Athenahealth CEO Steps Down After Lewd Video Emerges; Company Weighing Sale

After years of being dogged by allegations of domestic abuse and sexual harassment, Jonathan Bush has stepped down as president, CEO and director of Athenahealth, according to Bloomberg. As the company begins the executive-search process, it has appointed Jeff Immelt to step in to the executive chairman role, while CFO Marc Levine will assume additional operational responsibilities.

Bush

Bush, the nephew of former President George W Bush, was the subject of a Bloomberg story published over the weekend that contained new details about alleged inappropriate behavior, including reports that he abused his ex-wife and created a “sexually hostile work environment.’

Bloomberg claimed to have seen a video where Bush dressed up as a race car driver and pretended to be the title character from the 2006 comedy “Talladega Nights: The Ballad of Ricky Robby.”

Halfway through the skit, he said he wanted to “jump down on” one of his female employees and “do inappropriate things.” He then briefly pauses. “Uh, but obviously that’s totally inappropriate and would never happen or be said on a microphone.” The exact context of the remarks isn’t clear.

The medical technology company said in a statement that it would consider a sale or merger. It’s also fighting a $160 a share takeover offer from Paul Singer’s Elliott Management. It is surely a pure coincidence the CEO quit less than a month after relentless hedge fund manager Paul Singer went hostile.

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5 Years After Snowden, Has Anything Changed?

Edward SnowdenFive years ago The Guardian published the first of what would be a bombshell series of stories about how the United States (and several other Western countries) were engaged in the mass surveillance of their own citizens, collecting millions upon millions of telephone and internet records.

It wasn’t the first time the feds’ saw some of their secret tech surveillance exposed—you may recall the revelation of AT&T’s secret room 641A, for example—but now Americans got provided evidence of how far-reaching this surveillance was. It became very clear that the targets included all of us.

The name of the source behind the story was initially kept secret, but he soon revealed himself to be a government contractor named Edward Snowden.

Since then, Snowden has become a household name—even as he remains stuck in Russia, wanted on espionage charges in the United States. The Guardian and The Washington Post won Pullitzer prizes in 2014 for their reporting based on the documents Snowden provided.

Five years later, it’s worth looking at the legacy of Snowden’s revelations.

The Snooping Hasn’t Really Stopped—But There Have Been Changes: Among the revelations that emerged from Snowden’s leaks was how much of the surveillance was based on secret interpretations of federal laws. Section 215 of the PATRIOT Act allowed the Foreign Intelligence Surveillance Act (FISA) Court to grant the feds approval to secretly collect information from third parties during terrorism investigations. The Department of Justice turned out to have secretly interpreted this section of the law as an authorization to collect the metadata records of millions upon millions of Americans.

This interpretation was so far afield of the law’s intent that Rep. Jim Sensenbrenner (R-Wis.), who crafted the PATRIOT Act, publicly denounced it. And released reports from the FISA Court indicated it sometimes was not fully aware of how extensive the federal data collection reached. Other courts subsequently ruled that this mass data collection was not authorized.

In 2015, Section 215 of the Patriot Act was set to sunset, and a pack of legislators—most famously Sen. Rand Paul (R-Ky.)—moved to block it from being renewed. They succeeded, and it was replaced by the USA Freedom Act.

The USA Freedom Act did not, unfortunately, eliminate mass metadata collection. But it did set up actual guidelines that required government investigators to use specific search terms when attempting to look at metadata in records collected by phone companies. The new law also called for annual reports that give Americans a sense of how much secret surveillance is happening. The reports are vague and incomplete, but they’re more than we were getting previously.

Americans Learned What Metadata Is and Why It Mattered: When Snowden’s leaks first started, President Barack Obama and many lawmakers insisted that “Nobody is reading your email.” This became a mantra among those trying to downplay Snowden’s revelations.

It was a deliberate attempt to distract from the reality that we were all leaving electronic fingerprints everywhere we went and every time we communicated with each other. The government was collecting all our metadata—information about where, when, and to whom we were communicating. They were collecting everything but the conversations themselves.

Back in the days of Ma Bell, we thought of “metadata” as simply information about who we were calling and for how long we were talking. These days we all keep huge chunks of information about our lives on our computers, tablets, and smartphones. Experiments have demonstrated that, based on just your metadata, observers can reconstruct a good part of your life and your relationships with others.

This realization about how much privacy we’re losing via our metadata has played out as we worry about government track our social media use—and as we become more aware of the ways that police (and not just federal police) are trying to keep track of our behavior through such tools as license plate readers and facial recognition.

Efforts to Push Forward with Increased Tech Surveillance Get Pushback: Many citizens and even lawmakers aren’t accepting the idea that every form of surveillance that the government demands is necessary. Some states have passed laws requiring police to get warrants in order to track cellphone location data. The question of whether this tracking violated the Fourth Amendment is now under review by the Supreme Court.

Senators have warned the Department of Homeland Security about using facial recognition software to scan Americans boarding international flights. In California, lawmakers are currently considering legislation requiring police to get permission from their local government before implementing new surveillance technologies.

But other officials keep pushing and pushing to implement more surveillance tech, even as the public resists. Immigration enforcers want access to the data the feds have collected. Officials want to use facial recognition systems when monitoring protests via drones, and to combine such systems with police body cameras. Police in Miami Beach are willing to cause massive traffic jams in order to scan everybody’s license plates while searching people with warrants. New York Gov. Andrew Cuomo wants to use facial recognition tools on cashless toll roads to identify drivers.

There are stories every day about officials wanting to use technology for surveillance. While some of the news coverage may fall on deaf ears, Snowden’s information has been valuable to help people grasp that whenever the government starts spying, the surveillance will probably be broader and deeper than they actually tell us.

New Encryption Fights Begin: Back in the 1990s, the feds fretted about encryption on personal computers. Their efforts back then to limit our access to encryptionfailed.

Fears of terrorism having given new life to that old fight against encryption. Officials want access to locked phones or other secured devices belonging to people who have allegedly committed crimes, but encryption makes it harder for law enforcement to get in.

For many officials, the public push has been to try to force tech companies to compromise data security by creating so-called “backdoors” that bypass tech encryption or to otherwise provide access on demand. In the wake of the terrorist attack in San Bernardino, California, the FBI had a court fight with Apple over its efforts to force the company to give it access to an iPhone in one terrorist’s possession. While Apple resisted, the FBI managed to get access with the assistance of a third party. It turned out later that the FBI was deliberately looking for a fight to try to establish a precedent.

Privacy and technology experts have warned us over and over that compromising encryption means rendering all of us vulnerable to breaches from anybody who gets their hands on these encryption keys or figures out how to mimic these access mechanisms. Weakening encryption would make everyone susceptible not just to government snoops—ours or those working for malicious foreign governments—but to hackers with identity theft or other crimes in mind.

Many officials demanding an encryption bypass simply refuse to entertain the possibility that this would expose citizens to greater threats. Nor are they understand the ways Snowden’s disclosures have made Americans more skeptical about giving them access in the first place.

But tech companies keep pushing for stronger mechanisms to keep users’ data secure, regardless of the wishes of government officials. Snowden’s own email provider, Lavabit, shut down in 2013 rather than comply with the government’s demands for the encryption key that would let it access Snowden’s communications. Founder Ladar Levison resurrected the company in 2017 with end-to-end encryption that makes it much harder for the government to force its way in.

The Trumpification of the Surveillance Fight: After Donald Trump became president, the surveillance fight took a strange turn. The FBI had gotten the FISA Court’s authorization to snoop on Trump campaign aides in order to probe connections with foreign countries—Russia in particular. As the special investigation plays out, Trump and his supporters have decried the use of these secret surveillance tools against people close to him.

This could have been an opportunity to discuss how the federal government engages in secret snooping against the citizenry in general, how this could be corrupted for political purposes, and why that would be a good reason to limit the feds’ surveillance powers.

But that conversation did not happen. Indeed, some of the people crying the loudest that the “deep state” is coming after Trump also believe that Snowden committed treason by exposing federal surveillance. Rep. Devin Nunes (R-Calif.), a conservative lawmaker who frequently insists the FBI’s investigation of the president is politically motivated, is a huge fan of government surveillance on you. He just doesn’t like it when Trump’s the target.

This preference for simply protecting Trump rather than having an actual surveillance debate became clear when Section 702 of the FISA Amendments came up for renewal last year. Section 702 is another law that’s been commandeered for domestic surveillance even though its stated purpose is to fight foreign terrorism and espionage. During the debate over renewing it, civil rights activists and privacy-minded lawmakers tried to force reforms. But despite all the yelling about spying on Trump that was taking place at the exact same time, most Republican lawmakers (Nunes included) voted not only to renew Section 702 but to expand its ability to target Americans.

Utlimately, Snowden’s biggest accomplishments were to bringing the surveillance debate to the forefront and to encourage tech companies to ramp up their encryption and other security efforts. In the July Reason, Elizabeth Nolan Brown explains how you can encrypt your own communications. The fact that strong encryption tools are becoming more available to average internet users is one thing we can all thank Snowden for.

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Trump’s “Trade War” Is Working: US Trade Deficit Collapses

One month after the biggest plunge in the US trade deficit since the financial crisis – good news for Trump who has engaged in “trade war” with the rest of the world to boost US trader and exports – the good news continued in April, when according to the Census Bureau, the US deficit shrank again, down 2.1% from a revised $47.2BN to $46.2BN, and beating the $49BN consensus estimate and better than the lowest estimate of $46.2BN.

The number was so good, some were wondering why Trump didn’t pre-tweet it, as he did with the payrolls report.

Incidentally, with today’s revision, the March plunge in the US trade deficit has now risen to $10BN, the highest since 2008, and the second biggest improvement in the US deficit on record.

According to the census bureau, the deficit decreased from a revised $47.2 billion in March to $46.2 billion in April, amid a perfect trade environment as exports rose and imports declined for the second month in a row, or as Trump would say, “his policies to boost US trade worked.”

 

Broken down by category, the goods deficit decreased $1.0 billion in April to $68.3 billion. The services surplus decreased less than $0.1 billion in April to $22.1 billion.

The good news: exports of goods and services increased $0.6 billion, or 0.3%, in April to $211.2 billion. Exports of goods increased $0.3 billion and exports of services increased $0.3 billion.

  • The increase in exports of goods mostly reflected increases in industrial supplies and materials ($1.3 billion) and in foods, feeds, and beverages ($0.7 billion). A decrease in capital goods ($1.4 billion) partly offset the increases.
  • The increase in exports of services mostly reflected increases in other business services ($0.1 billion), which includes research and development services; professional and management services; and technical, trade-related, and other services, in financial services ($0.1 billion), and in charges for the use of intellectual property ($0.1 billion).

Also good news, if only for GDP bean-counters: imports declined, decreasing by $0.4 billion, or 0.2%, in April to $257.4 billion. Imports of goods decreased $0.7 billion and imports of services decreased $0.3 billion.

The decrease in imports of goods mostly reflected decreases in consumer goods ($2.8 billion) and in automotive vehicles, parts, and engines ($0.9 billion). Increases in other goods ($1.3 billion) and in industrial supplies and materials ($1.2 billion) partly offset the decreases.

The increase in imports of services mostly reflected increases in transport ($0.1 billion), in other business services ($0.1 billion), and in charges for the use of intellectual property ($0.1 billion)

Broken down by trading partner, the March figures showed surpluses with South and Central America ($4.1), Hong Kong ($2.2), United Kingdom ($0.9), Singapore ($0.7), and Brazil ($0.6

Meanwhile, the countries that should be worried that they may fall in Trump’s trade war sights, and recorded deficit with the US in March, included China, of course, with a $30.8 billion deficit, down sharply from $35.4 billion a month earlier, but also the European Union ($13.2), Mexico ($6.0), Japan ($5.9), Germany ($5.6), OPEC ($3.3), Italy ($2.4), India ($2.0), Canada ($1.7), France ($1.6), South Korea ($1.3), Taiwan ($1.1), and Saudi Arabia ($0.9).

Finally, to help Trump make his economic case even stronger, the US deficit excluding petroleum products: after hitting a record in February, continued its dramatic improvement in April, suggesting that whatever Trump is doing to boost overall trade (we already know US petroleum exports are soaring), may be working, as it shrank from over $50BN in February to just $41BN in April.

And now, we expect even more upward revisions to Q2 GDP, which according to the Atlanta Fed will now likely print above 5.0%

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Putin Praises “Courageous And Mature” Trump For Agreeing To Meet With North Korea

Russian President Vladimir Putin praised US President Donald Trump for agreeing to meet with North Korean leader Kim Jong Un about the possibility of denuclearization on the Korean Peninsula. After calling Trump “courageous and mature”, Putin added that he’s expecting a “positive outcome” from the June 12 summit, which is set to take place in Singapore.

“I still hope that this meeting – a very courageous and mature decision U.S. President Donald Trump has made, to have direct contacts with North Korean leader Kim Jong Un – will take place, and we all expect a positive outcome,” Putin said in an interview with China Media Group ahead of a planned summit in Shanghai later this week.

Putin and Trump are said to be planning a summit, and the two leaders have met twice in person since Trump took office.

Trump

In addition, Putin recently told an Austrian media outlet that he and Trump speak on the phone regularly.

Indeed, Donald Trump and I have, firstly, met more than once at various international venues and secondly, we regularly talk over the phone,” the Russian leader said.  

Putin’s remarks come a day after Putin invited Kim to Russia. Later in the interview, Putin criticized US sanctions against Russia, saying they would hurt both sides. Though he added that Russia isn’t afraid of the sanctions.

How long before the left uses these two statements to ‘confirm’ Trump’s treasonous relations with Putin? We suspect not long.

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US Productivity Growth Disappoints In Q1, Unit Labor Costs Surge

For the eighth straight quarter, US productivity grew in Q1, rising 0.4% QoQ (improving on Q4’s +0.3%). However, the Q1 gain was less than the +0.6% expectation (and well below the preliminary +0.7% level) as Unit Labor Costs accelerated more than expected.

 

This is the equal longest streak of productivity gains since 2010 (which corresponded to the V-shaped bounce off the great financial crisis lows).

On the bright side for some, unit labor costs rose more than expected up 2.9% QoQ SAAR, the fastest rate since Q1 2017 and has accelerated in each of the last 4 quarters…

However, real compensation declined for the 3rd straight quarter.

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Trump Will Demand Kim Commitment To Nuclear Disarmament Timetable

With less than a week to go until the historic Trump-Kim summit on June 12 in Singapore, details of the US-led agenda are starting to emerge, with Bloomberg and Reuters reporting that the White House wants North Korean leader Kim Jong Un to commit to a timetable to surrender his country’s nuclear arsenal when he meets with Trump during the high-stakes summit that could last as long as two days, or end right there and then if Kim balks at the demand.

Citing a US official, Bloomberg reported that Trump has been advised not to offer Kim any concessions as the White House seeks to put the onus on the North Koreans to make the summit a success; having already canceled the meeting once, the president is reportedly determined to walk out of the meeting if it doesn’t go well.

Alternatively, if things go as planned and if the two men hit it off, Trump may offer Kim a follow-up summit at his Mar-a-Lago resort in Palm Beach, Florida, as soon as this fall.

Other than confirming what we already knew, namely that the two will first meet next Tuesday at 9 a.m. at the Capella Hotel on Singapore’s Sentosa Island, the White House has described no schedule for the summit.  If the first meeting goes well, there will be further events that day and perhaps even the next day.

The Capella Hotel stands on the island of Sentosa in Singapore

Trump will be joined in Singapore by Secretary of State Mike Pompeo, White House chief of staff John Kelly and national security adviser John Bolton. The U.S. delegation also tentatively includes the CIA’s top Korea expert, Andrew Kim; the National Security Council’s point person on the Koreas, Allison Hooker; and White House deputy chief of staff Joe Hagin, who has negotiated much of the groundwork for the summit.

Absent from Trump’s delegation will be some notable names: Vice President Mike Pence, who will remain in the U.S., and Defense Secretary Jim Mattis. Mattis said Sunday at a defense conference in Singapore that North Korea will win relief from crippling U.S. economic sanctions “only when it demonstrates verifiable and irreversible steps to denuclearization.”

To be sure, North Korea has publicly bristled at U.S. officials’ insistence on the so-called “Libya Approach”, i.e., that it must agree to disarm before receiving anything in return, instead calling for a step-by-step approach to ridding the Korean Peninsula of nuclear weapons. Trump has indicated flexibility in his approach, although it is still unclear what a path to denuclearization would look like.

Pompeo, who has traveled to Pyongyang twice since March, has prepared Trump for the summit in eight to 10 hours of briefings per week for several weeks, two U.S. officials said. The CIA’s Kim has usually joined him. On Tuesday, former Sens. Sam Nunn and Richard Lugar, who cosponsored a law aimed at securing and dismantling nuclear weapons after the fall of the Soviet Union, briefed Trump and Pence on the lessons they had learned.

Some more details on the actual summit:

Typically, the president’s preparations for meetings with foreign leaders are shaped by several administration officials and result in a pair of briefing books. One, on customs and protocol, primarily is assembled by the State Department and is shared with much of the U.S. delegation. The other is a more exclusive document for the president that includes a biography of the foreign leader assembled by the U.S. intelligence community. It also sometimes includes memos from individual Cabinet members with their private assessments of the leader.

Trump’s aides consider him ready for a summit in which the White House believes he holds an advantage — Singapore is a Westernized metropolis and will be the farthest Kim Jong Un has traveled since taking charge of his country in 2011. It was not clear if Kim still demands that someone foot the bill for his hotel room.

Meanwhile, U.S. officials reportedly believe Kim is extremely worried about security at the summit and is fearful of assassination attempts, according to two people familiar with the matter.

Frustrated after the North Koreans cut off communications for about five days last month and snubbed Hagin at a preparatory meeting in Singapore, Trump canceled the summit on May 24. Talks resumed, however, and Kim dispatched an envoy — spy chief Kim Yong Chol — to Washington on Friday to deliver a letter to Trump. The letter, handwritten by Kim in Korean, expressed his desire for the summit.

Trump said later that day that the Singapore meeting was back on. Kim Yong Chol also brought Trump a gift, and Trump reciprocated with a gift for Kim. White House officials declined to describe either present.

On Tuesday, the White House announced that the summit will be held at the Capella Hotel on Singapore’s southern island of Sentosa, as had been leaked previously.

To avoid “incidents”, Singapore airspace will be restricted during the planned summit, according to a notice posted by the International Civil Aviation Organization and the U.S. Federal Aviation Administration said Wednesday.

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SCOTUS May Yet Approve Gay Wedding Cake Demands: New at Reason

Kamala Harris, a Democratic senator from California, says Jack Phillips should have been forced to bake gay wedding cakes because “our constitution requires equal protection under the law.” Ted Cruz, a Republican senator from Texas, says this week’s Supreme Court ruling in Phillips’ favor is “a major victory for religious liberty,” upholding the Colorado baker’s “constitutional right to live according to his faith.”

Although Harris and Cruz are both lawyers, Jacob Sullum says, they are both wrong. Harris conflates discrimination by individuals with discrimination by the government, while Cruz overlooks the Supreme Court’s approval of laws based on that false equivalence.

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Soldier Steals “Tank”, Takes Police On 60 Mile Chase Across Virginia Streets

It was a joy ride that the soldiers at Ft. Pickett won’t soon forget.

A soldier was arrested late Tuesday after he stole an armored personnel carrier – or “tank” as everyone on social media called it during a brief frenzy late on Tuesday night – from Ft. Pickett in Blackstone, Va. and led police on a more than 60-mile, two-hour chase through Virginia that ended in the streets of Richmond, according to NBC 4.

After he got bored with the tank ride, the suspect was taken into custody at around 9:40 pm ET when he abandoned the vehicle and was apprehended by state police near City Hall. The vehicle belongs to the Virginia National Guard.

Police didn’t name the suspect, but said that charges are pending.

The suspect reportedly climbed inside the armored personnel vehicle and drove away from Fort Pickett in Nottoway County beginning at around 7:50 pm ET, police said. Police pursued the man as he drove along Route 460, northbound on Interstate 95 and along Broad Street — a main thoroughfare for traffic in Richmond, Virginia. No injuries or crashes were reported.

It was unclear what the hijacker’s motive was, or whether he was driving the APC drunk.

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Crony Capitalism: New at Reason

“Are you on the take?”

When John Stossel tried to get Edgewater, New Jersey, politicians to answer that question, the mayor wouldn’t discuss it, ultimately telling him, “You may sit down.”

Instead, Stossel exposed the politicians’ shady deals. As he notes, when politicians favor their friends, that’s not capitalism, it’s crony capitalism. And that’s what’s happening in Edgewater.

View this article.

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Elon Musk Survives Shareholder Vote As He Plots Escape From Model 3 “Production Hell”

Elon Musk has survived a shareholder vote to strip him of Tesla’s chairmanship and replace him with an independent director, a plan that was backed by Norway’s sovereign wealth fund, the world’s largest, among other Tesla shareholders. The proposal, which was defeated in a vote at yesterday’s shareholder meeting, represented the strongest challenge yet to Musk’s power over the Silicon Valley car manufacturer.

According to Reuters, Norges Bank Investment Management, favored dividing the roles of CEO and chairman to boost corporate governance. The fund also opposed the re-election of board member Antonio Gracias, though it backed the reappointment of both James Murdoch and Elon Musk’s brother, Kimbal Musk. This isn’t the first time the wealthy Norwegians has opposed Musk: the company previously voted against Musk’s pay package back in March, which at the time was valued at $2.6 billion, but might ultimately be worth much more. The wealth fund holds a 0.48% stake in Tesla at the end of 2017, making it worth $252.5 million.

Meanwhile, despite the recent underperformance of Tesla stock, shareholders appeared willing to look through the growing production problems. Though Musk has consistently overestimated Tesla’s ability to meet production goals, investors proved once again that they’re willing to take his projections at face value – no matter how fantastical they might be – when Tesla shares jumped after Musk said it’s “quite likely” that Tesla will build 5,000 Model 3 sedans a week by the end of the month. The company’s profit- and cash-generation targets for the rest of the year are dependent on reaching this target, Musk said.  Musk added that production has improved to 3,500 Model 3s a week.

Tesla

After retaining the Tesla chairmanship, Musk claimed that it’s “very difficult” to become a “mass-manufacturing car company” and that “no one has succeeded in doing this in a very long time in the US.”

Of course, these production hiccups have been one of the reasons why Tesla burned through more than $1 billion in three of the last four quarters. And one activist group said it would oppose the reappointment of all three Tesla directors up for a vote yesterday because of the production delays.

Countering growing skepticism, Musk said that the addition of a third general assembly line at Tesla’s Fremont Factory has helped Tesla turn the corner on manufacturing – adding that cars are moving through the new line “crazy fast,” according to Bloomberg.

“The biggest constraint on output is general assembly,” Musk said. “We can probably get to 5,000 a week with the current two general assembly lines. But with the third one, I’m highly confident that we can exceed 5,000 units per week.”

As Bloomberg notes, manufacturing has befuddled Tesla ever since Musk predicted 11 months ago that “production hell” would be ahead for the first car the company was trying to make in high volumes. If indeed Tesla is up to 3,500 Model 3s, on its way to 5,000 by the end of the month, Tesla may soon move from hell to just purgatory.

Tesla is also toying with the idea of expanding capacity by adding another plant, which would produce cars, battery packs and powertrains in Shanghai. More details should be forthcoming next month, Musk said.

Despite having not yet reached its targets with the Model 3, Musk is already touting new models that will start production next month – like the all-wheel drive version of the Model 3. Tesla will unveil the Model Y crossover in March, which will go into production in the first half of 2020. Tesla then plans to unveil the Model Y crossover in March. That will go into production in the first half of 2020, along with the Semi truck and Roadster models.

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