear to be the central pillars of the American economic future.

What did unemployment show? Population growth since the recession meant that the economy needed to add at least seven million more jobs than it did to absorb the growth. In Summer 2014, four million people were still counted as long-term unemployed and six million weren’t counted because they had just given up looking for work after many rebuffs. The slack labor market held down real wages as a low level of inflation continued. Hence, unemployment could stay high even as the economy grew. That, in turn, kept wages from rising in the way that they would in a tight labor market.

To get work, many people took lower-paying jobs than they had held before the recession. Eighty percent of Americans earn less than they did before the recession. Indeed, the median income fell from $55,627 in 2007 to $51,017 in June 2014. Many people also supplemented their income with government benefits like food stamps. In 2007 26.3 million people received food stamps; in 2009 47.6 million people received food stamps.

Continuing high unemployment and stagnant wages meant that it felt to any normal person that the recession remained in force. It’s hard to see the dawn when it is still so dark.

[1] The National Bureau of Economic Research has technical definitions for “recession” and “depression.” These have nothing to do with the popular perception of economic conditions. Therefore they become the butt of out-of-office politicians, late-night comedy-show hosts, and other people of that ilk.

[2] Shaila Dewan, Nelson D. Schwartz, and Alicia Parlapiano, “How the Recession Reshaped the Economy,” NYT, 15 June 2014, pp. 6-7.

Annals of the Great Recession I.

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In a column in the New York Times, Neil Irwin takes up an important, under-analyzed topic.[1] He doesn’t take it very far, but it’s better than a poke in the eye with a sharp stick.

He begins by reporting on a new book on the “Great Recession” by the University of California-Berkeley economic historian Barry Eichengreen.[2] The book is 500 pages long and came out in early January 2015, so I don’t think that Irwin has fully digested what Professor Eichengreen has to say. (I sure haven’t.) All the same, he brings out several important points.

First, the Great Depression of the 1930s and—more importantly—the Second World War legitimized Keynesian counter-cyclical spending to moderate the economy. Thus, when the American economy began to plummet in early 2008, both Republican President George W. Bush and the Democrat-led Congress agreed on a $150 billion to cover the credit markets (the TARP). Within a year, however, Republicans had turned against big deficits. When the newly-elected President Barack Obama called for a $787 billion stimulus bill, scarcely any Republicans could be found to vote for it. For the next several years the Republicans kept up their assault on deficit spending. By 2011 Democrats also were running away from deficits.

Second, in the absence of spending action by Congress, responsibility for countering the recession fell to the Federal Reserve Bank (the Fed). Here again, Eichengreen finds too little effort made too late. The Fed’s stimulation mostly came a day late and a dollar short. “Quantitative Easing” through bond-buying pumped money into the economy. It just never pumped in enough money until the ambitious program that began in September 2012 (and which has now come to an end).

The result of these lamed policies came in an excessively-long recession that has just ground the spirit out of many Americans. Irwin is good on pointing out the events. He’s less good at explaining them. Why did Republicans turn against Keynesianism?[3] Why did Democrats, of all people, turn against the legacy of Franklin D. Roosevelt?

What is missing in Irwin’s explanation is any analysis of the rise of the “Tea Party.”[4] Not everyone responded well to the stimulus bill. A Seattle-area blogger named Keli Carender organized a protest against the bill in February 2009, then talked it up on-line. Soon, protests took place in other cities. Then Rick Santelli’s on-air rant against bail-outs went viral. Then Fox News pushed the cause. April 15, 2009 provided a forum for lots of protest rallies. ObamaCare added fuel to the fire.

This “Tea Party” movement was largely made up of previously apolitical ordinary citizens who had been energized by their economic concerns. Underneath this concern is a feeling that they have “lost” their country to “elites.” At the same time, many Tea Party people had “social conservative” views on gay marriage, the Second Amendment, hostility to the expansion of government authority by the courts). Illegal immigration formed another concern. Finally, some of the Tea Party supporters were just nuts: “birthers” and “Obama = Hitler” types. The specific targets of the “Tea Party” were the rapidly expanding federal deficit, the growth of “big government,” and taxes. The agenda of the movement appeared to be unrealistic and impossible to achieve: lower taxes combined with a balanced budget.

The “Tea Party” pressured Republicans. The Democratic abdication is harder to figure. Nobel Prize economist Paul Krugman argued that the Obama Administration’s stimulus program was half the size it needed to be, was spread over two years instead of front-loaded into one year, and contained a lot of tax cuts that were a waste. However, Irwin (and apparently Eichengreen) still trot out the tired excuse that the administration under-estimated the scope of the problem. More importantly, perhaps, President Obama felt no commitment to stimulus. Bob Woodward has quoted him as saying “Look, I get the Keynesian argument, but the American people just aren’t there.” But why didn’t he use the “bully pulpit” to get them there? And why didn’t Democratic leaders tell him—as Al Gore once told Bill Clinton, to “get with the program”? There is a lot of blood on the floor from this unnecessary disaster and a lot of blame to go around.

[1] Neil Irwin, “The Depression’s Unheeded Lessons,” NYT, 11 January 2015.

[2] Barry Eichengreen, Hall of Mirrors: The Great Depression, the Great Recession, and the Uses and Mis-Uses of History (New York: Oxford University Press, 2015).

[3] Richard Nixon once remarked that “We are all Keynesians now.” Republicans may yet come to rue the day they tossed over the ideas of Nixon for those of Ronald Reagan. Nixon also had proposed national health care, only to have it sunk by the petty personal jealousy of Teddy Kennedy.

[4] “The Rise of the Tea Party,” The Week, 19 February 2010, p. 13.

 

Euro Muslims.

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Ten years ago, almost to the day, Ross Douthat made the following observations.[1] Then, about 4 percent of the population of Europe was Muslim.[2] This seemed likely to change. Demographers projected that the low and falling birthrate among Christian Europeans would reduce the European population from 728 million people to about 630 million by 2050. Moreover, it will be an aged population dependent upon young workers from somewhere else to finance their pensions and medical care. Already about 900,000 immigrants entered Europe each year. This was about enough to off-set native European population decline and to keep the population at about the 1995 level. However, in 2000 a UN study projected that the countries of the European Union will require over 13 million immigrant workers EACH YEAR to preserve the 1995 ratio of workers to retirees. Thus Europeans may be compelled to organize a huge increase in immigration over the coming decades. Much of this population growth will come from nearby Muslim countries.   In addition, Muslims in Europe have a younger demographic profile and a birth rate triple that of non-Muslims. As a result of these trends alone, and disregarding immigration, demographers anticipated that the Muslim share of European population would reach eight percent by 2015. Moreover, many Europeans are not so much Christian as non-Muslim. If we suppose that a future renewal of European religious enthusiasm is possible, why would Christianity benefit? Might not wide conversions to Islam take place?

Already in 2005 Europeans were being forced to consider the possibility that Muslims within Europe uphold values that are hard to reconcile with currently prevailing norms: the French expelled an imam who insisted that the Koran authorized wife-beating (and what if the imam is correct?); in 2002 and 2004 Muslim militants assassinated two Dutch politicians who warned against the danger posed by Muslim immigration; and the Madrid (2004) and London (2005) train bombings reminded Europeans of the dangers of Islamic radicalism.

Ten years on, Reuel Marc Gerecht makes a number of important points.[3] First, jihad has become charismatic for some EuroMuslims. ISIS is conquering territory, not just blowing up things. Hundreds, perhaps thousands, of young men have gone to fight under the black banners. They come from Europe as well as the Arab countries. To my mind, it is their Spanish Civil War.

Second, European Community states are not likely to sit still for selective targeting of their Muslim citizens by American immigration officers. Hence, American security against European radical Islamists depends on the French and British domestic security services. Both governments have robust security services, while the Americans have little human intelligence from among European Muslims. If the British MI-5 and the French DCRI fail in their efforts to track Euro jihadis and thwart their plots, then the United States is in for a bad time.

EuroIslam may succeed where EuroDisney failed. After the fall of Constantinople to the Turks in 1453 the Hagia Sophia cathedral became a mosque. Will we live to see the day when American tourists line up to enter the great mosque on the isle de la Cite, and when the nearby statue of Charlemagne, the grandson of Charles Martel who defeated an Arab army at Tours, seems like a monument to Muslim persistence?[4]

[1] Ross Douthat, “The World in Numbers: A Muslim Europe?” Atlantic Monthly, January-February 2005, pp. 58-59.

[2] The admission of Turkey to the European Union would raise the share of Muslims in the population to 15 percent. There is no way that will happen now, given the Islamist tilt of the current Turkish government.

[3] Reuel Marc Gerecht, “France and the New Charismatic Jihad,” WSJ, 8 January 2015, A11.

[4] OK, that’s alarmist. My imagination got the better of me.

Man of Steel.

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In the first volume of his new biography of Joseph Stalin[1], Princeton historian Stephen Kotkin makes clear the disastrous effects of Bolshevik victory in the Russian Revolution. “The Russian Revolution—against the tyranny, corruption, and, not least, incompetence of tsarism—sparked soaring hopes for a new world of abundance, social justice and peace.” Garry Trudeau mockingly entitled a collection of his “Doonesbury” cartoons from the Vietnam War-era But This War Had Such Promise. The same might be said of the Russian Revolution. Twenty years on the country was a vast police state; millions were dead from famine or execution, while millions more were imprisoned in the Gulag archipelago; Russian agriculture had fallen below its prewar levels to off-set the increase in industrial production; and a murderous psychopath ruled the country without any check on his actions. Fifty years on from that sad state, Communism finally collapsed under the weight of its own failings.[2]

Historians have argued that circumstances forced Stalin to into certain courses of action, rather than him having chosen them. Thus, surrounded by a hostile world, Russia had to modernize its economy and be always on watch against subversion. The forced collectivization of agriculture offered the only means to rapidly modernize Russian peasant-based farming. Modernization of farming under State control held the only means to obtain the resources for rapid industrialization. The opposition from the peasants, then the wavering among Bolsheviks over the high human costs of collectivization forced the adoption of harsh measures.

Kotkin rejects such views. He argues that Stalin fulfilled, rather than diverged from, Lenin’s intentions. “If only Lenin had lived,” the same things would have happened to Russia and the world. From the first, the Bolsheviks “unwittingly, yet relentlessly reproduced the pathologies and predations of the old regime state in new forms.” Between 1918 and 1928, tyranny, corruption, and incompetence became the hall-marks of the Soviet state. Stalin rose to power in this environment thanks to his own ruthlessness, adroit skill at maneuver, and the spectacular incompetence of his rivals like Trotsky, Bukharin, and Kamenev.[3] (Indeed, the incompetence of these men at conspiratorial politics offers a clue to how Lenin himself rose to leadership of the Bolshevik party before the Revolution.) However, the Russian Revolution had never been carried through to completion. The resistance from the peasantry and many other people had forced the strategic retreat called the “New Economic Policy” (N.E.P.). While Lenin claimed to hold the “commanding heights” of the economy (foreign trade, finance, heavy industry), agriculture and commerce remained in private hands. The path to traditional capitalist economic development remained open. With that, Bolshevism would become irrelevant.

By 1928, when the first volume of Kotkin’s gigantic work ends, Stalin had gained control of the main levers of power in the Soviet Union. He set out to complete the Revolution. Heads would roll.

[1] Stephen Kotkin, Stalin, Volume I: Paradoxes of Power, 1878-1928 (New York: Penguin, 2014). See the review by Serge Schmemann, NYT, 9 January 2015, C29.

[2] Rather than from any actions of the Reagan Administration. American triumphalism in the wake of the collapse of Communism showed the first signs of that generational change in self-concept that was to prove so disastrous under the Bush II administration.

[3] See: Robert Conquest, The Great Terror: Stalin’s Purge of the Thirties (New York: Macmillan, 1968), pp. 3-122.

 

What We Learned from the Report of the 911 Commission XXIX.

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The tricky issue of Personality and Culture.

The foreign intelligence community did a pretty good job of centralizing information and analysis on threats to American interests abroad and of coordinating a response. However, there was no centralization of information and analysis on domestic threats, no co-ordination of response, and no adequate communication between foreign and domestic intelligence. No one seems to have realized that the domestic agencies had no formal plans or procedures for how to respond to terrorism; no one told the agencies to develop such plans and procedures. (pp. 378-379.) There was no central co-ordination of intelligence analysis or threat assessment. “The mosaic of threat intelligence came from the [CIA’s] Counterterrorist Center, which collected only abroad. Its reports were not supplemented by reports from the FBI.” (p. 294.)

“Beneath the acknowledgement that Bin Laden and al Qaeda presented serious dangers, there was uncertainty among senior officials about whether this was just a new and especially venomous version of the ordinary terrorist threat America had lived with for decades, or was radically new, posing a threat beyond any yet experienced.” (p. 491.) Richard Clarke failed in repeated efforts to get the Clinton administration to recognize al Qaeda as a first order threat, and he was still trying to get a decision on this from the new Bush administration in early September 2001. However, no one—even Richard Clarke—ever forced an open debate on the issue. (p. 491.)

NB: A point worth considering. The above analyses fairly frequently point out the deficiencies of the FBI, the CIA, and the State Department because all three of them privilege the local commanders (so to speak) over central authority. Local offices tend to have autonomy about what they do and how they do it within the broad outlines of general policy defined from the center. However, at the start of Chapter Five, “Al Qaeda Aims at the American Homeland,” there appears the following remark. “Bin Laden and his chief of operations,…, occupied undisputed leadership positions atop al Qaeda’s organizational structure. Within this structure, al Qaeda’s worldwide terrorist operations relied heavily upon the ideas and work of enterprising and strong-willed field commanders who enjoyed considerable autonomy.” (p. 210.) How could the same system work FOR al Qaeda and AGAINST the United States?

President Clinton apparently grew impatient with the inability of the United States government to make Bin Laden just go away. President Clinton once remarked to JCS Chairman (and Green Beret and former commander of all Special Forces) Hugh Shelton that “You know, it would scare the shit out of al-Qaeda if suddenly a bunch of black ninjas rappelled out of helicopters into the middle of their camp.” Shelton subsequently declared that he didn’t remember Clinton making the statement and former Secretary of Defense William Cohen said that he thought the President might have been making a hypothetical statement, however Clinton has repeatedly stated that he said this. (p. 272.) NB: It’s like listening to my 13 year-old—when he was younger.

“According to Clarke, [National Security Adviser Sandy] Berger upbraided DCI [George] Tenet so sharply after the Cole attack—repeatedly demanding to know why the United States had to put up with such attacks—that Tenet walked out of a meeting of the principals.” (p. 278.) In Summer 2001 Tenet engaged in a lot of hand wringing about ordering a lethal attack on Bin Laden. “Are America’s leaders comfortable with the CIA doing this, going outside of normal military command and control? Charlie Allen told us that when these questions were discussed at the CIA, he and the Agency’s executive director, A.B. “Buzzy” Krongard, had said that either one of them would be happy to pull the trigger, but Tenet was appalled, telling them that they had no authority to do it, nor did he.” (reported, p. 305.) NB: What would Dulles, or Helms, or Colby have said?

What We Learned from the Report of the 911 Commission XXVIII.

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So, there were flaws in how the government professionals responded to the danger posed by al Qaeda. How did elected officials do?

 

The Carter administration began the practice of having counter-terrorism co-ordinated by an NSC staff member in the White House. A civil servant, Richard Clarke, took over the function of co-ordinating policies on trans-national crime, narcotics, and terrorism (“drugs and thugs”) in the Reagan administration after Olly North’s “arms for hostages enterprise ran aground. The Clinton administration kept Clarke on. Beginning in 1995 the Clinton administration took a considerable interest in resisting terrorism: the anti-terrorism budget of the FBI was substantially increased and the budgets of the CIA ceased to decline; the US leaned on foreign countries to stop providing shelter to terrorists; and Richard Clarke was promoted to be “national coordinator for security, infrastructure protection, and counterterrorism.” (pp. 144-150.) In theory, Clarke was supposed to report through the Deputies Committee; in practice Clarke reported directly to a restricted sub-group of the Principals. (p. 288.)

However, Osama Bin Laden declared war on the United States in February 1998, but neither Bill Clinton nor George W. Bush went to Congress for a corresponding declaration of war against Osama Bin Laden. This limited the possibilities for action against Bin Laden. (NB: On the other hand, how do you declare war against one guy living in a cave in the most backward place on earth?)

 

In the wake of the Watergate scandals, Congress created House and Senate select committees to over-see the work of the intelligence agencies (and to keep them from making a mess on the carpet). However, the Armed Services committees have real authority over the intelligence agencies, so the intelligence budgets rise and fall with the over-all levels of defense spending.

The grab for a “peace dividend” in the 1990s by cutting defense budgets also drove down intelligence budgets; Congress wasn’t interested in terrorism as a problem; and Congress has become progressively less capable of exercising over-sight of the executive branch in recent decades. Instead of carefully reviewing the implementation of laws and programs, Congressional committees have shifted to “a focus on personal investigations, possible scandals, and issues designed to generate media attention.” (Quoted, p. 155.) They certainly did nothing to push the executive branch to reorganize itself to deal with the post-Cold War world. (pp. 150-157.) NB: The general coarsening of American public life showed up here as well.

 

What We Learned from the Report of the 911 Commission XXVII.

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The Federal Aviation Administration thought that security was not much of an issue and that a bombing was more likely than a hijacking, let alone a suicide-hijacking. Even so, FAA security was “seriously flawed prior to 9/11.” (p. 123.) Its intelligence assessment was focused overseas and in any event was ignored by the FAA leadership. No one in the other sections of the government (CIA, FBI, State Department) ever bothered to pass the multiple thousands of names on government terrorist “watch lists” to the FAA for inclusion on its passenger pre-screening lists. Many tests of passenger boarding security indicated that it could be easily breached, but no one ever took the matter seriously because effective measures would make air travel more cumbersome and even more of a pain in a neck that it was already. There were only 33 air marshals, and they guarded overseas flights.

Air carriers—or the security firms to which they contracted out the work—simply ignored requirements for continuous random searches of carry-on luggage. Previous experience with hijackings led to a common prescribed strategy of cooperation and conciliation. (pp. 121-126.)

The State Department had dominated the making and implementation of American foreign policy until the end of the Eisenhower administration in 1960; the Kennedy-Johnson administrations shifted leadership to the Defense Department, which took up the task with a will; the Nixon administration then concentrated leadership in the National Security advisor.   Budgets followed function, reducing the means the diplomats possessed to match their declining importance. (pp. 137-138.)

In the Sixties and Seventies terrorism wasn’t very important, so it was left to the State Department. Thereafter, terrorism policy became a tin can kicked from one place to another: in the Carter administration National Security Adviser Zbigniew Brzezinski seized control of the issue during the Iranian hostage crisis in 1979-1981; in the Regan administration Secretary of State George Schultz adopted an aggressive stance on the matter in the Eighties, but found himself blocked by Caspar Weinberger’s resistance to military solutions; the Clinton State Department was largely indifferent to the issue relative to more pressing tasks. (pp. 138-140.)

Since the Eighties the military services have emphasized “jointness” (or you don’t get promoted). This has tended to homogenize the military advice provided to political leaders and it definitely shifted the balance of power within the services to favor the regional commands over the central authority of the Joint Chiefs. (pp. 140-141.) [NB: You will notice the parallel to the autonomy of CIA station chiefs and FBI SAICs.]

Once the Israelis whacked the Palestinian hijackers at Entebbe (1976) and the West Germans did the same at Mogadishu (1977), the Army created Delta Force. Delta Force suffered a humiliating catastrophe during the attempt to rescue the Iranian hostages (1980), then Hezbollah truck bombed the Marines in Beirut; then Army Special Forces suffered a perceived defeat in Mogadishu (1993). The American military took from these reverses a belief that special operations required “maximum preparation, overwhelming force, and a well-defined mission.” (p. 142.) Conversely, air strikes against Libya (1986) and against Iraq (1993) in response to acts of state-sponsored terrorism seemed to the American military to define an effective use of conventional military power against unconventional enemies. (pp. 143-144.)

Conversely, foreign terrorists may have taken the lesson that the Americans could be forced into retreat by relatively minor casualties suffered in spectacular acts of terrorism, and would respond to attack by blowing up a building, then going away. (pp. 143-144.)

Thoughts for the New Year.

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I don’t know anything. So, here are my thoughts on a couple of issues.

Climate change is a grave reality. However, I doubt that people can entirely hold back (let alone turn back) global warming. Carbon-burning is central to the industrialization of developing-economies. There aren’t a lot of cheap and ready-to-use alternatives. Instead, there is going to be a long period of adaptation to worsened conditions. It is going to make environmentalists, intellectuals, and other “progressive” people very angry that there will turn out to be market-driven profit opportunities when statist restrictions might have provided more desirable outcomes.

In terms of foreign policy, Vladimir Putin is considerably more of an adult than are American leaders. Balance-of-power politics and spheres of influence are realities in world politics. Power and influence are not the single and permanent prerogative of the United States. For one thing, Ukraine is to Russia as Mexico is to the United States. (“Pity poor Mexico. So far from God, so near the United States.”) For another thing, Putin has tried to help the US out of a couple of ditches into which American leaders have driven it. Syrian chemical weapons and a possible solution to the Iranian nuclear problem are the key examples. All the while he has been vilified because he isn’t a democrat at home and he’s resisting the onward march of Western power around the borders of Russia.

In the Middle East we are witnessing a re-writing the Sykes-Picot Agreement. Iraq is fragmenting into Shi’ite, Sunni, and Kurdish enclaves. This fragmentation is being papered-over during the current emergency. The Shi’ites will never be able to repair their behavior during the Maliki period. Syria is going to fragment into Alawite, Sunni, and Kurdish enclaves. A Kurdish state will emerge. This new country will have trouble with both Turkey and Iran. Will Jordan or Saudi Arabia absorb the unstable and impoverished new Sunni micro-state in western Iraq?

The “two-state solution” to the Israel-Palestine conflict isn’t. Israel cannot afford to have a Palestinian state created. That state would be implacably revanchist, regardless of whatever professions its spokesmen might make in order to obtain sovereignty. Over the centuries, many people have felt that the problems of the world could be resolved if only the Jews would die and stop bothering people. Well, the Israelis aren’t buying this line.

The United States gets much less from the US-Israel alliance than does Israel.

ISIS isn’t a serious problem. The enthusiasm for “jihad” among many Muslims is a serious problem. It is likely to be around for a long time. I’m not sure that it can be de-legitimized by Western propaganda. I’m not sure that playing military whack-a-mole with every new outbreak will solve the problem.

Much as I agree with the objectives being pursued by President Obama on some key issues, I don’t believe that he has the authority for some of his actions. The Supreme Court is likely to overturn the authority-grab carried out by the EPA. The immigration problem wasn’t/isn’t a crisis. It’s just a stick with which to beat the Republicans and an effort to keep Hispanic-American voters on the side of the Democrats. American liberals are going to rue the day that they celebrated his unilateral actions on coal-burning energy generation and immigration. One day, a Republican president will invoke the Obama example.

What we learned from the Report of the 911 Commission XXVI.

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Second, there were restrictions on the sharing of information.

The Watergate-era investigations of government abuses of power led to the adoption (1976, 1983) of highly-restrictive rules for domestic intelligence gathering.

In addition, in 1978 Congress passed the Foreign Intelligence Surveillance Act (FISA) that controlled domestic intelligence gathering directed against a foreign power, usually by the FBI. The Justice Department’s Office of Intelligence Policy and Review (OIPR) took charge of presenting applications for a FISA warrant to the FISA court. The Justice Department’s initial interpretation of the law limited co-operation between criminal prosecutors and the FBI agents gathering FISA information, but in 1994-1995 the Clinton Administration’s Justice Department (acting head of OIPR Richard Scruggs, Deputy Attorney General Jamie Gorelick) further tightened restrictions on contact between the FBI and prosecutors in national security cases. (p. 115.)

“These [1995] procedures were almost immediately misunderstood and misapplied.” (p. 115.) OIPR then bullied the FBI and Criminal Division prosecutors into compliance with this “misunderstanding” of what the procedures actually required. Reviews of these issues in 1999, 2000, and 2001 all concluded that the 1995 procedures were being misapplied to the detriment of national security, but no one did anything to correct the problem. (p. 116.) [NB: Neither Attorney General Janet Reno nor Gorelick tried to correct what the 9/11 Report later characterized as a “misunderstanding.”]

As a result, FBI agents working on intelligence matters communicated but little with both prosecutors and with FBI agents working on criminal matters, although they did pick up lots of useful information from their contacts with the NSA and the CIA. FBI counterintelligence became a sort of black hole in the Justice Department. (p. 116.)

Third, there was a sort of autism prevalent in the FBI. “The FBI simply did not produce the kind of intelligence reports that other agencies routinely wrote and disseminated. As law enforcement officers, Bureau agents tended to write up only witness interviews. Written cases analysis usually occurred only in memoranda to supervisors requesting authority to initiate or expand an investigation.” (p. 259.)

Fourth, Louis Freeh did not communicate with President Clinton. (p. 513.) [NB: I don’t know if this is a reflection of the on-going investigations of Clinton? Somebody needed to give up in the scandals for the good of the country.]

Other Law Enforcement Agencies. “Before 9/11, with the exception of one portion of the FBI [essentially the New York City field office], very little of the sprawling U.S. law enforcement community was engaged in countering terrorism.” (p. 120.) The Department of Justice has the U.S. Marshals Service and the Drug Enforcement Agency; the Treasury Department has the Secret Service, the Customs Service, and the Bureau of Alcohol, Tobacco, and Firearms. The Immigration and Naturalization Service (INS) was swamped trying to deal with the flood of both legal aliens (requiring naturalization) and illegal aliens (flooding in over the southern border). The INS was woefully under-funded relative to its responsibilities. Although the INS attempted to respond to terrorism after the 1993 WTC bombing, “might have been” horror stories abound. (pp. 118-120.)

What we learned from the Report of the 911 Commission XXV.

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What Went Wrong?

The truck bombing of the World Trade Center in February 1993 had several noteworthy features. First, it heralded the arrival of a new sort of terrorism intended to create massive casualties among American civilians. Second, the American government responded in a devastating fashion through its law enforcement agencies. Third, the successful law enforcement response led American officials to both underestimate the new danger facing the country and to over-estimate the ability of the government to respond to that danger. (pp. 105-107.)

 

Adaptation—and Non-adaptation—in the Law Enforcement Community.

Superficially, it appeared that the FBI was taking strong action against terrorism in the 1980s and 1990s. In 1986 Congress authorized the FBI to investigate anti-American terrorism abroad; in 1989 Congress authorized the FBI to arrest people abroad without the consent of the host country. (pp. 109-111.) Louis Freeh (Director of the FBI, 1993-2001) established a Counterterrorism Division in the FBI, created a five year plan for counterterrorism (1998), multiplied the number of “legal attaches” abroad and urged them to co-operate with the local CIA stations.

The reality was very different. First, the FBI grants a lot of autonomy to each of its 56 Special Agents in Charge (SACs) to run their field offices; assesses performance on the basis of conventional crime statistics; rewards the “office of origin” for success in operations that involve more than one field office; and promotes on the basis of performance. Hence, FBI agents had powerful disincentives to investigate terrorism or espionage, or to co-operate with an investigation in a different field office. (pp. 108-109.)

The tendency toward local autonomy was strongly reinforced by Louis Freeh’s tenure as Director of the FBI (1993-2001). Moreover, Freeh never forced the re-allocation of budget resources to s upport counterterrorism and never forced the field offices to actually direct their efforts toward combating terrorism. This showed up in the hiring and deployment of analysts, the allocation of agents to intelligence and counterterrorism work, and the failure to create an effective system of information processing and communication with regard to terrorism. (pp. 111-114.)