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Budget Deficit Now Expected To Near $4 Trillion This Year

In the halcyon days of yore—you know, 10 weeks ago—budget hawks were fretting about the return of trillion-dollar deficits, with the Congressional Budget Office’s latest 10-year projection showing that the annual budget deficit would hit $1.7 trillion by 2030.

Today, that projection is not even worth the paper it is printed on.

In the midst of the COVID-19 pandemic that has already prompted Congress to hike spending by $2.2 trillion (with more likely on the way), and with revenue collections likely to drop in a big way as a result of the coronavirus-induced economic shutdown, the federal government is facing the prospect of a budget deficit of nearly $4 trillion this year. That’s according to several independent projections made by various organizations over the past week.

The numbers are truly staggering. According to the Committee for a Responsible Federal Budget (CRFB), a nonpartisan group that advocates for lower deficits, the budget deficit will hit $3.8 trillion this year—that’s four times larger than the $984 billion deficit recorded last year. The exploding deficit will cause the national debt to exceed the size of the entire U.S. economy this year, something that has not happened since the height of World War II.

And it is almost certainly a best-case scenario. “These projections almost certainly underestimate deficits, since they assume no further legislation is enacted to address the crisis and that policymakers stick to current law when it comes to other tax and spending policies,” the CRFB said in a statement. “The projections also assume the economy experiences a strong recovery in 2021 and fully returns to its pre-crisis trajectory by 2025.”

If that happens, annual budget deficits will fall to about $2 trillion next year and to $1.3 trillion in 2025. For comparison’s sake, the largest since-year deficit during the Great Recession that followed the 2008 economic crisis was $1.3 trillion.

But even if deficits recede to merely pre-coronavirus record highs, the national debt will continue to exceed the size of the U.S. economy for the immediate future, the CRFB projects.

Other budget-watchers have come to similar conclusions. Investment bank Goldman Sachs is now expecting a $3.6 trillion federal deficit this year. G. William Hoagland, a senior vice president of the Bipartisan Policy Center and a former Senate GOP budget aide, told Roll Call that he expects a deficit of $3.9 trillion. Romina Boccia, research director for the Heritage Foundation’s Center for the Federal Budget, told Fox News that the deficit will likely exceed $3.5 trillion.

“There’s the real risk, of course, that we might be teeing up a public debt crisis on the other end of this,” Boccia told Fox. That, she added, would likely mean higher taxes, reduced government services, inflation, and economic stagnation.

Just as the heavy borrowing that took place during the Great Depression and World War II was followed by a period of fiscal restraint to bring deficits back in line, the CRFB says, so too must policy makers prioritize deficit reduction once the current public health crisis has passed. “Putting long-term deficit reduction measures in place sooner rather than later would allow policymakers to phase in changes more gradually and give those affected more warning and ability to prepare,” the CRFB advises.

The CBO has yet to publish an updated projection that takes last month’s passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act into account. By the time it does, that projection might be out of date, too. Already, President Donald Trump and Speaker of the House Nancy Pelosi (D–Calif.) are discussing plans for another trillion-dollar (maybe $2 trillion) stimulus package.

And the coronavirus is expected to wreak havoc on state budgets as well, raising the prospect that the federal government may have to use its credit card to bail out some states too. The National Governors Association is already asking for $500 billion.

In other words, 10 weeks from now, we might be wishing for the days when the federal deficit was only $4 trillion.

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Budget Deficit Now Expected To Near $4 Trillion This Year

In the halcyon days of yore—you know, 10 weeks ago—budget hawks were fretting about the return of trillion-dollar deficits, with the Congressional Budget Office’s latest 10-year projection showing that the annual budget deficit would hit $1.7 trillion by 2030.

Today, that projection is not even worth the paper it is printed on.

In the midst of the COVID-19 pandemic that has already prompted Congress to hike spending by $2.2 trillion (with more likely on the way), and with revenue collections likely to drop in a big way as a result of the coronavirus-induced economic shutdown, the federal government is facing the prospect of a budget deficit of nearly $4 trillion this year. That’s according to several independent projections made by various organizations over the past week.

The numbers are truly staggering. According to the Committee for a Responsible Federal Budget (CRFB), a nonpartisan group that advocates for lower deficits, the budget deficit will hit $3.8 trillion this year—that’s four times larger than the $984 billion deficit recorded last year. The exploding deficit will cause the national debt to exceed the size of the entire U.S. economy this year, something that has not happened since the height of World War II.

And it is almost certainly a best-case scenario. “These projections almost certainly underestimate deficits, since they assume no further legislation is enacted to address the crisis and that policymakers stick to current law when it comes to other tax and spending policies,” the CRFB said in a statement. “The projections also assume the economy experiences a strong recovery in 2021 and fully returns to its pre-crisis trajectory by 2025.”

If that happens, annual budget deficits will fall to about $2 trillion next year and to $1.3 trillion in 2025. For comparison’s sake, the largest since-year deficit during the Great Recession that followed the 2008 economic crisis was $1.3 trillion.

But even if deficits recede to merely pre-coronavirus record highs, the national debt will continue to exceed the size of the U.S. economy for the immediate future, the CRFB projects.

Other budget-watchers have come to similar conclusions. Investment bank Goldman Sachs is now expecting a $3.6 trillion federal deficit this year. G. William Hoagland, a senior vice president of the Bipartisan Policy Center and a former Senate GOP budget aide, told Roll Call that he expects a deficit of $3.9 trillion. Romina Boccia, research director for the Heritage Foundation’s Center for the Federal Budget, told Fox News that the deficit will likely exceed $3.5 trillion.

“There’s the real risk, of course, that we might be teeing up a public debt crisis on the other end of this,” Boccia told Fox. That, she added, would likely mean higher taxes, reduced government services, inflation, and economic stagnation.

Just as the heavy borrowing that took place during the Great Depression and World War II was followed by a period of fiscal restraint to bring deficits back in line, the CRFB says, so too must policy makers prioritize deficit reduction once the current public health crisis has passed. “Putting long-term deficit reduction measures in place sooner rather than later would allow policymakers to phase in changes more gradually and give those affected more warning and ability to prepare,” the CRFB advises.

The CBO has yet to publish an updated projection that takes last month’s passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act into account. By the time it does, that projection might be out of date, too. Already, President Donald Trump and Speaker of the House Nancy Pelosi (D–Calif.) are discussing plans for another trillion-dollar (maybe $2 trillion) stimulus package.

And the coronavirus is expected to wreak havoc on state budgets as well, raising the prospect that the federal government may have to use its credit card to bail out some states too. The National Governors Association is already asking for $500 billion.

In other words, 10 weeks from now, we might be wishing for the days when the federal deficit was only $4 trillion.

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We Are All Federalists Now

Throughout the 1970s, 1980s, 1990s, and 2000s, the issue of federalism sharply divided the Supreme Court. National League of Cities v. Usery (1976) set aside a federal law because it violated the principles of federalism. But less than a decade later, Justice Harry Blackmun changed in his position in Garcia v. San Antonio Metropolitan Transit Authority (1985). Blackmun now contended that the political process, and not the courts, were responsible for protecting state sovereignty. Then-Justice Rehnquist dissented in Garcia. And he offered what would prove to be a prescient prediction:

“I do not think it incumbent on those of us in dissent to spell out further the fine points of a principle that will, I am confident, in time again command the support of a majority of this Court.”

He was right. But I don’t think he could have anticipated how large that majority would eventually become. In recent years, elements of the Rehnquist Court’s federalism jurisprudence have gained unanimous support.

Consider Murphy v. NCAA. All 9 Justices accepted the general commandeering principles articulated in Printz v. United States (1997). Justice Ginsburg wrote a partial dissent for Justices Sotomayor and Breyer that did not dispute Printz, and its predecessor, New York v. U.S. Both Ginsburg and Breyer dissented in Printz.

And more recently, Allen v. Cooper was also unanimous. All 9 Justices went along with the general sovereign immunity framework articulated in Seminole Tribe. Justices Ginsburg and Breyer are the only remaining Justices from the Rehnquist Court who regularly dissented in sovereign immunity cases. Yet, they acquiesced concurred in Allen. Indeed, they threw in the towel on Seminole Tribe, citing stare decisis concerns. They explained:

That our sovereign-immunity precedents can be said to call for so uncertain a voyage suggests that something isamiss. Indeed, we went astray in Seminole Tribe of Fla. v. Florida (1996), as I have consistently maintained. See College Savings Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., (1999) (dissenting opinion); Federal Maritime Comm’n v. South Carolina Ports Authority (2002) (same). We erred again in Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank (1999), by holding that Congress exceeded its §5 powers when it passed a patent counterpart to the copyright statute at issue here. But recognizing that my longstanding view has not carried the day, and that the Court’s decision in Florida Prepaid controls this case, I concur in the judgment.

This support for federalism is not limited to the Supreme Court. So-called “sanctuary” states and cities have rallied behind Printz, as well as NFIB v. Sebelius, to fight the Trump administration’s executive actions on immigration. Indeed, several of the blue states filed briefs in Printz opposing the commandeering doctrine. But now, they have come to support that doctrine.

Yesterday, President Trump said he had the “ultimate authority” to order the governors to re-open the country:

When President Trump was asked during Monday’s news briefing what authority he has to reopen the country, he didn’t hesitate to answer. “I have the ultimate authority,” the president responded, cutting off the reporter who was speaking.

Trump later clarified his position further, telling reporters, “When somebody is the president of the United States, the authority is total and that’s the way it’s got to be. … It’s total. The governors know that.”

The local leaders, Trump said, “can’t do anything without the approval of the president of the United States.”

Several reporters called yesterday and asked me what was talking about. I have no clue. The federal government lacks the power to order governors what to do. Such a power was expressly foreclosed by Printz. (I discuss the commandeering doctrine in this article.) I gave this quote to the Washington Post:

Josh Blackman, a constitutional law professor at the South Texas College of Law Houston, told The Post that if Trump were to call up Cuomo tomorrow and order him to send everyone back to work, Cuomo could easily tell Trump to “get lost, and that would be his prerogative.”

I actually said “get lost,” followed by several expletives, but the reporter omitted that part.

But lest we forget, there was a dissent in Printz. Justice Stevens argued that the federal government could order governors to facilitate important federal goals–specifically, to provide troops for the draft:

Thus, for example, the decision by Congress to give President Wilson the authority to utilize the services of state officers in implementing the World War I draft, see Act of May 18, 1917, ch. 15, § 6, 40 Stat. 80-81, surely indicates that the National Legislature saw no constitutional impediment to the enlistment of state assistance during a federal emergency.

Under Justice Stevens’s logic, the federal government could order the states to stay locked down, or open up, if there was a “federal emergency.”

There is a difference, of course, between a President unilaterally issuing an order to Governors based on Article II powers, and doing so pursuant to an enacted statute. For example, Truman could have seized the steel mills if Congress had authorized the taking. But modern-day criticism of Trump seems to accept Printz‘s general principal.  No one is championing Justice Stevens’s dissent. Indeed, there is no support for one of Stevens’s proposed amendments, that would have overruled Printz.

We are all Federalists now.

 

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While Trump Rants, It’s Governors Who Have Gone Full Captain Queeg

One of the most pervasive and exhausting features of the Donald Trump era is the way in which the president makes everything all about him. With that in mind, it’s not surprising, then, that yesterday he asserted that he alone guards the on/off switch of the American economy.

Trump’s pathetic (but telling) flex is without constitutional grounding, of course. For the same reasons that he doesn’t have the power to issue a national shelter-in-place decree because of the novel coronavirus pandemic, he doesn’t have the power to open up the economy, either. Since the 1820s, it’s established law that states and local governments, not the federal government, have the right to impose quarantine laws and other public health measures. “In theory,” wrote constitutional lawyer and The Dispatch contributor David French a couple weeks ago, “Congress may use its power under the Constitution’s Commerce Clause to grant the president additional authority over commerce during a public health crisis, but it has not done that. Thus, the true executive authority of state commerce rests with governors.”

So for all the attention that yesterday’s presidential temper tantrum is getting, it’s simply Trump being Trump. Perhaps more importantly, it directs attention away from the ways in which governors are themselves acting as petty tyrants, shutting down all sorts of basic economic activity for no good reasons at all. They are the ones who are most acting like Captain Queeg, the battle-fatigued commander in The Caine Mutiny whose erratic behavior and monomaniacal fixation on missing strawberries has become a shorthand for insane leadership that should be removed from power.

Hence, Michigan Gov. Gretchen Whitmer, the subject of a recent glowing profile in Politico, has banned the sale of paint in the name of battling the coronavirus. Officials in the state have also banned the sale of vegetable seeds, as have leaders in Vermont. “At least 316 million people in at least 42 states, three counties, nine cities, the District of Columbia and Puerto Rico are being urged to stay home,” reported The New York Times a week ago, meaning that the vast majority of Americans are under various levels of government-mandated lockdowns. In Mississippi, this has even taken the form of fining churchgoers who attended services in their own cars. Pennsylvania’s Gov. Tom Wolf decreed liquor was a “non-essential” product and shut down liquor stores (which are owned and operated by the state) before overseeing a failed attempt at online-only sales.

As economist David R. Henderson underscores in a powerful, provocative piece for the American Institute of Economic Research, it was mostly mayors and governors who shut down the economy. He emphasizes that in many cases (including those of New York City and state), leaders pulled the plug after insisting that the coronavirus actually wasn’t that big a deal and that residents should keep calm and carry on. Now those same people are talking about reopening things up, which, all things considered, is heartening.

Still, writes Henderson:

Those who think discussion is needed before we take such a bold step should answer this: how much public discussion was there before March 16, when San Francisco Mayor London Breed, in what she called a “defining moment,” shut down most of San Francisco’s economy? Days later, did the county governments of California discuss with their citizens whether to impose “sheltering in place?” California’s governor? New York’s governor? Most of the other governors? No. Nor was there debate or much consultation on the White House’s sudden and shocking bans on international travel that have trapped possibly more than 100,000 American students abroad, forcibly separated from their families?

No, these leaders just did it.

As president, Trump wields massive power and should always be held accountable when his rhetoric and lack of knowledge create problems. First and foremost, we would do well to focus on the impact—good, bad, and ugly—of the $2 trillion spending bill he pushed through Congress a few weeks back. Trump doesn’t bear sole responsibility for The CARES Act, which effectively passed the House and the Senate unanimously, but if you’re looking for something over which he had a lot of control, well, there you are. And if you’re looking for the nutjobs repsonsible for fining the faithful in Greenville, Mississippi for going to drive-in church services or shutting down booze stores in Pennsylvania, you need to look closer to home.

This latest flap has already generated millions of responses both on social media and in the legacy media. And yet it’s only Tuesday and Trump’s assertion that like Captain Queeg, he’s in charge here may not even be this week’s biggest media flare-up. Yes to reopening the economy as soon as safely possible, but let’s also remember all the places where power and petty tyrants live.

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We Are All Federalists Now

Throughout the 1970s, 1980s, 1990s, and 2000s, the issue of federalism sharply divided the Supreme Court. National League of Cities v. Usery (1976) set aside a federal law because it violated the principles of federalism. But less than a decade later, Justice Harry Blackmun changed in his position in Garcia v. San Antonio Metropolitan Transit Authority (1985). Blackmun now contended that the political process, and not the courts, were responsible for protecting state sovereignty. Then-Justice Rehnquist dissented in Garcia. And he offered what would prove to be a prescient prediction:

“I do not think it incumbent on those of us in dissent to spell out further the fine points of a principle that will, I am confident, in time again command the support of a majority of this Court.”

He was right. But I don’t think he could have anticipated how large that majority would eventually become. In recent years, elements of the Rehnquist Court’s federalism jurisprudence have gained unanimous support.

Consider Murphy v. NCAA. All 9 Justices accepted the general commandeering principles articulated in Printz v. United States (1997). Justice Ginsburg wrote a partial dissent for Justices Sotomayor and Breyer that did not dispute Printz, and its predecessor, New York v. U.S. Both Ginsburg and Breyer dissented in Printz.

And more recently, Allen v. Cooper was also unanimous. All 9 Justices went along with the general sovereign immunity framework articulated in Seminole Tribe. Justices Ginsburg and Breyer are the only remaining Justices from the Rehnquist Court who regularly dissented in sovereign immunity cases. Yet, they acquiesced concurred in Allen. Indeed, they threw in the towel on Seminole Tribe, citing stare decisis concerns. They explained:

That our sovereign-immunity precedents can be said to call for so uncertain a voyage suggests that something isamiss. Indeed, we went astray in Seminole Tribe of Fla. v. Florida (1996), as I have consistently maintained. See College Savings Bank v. Florida Prepaid Postsecondary Ed. Expense Bd., (1999) (dissenting opinion); Federal Maritime Comm’n v. South Carolina Ports Authority (2002) (same). We erred again in Florida Prepaid Postsecondary Ed. Expense Bd. v. College Savings Bank (1999), by holding that Congress exceeded its §5 powers when it passed a patent counterpart to the copyright statute at issue here. But recognizing that my longstanding view has not carried the day, and that the Court’s decision in Florida Prepaid controls this case, I concur in the judgment.

This support for federalism is not limited to the Supreme Court. So-called “sanctuary” states and cities have rallied behind Printz, as well as NFIB v. Sebelius, to fight the Trump administration’s executive actions on immigration. Indeed, several of the blue states filed briefs in Printz opposing the commandeering doctrine. But now, they have come to support that doctrine.

Yesterday, President Trump said he had the “ultimate authority” to order the governors to re-open the country:

When President Trump was asked during Monday’s news briefing what authority he has to reopen the country, he didn’t hesitate to answer. “I have the ultimate authority,” the president responded, cutting off the reporter who was speaking.

Trump later clarified his position further, telling reporters, “When somebody is the president of the United States, the authority is total and that’s the way it’s got to be. … It’s total. The governors know that.”

The local leaders, Trump said, “can’t do anything without the approval of the president of the United States.”

Several reporters called yesterday and asked me what was talking about. I have no clue. The federal government lacks the power to order governors what to do. Such a power was expressly foreclosed by Printz. (I discuss the commandeering doctrine in this article.) I gave this quote to the Washington Post:

Josh Blackman, a constitutional law professor at the South Texas College of Law Houston, told The Post that if Trump were to call up Cuomo tomorrow and order him to send everyone back to work, Cuomo could easily tell Trump to “get lost, and that would be his prerogative.”

I actually said “get lost,” followed by several expletives, but the reporter omitted that part.

But lest we forget, there was a dissent in Printz. Justice Stevens argued that the federal government could order governors to facilitate important federal goals–specifically, to provide troops for the draft:

Thus, for example, the decision by Congress to give President Wilson the authority to utilize the services of state officers in implementing the World War I draft, see Act of May 18, 1917, ch. 15, § 6, 40 Stat. 80-81, surely indicates that the National Legislature saw no constitutional impediment to the enlistment of state assistance during a federal emergency.

Under Justice Stevens’s logic, the federal government could order the states to stay locked down, or open up, if there was a “federal emergency.”

There is a difference, of course, between a President unilaterally issuing an order to Governors based on Article II powers, and doing so pursuant to an enacted statute. For example, Truman could have seized the steel mills if Congress had authorized the taking. But modern-day criticism of Trump seems to accept Printz‘s general principal.  No one is championing Justice Stevens’s dissent. Indeed, there is no support for one of Stevens’s proposed amendments, that would have overruled Printz.

We are all Federalists now.

 

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While Trump Rants, It’s Governors Who Have Gone Full Captain Queeg

One of the most pervasive and exhausting features of the Donald Trump era is the way in which the president makes everything all about him. With that in mind, it’s not surprising, then, that yesterday he asserted that he alone guards the on/off switch of the American economy.

Trump’s pathetic (but telling) flex is without constitutional grounding, of course. For the same reasons that he doesn’t have the power to issue a national shelter-in-place decree because of the novel coronavirus pandemic, he doesn’t have the power to open up the economy, either. Since the 1820s, it’s established law that states and local governments, not the federal government, have the right to impose quarantine laws and other public health measures. “In theory,” wrote constitutional lawyer and The Dispatch contributor David French a couple weeks ago, “Congress may use its power under the Constitution’s Commerce Clause to grant the president additional authority over commerce during a public health crisis, but it has not done that. Thus, the true executive authority of state commerce rests with governors.”

So for all the attention that yesterday’s presidential temper tantrum is getting, it’s simply Trump being Trump. Perhaps more importantly, it directs attention away from the ways in which governors are themselves acting as petty tyrants, shutting down all sorts of basic economic activity for no good reasons at all. They are the ones who are most acting like Captain Queeg, the battle-fatigued commander in The Caine Mutiny whose erratic behavior and monomaniacal fixation on missing strawberries has become a shorthand for insane leadership that should be removed from power.

Hence, Michigan Gov. Gretchen Whitmer, the subject of a recent glowing profile in Politico, has banned the sale of paint in the name of battling the coronavirus. Officials in the state have also banned the sale of vegetable seeds, as have leaders in Vermont. “At least 316 million people in at least 42 states, three counties, nine cities, the District of Columbia and Puerto Rico are being urged to stay home,” reported The New York Times a week ago, meaning that the vast majority of Americans are under various levels of government-mandated lockdowns. In Mississippi, this has even taken the form of fining churchgoers who attended services in their own cars. Pennsylvania’s Gov. Tom Wolf decreed liquor was a “non-essential” product and shut down liquor stores (which are owned and operated by the state) before overseeing a failed attempt at online-only sales.

As economist David R. Henderson underscores in a powerful, provocative piece for the American Institute of Economic Research, it was mostly mayors and governors who shut down the economy. He emphasizes that in many cases (including those of New York City and state), leaders pulled the plug after insisting that the coronavirus actually wasn’t that big a deal and that residents should keep calm and carry on. Now those same people are talking about reopening things up, which, all things considered, is heartening.

Still, writes Henderson:

Those who think discussion is needed before we take such a bold step should answer this: how much public discussion was there before March 16, when San Francisco Mayor London Breed, in what she called a “defining moment,” shut down most of San Francisco’s economy? Days later, did the county governments of California discuss with their citizens whether to impose “sheltering in place?” California’s governor? New York’s governor? Most of the other governors? No. Nor was there debate or much consultation on the White House’s sudden and shocking bans on international travel that have trapped possibly more than 100,000 American students abroad, forcibly separated from their families?

No, these leaders just did it.

As president, Trump wields massive power and should always be held accountable when his rhetoric and lack of knowledge create problems. First and foremost, we would do well to focus on the impact—good, bad, and ugly—of the $2 trillion spending bill he pushed through Congress a few weeks back. Trump doesn’t bear sole responsibility for The CARES Act, which effectively passed the House and the Senate unanimously, but if you’re looking for something over which he had a lot of control, well, there you are. And if you’re looking for the nutjobs repsonsible for fining the faithful in Greenville, Mississippi for going to drive-in church services or shutting down booze stores in Pennsylvania, you need to look closer to home.

This latest flap has already generated millions of responses both on social media and in the legacy media. And yet it’s only Tuesday and Trump’s assertion that like Captain Queeg, he’s in charge here may not even be this week’s biggest media flare-up. Yes to reopening the economy as soon as safely possible, but let’s also remember all the places where power and petty tyrants live.

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What the Cyberspace Solarium report means for the private sector

The Cyberspace Solarium Commission’s report was released into the teeth of the COVID-19 crisis and hasn’t attracted the press it probably deserves. But the commissioners include four sitting Congressmen who plan to push for adoption of its recommendations. And the Commission is going to be producing more material – and probably more press attention – over coming weeks. In this episode, I interview Sen. Angus King, co-chair of the Commission, and Dr. Samantha Ravich, one of the commissioners.

We focus almost exclusively on what the Commission’s recommendations mean for the private sector. The Commission has proposed a remarkably broad range of cybersecurity measures for business. The Commission recommends a new products liability regime for assemblers of final goods (including software) who don’t promptly patch vulnerabilities. It proposes two new laws requiring notice not only of personal data breaches but also of other significant cyber incidents. It calls for a federal privacy and security law – without preemption. It updates Sarbanes-Oxley to include cybersecurity principles. And lest you think the Commission is in love with liability, it also proposed tort immunities for critical infrastructure owners operating under government supervision during a crisis. The interviews cover all these proposals, plus the Commission’s recommendation of a new role for the Intelligence Community in providing support to critical US companies.

In the news, Nick Weaver and I dig deep into the Google and Apple proposals for tracking COVID-19 infections. I’ve got a separate post in the works on the topic, but the short version is that I think Google and Apple have dramatically overvalued privacy interests and downgraded the job of actually tracking infections. Nick disagrees, believing that the privacy interests aren’t actually conflicting with the tracking goals, but we agree that the app should operate on an opt-out basis, not opt-in.

The Great Decoupling, part 278: It looks as though China Telecom will be getting the boot from US telecom markets, at least if Team Telecom has anything to say about it. And speaking of Team Telecom, Brian Egan tells us that it has a new charter and a new, catchy acronym: CAFPUSTTSS!

Nick and I dig into a Ninth Circuit decision that may be heading for the Supreme Court. It holds that Facebook can be held liable for wiretapping when it gets information from its widely deployed “like” buttons on third-party sites.

Fish gotta swim, birds gotta fly, and the EU gotta regulate tech, coronavirus or no coronavirus. Maury Shenk reports, bemusedly. Matching him bemusement for bemusement, Nick tries to explain a French ruling that Google must pay news outlets to link to their content (and can’t stop linking to the outlets).

Maury explains the 5G-coronavirus conspiracy that has Brits burning cellular masts. And Nick explains how to make a “smart” lock spill its secrets, and how to fall foul of the FTC.

And in quick takes, the COVID-19 cyber threat has the US and UK authorities joining hands against cyberattacks, the Australian government is hacking criminals who are exploiting coronavirus, and we get a look at a future in which IoT devices defect to foreign intelligence agencies.

Download the 311th Episode (mp3).

You can subscribe to The Cyberlaw Podcast using iTunes, Google Play, Spotify, Pocket Casts, or our RSS feed. As always, The Cyberlaw Podcast is open to feedback. Be sure to engage with @stewartbaker on Twitter. Send your questions, comments, and suggestions for topics or interviewees to CyberlawPodcast@steptoe.com. Remember: If your suggested guest appears on the show, we will send you a highly coveted Cyberlaw Podcast mug!

The views expressed in this podcast are those of the speakers and do not reflect the opinions of their institutions, clients, friends, families, or pets.

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What the Cyberspace Solarium report means for the private sector

The Cyberspace Solarium Commission’s report was released into the teeth of the COVID-19 crisis and hasn’t attracted the press it probably deserves. But the commissioners include four sitting Congressmen who plan to push for adoption of its recommendations. And the Commission is going to be producing more material – and probably more press attention – over coming weeks. In this episode, I interview Sen. Angus King, co-chair of the Commission, and Dr. Samantha Ravich, one of the commissioners.

We focus almost exclusively on what the Commission’s recommendations mean for the private sector. The Commission has proposed a remarkably broad range of cybersecurity measures for business. The Commission recommends a new products liability regime for assemblers of final goods (including software) who don’t promptly patch vulnerabilities. It proposes two new laws requiring notice not only of personal data breaches but also of other significant cyber incidents. It calls for a federal privacy and security law – without preemption. It updates Sarbanes-Oxley to include cybersecurity principles. And lest you think the Commission is in love with liability, it also proposed tort immunities for critical infrastructure owners operating under government supervision during a crisis. The interviews cover all these proposals, plus the Commission’s recommendation of a new role for the Intelligence Community in providing support to critical US companies.

In the news, Nick Weaver and I dig deep into the Google and Apple proposals for tracking COVID-19 infections. I’ve got a separate post in the works on the topic, but the short version is that I think Google and Apple have dramatically overvalued privacy interests and downgraded the job of actually tracking infections. Nick disagrees, believing that the privacy interests aren’t actually conflicting with the tracking goals, but we agree that the app should operate on an opt-out basis, not opt-in.

The Great Decoupling, part 278: It looks as though China Telecom will be getting the boot from US telecom markets, at least if Team Telecom has anything to say about it. And speaking of Team Telecom, Brian Egan tells us that it has a new charter and a new, catchy acronym: CAFPUSTTSS!

Nick and I dig into a Ninth Circuit decision that may be heading for the Supreme Court. It holds that Facebook can be held liable for wiretapping when it gets information from its widely deployed “like” buttons on third-party sites.

Fish gotta swim, birds gotta fly, and the EU gotta regulate tech, coronavirus or no coronavirus. Maury Shenk reports, bemusedly. Matching him bemusement for bemusement, Nick tries to explain a French ruling that Google must pay news outlets to link to their content (and can’t stop linking to the outlets).

Maury explains the 5G-coronavirus conspiracy that has Brits burning cellular masts. And Nick explains how to make a “smart” lock spill its secrets, and how to fall foul of the FTC.

And in quick takes, the COVID-19 cyber threat has the US and UK authorities joining hands against cyberattacks, the Australian government is hacking criminals who are exploiting coronavirus, and we get a look at a future in which IoT devices defect to foreign intelligence agencies.

Download the 311th Episode (mp3).

You can subscribe to The Cyberlaw Podcast using iTunes, Google Play, Spotify, Pocket Casts, or our RSS feed. As always, The Cyberlaw Podcast is open to feedback. Be sure to engage with @stewartbaker on Twitter. Send your questions, comments, and suggestions for topics or interviewees to CyberlawPodcast@steptoe.com. Remember: If your suggested guest appears on the show, we will send you a highly coveted Cyberlaw Podcast mug!

The views expressed in this podcast are those of the speakers and do not reflect the opinions of their institutions, clients, friends, families, or pets.

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Emergency COVID-19 Rules Effectively Give California’s NIMBYs Unlimited Time To File Anti-Housing Environmental Lawsuits

The COVID-19 outbreak might be a disaster for most of the globe, but it’s proving to be a windfall for California’s NIMBYs who are being provided with new legal tools for delaying real estate developments.

Last week, the Judicial Council of California—the rule-making body for the state’s courts—issued 11 emergency rules for the judicial system during the current pandemic.

Included in the council’s rules was a blanket extension of deadlines for filing civil actions until 90 days after the current state of emergency ends. Ominously for housing construction, this extended statute of limitations applies to lawsuits filed under the California Environmental Quality Act (CEQA).

That law requires local governments to study proposed developments for potentially significant environmental impacts. CEQA also gives third parties the power to sue local governments for approving a construction project if they feel that a particular environmental impact wasn’t studied enough.

The law has become a favored tool of NIMBYs and other self-interested parties to delay unwanted developments or to extract concessions from developers. Anti-gentrification activists use CEQA to stop apartment buildings that might cast too much shadow. Construction unions use the law as leverage to secure exclusive project labor agreements.

Under normal circumstances, these CEQA lawsuits have to be filed within 30 or 35 days of a project receiving final approval. That deadline gives builders, and their lenders, a modicum of certainty about the future timeline of their projects.

By extending this statute of limitations to 90 days after the end of the state’s emergency (which is still yet to be determined), the council is effectively giving project opponents an unlimited amount of time to hold up projects, says Jennifer Hernandez, a land-use attorney with the law firm Holland & Knight.

“It’s not after the courts re-open, or after the courts re-open with a new and more cautious social distancing protocol,” she tells Reason. “When the COVID emergency is no longer an emergency is a much more aspirational goal than trying to figure out what the rules should be for conducting business given the COVID emergency.”

This could effectively put any construction project that hasn’t already run out the clock on CEQA’s statute of limitations on hold, says Nick Cammarota of the California Building Industry Association (CBIA).

“If I’m a builder I can’t move forward with my project until the [CEQA] statute of limitations has expired. The reason why I can’t do that is because if you do move forward, courts have the authority to order you tear down what you’ve built,” Cammarota tells Reason, explaining that “lenders today are unwilling to fund those loans for construction until the statute of limitations has expired.”

That’s bad news for a state that is already suffering from a shortage of some 3.5 million homes according to one estimate, and which has given itself the goal of building 500,000 new units a year to make up for the shortfall.

In 2019, permits for 109,000 units were issued in the state, down from 117,000 in 2018, and 113,000 in 2017, according to U.S. Census Bureau data. The indefinite extension of the timeline for filing CEQA lawsuits plus the current shutdown of most construction sites in the Bay Area could mean California is looking at another lost year for new housing construction.

“Without construction, you don’t have new housing and we stay in the housing catastrophe that we’re in,” says Hernandez.

In announcing their emergency provisions last week, the Judicial Council made clear that they were more or less operating on the fly and were open to revisions in their order.

“We are at this point truly with no guidance in history, law, or precedent,” said California Chief Justice Tani Cantil-Sakauye, chair of the council, in a press release. “And to say that there is no playbook is a gross understatement of the situation.”

Holland & Knight and the CBIA are both asking the Judicial Council to issue separate guidance for CEQA actions that offers a more limited extension of the statute of limitations.

California’s local governments are asking much the same thing. On Monday, the California League of Cities, as well as two associations representing county governments, requested the Judicial Council modify its emergency rules to allow the normal CEQA statute of limitations to resume after the lifting of the COVID-19 state of emergency.

“The Governor is calling upon all cities and counties to step up and face these crises by approving more housing units on a very considerable scale,” these local government associations say in their letter. The Judicial Council’s extension of civil action deadlines means “any applicants who got their approvals after the first week of March 2020 may have to wait until several months from now to get a green light from their lenders.”

Other than saying their emergency rules would be open for revision, the Judicial Council hasn’t given any indication on when, or even if, they’ll modify last week’s ruling to carve out some exemption for CEQA.

Not changing anything would be disastrous for new housing construction in the state, says Hernandez, saying “if this remains in place as is we’d expect to see an even more catastrophic slowdown in housing starts.”

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Trump Claims He Has ‘Total’ Authority Over When States End Social Distancing Rules. He’s Wrong.

Donald Trump told America last night that as president, total authority rests with him. “And that’s the way it’s gotta be. It’s total. It’s total. And the governors know that,” the president said during Monday night’s televised press conference on COVID-19 developments.

Last week, Trump told states they were on their own. Last night, he suggested “they can’t do anything without the approval of the president.”

Trump was referring to state decisions whether to “open the economy” anytime soon, something his administration has been urging state leaders to do while simultaneously denying them access to critical supplies from the National Strategic Stockpile and sometimes seizing gear that states and hospitals managed to acquire on their own.

If there’s a possible way to make state leaders look unprepared, Trump seems willing to take it regardless of the potential cost in American lives.

But Trump is wrong about having “total” authority over state leaders, and he’s wrong about being able to force a one-size-fits-all solution on the whole country.

Trump may tell Twitter that it’s not “the Governors [sic] decision to open up the states” but “that of the President of the United States & the Federal Government,” however—as Billy Binion wrote here yesterday—”the U.S. Constitution and Supreme Court precedent say otherwise.” Or, as John Yoo notes at National Review:

Congress can control commerce that crosses state lines, and even prohibit wholly intrastate activity that affects the national markets. It cannot, however, force individuals and businesses to engage in business in the first place.

Trump is also wrong to think we can move forward based on a national solution rather than regional and local approaches.

New York City is not Yavapai County, Arizona. San Francisco isn’t the Iowa suburbs or rural Kentucky. And so on. It’s foolish, unproductive, and dangerous to pretend the whole country should be lifting containment measures in unison or to act like one person can know what’s right for folks in vastly different communities with varying risk factors and a mish-mash of resources.

FOLLOWUP

Legal battles over state abortion bans continue. Oklahoma Gov. Kevin Stitt declared in late March that “any type of abortion services … which are not a medical emergency as defined … or otherwise necessary to prevent serious health risks to the unborn child’s mother” would be temporarily banned. Earlier this month, a U.S. district judge ruled against the ban. Now, the U.S. Court of Appeals for the 10th Circuit has upheld the lower court’s decision.

That’s in line with what the 6th U.S. Circuit Court of Appeals decided last week with regard to an Ohio abortion ban.

But the U.S. Court of Appeals for the 5th Circuit decided the other way for Texas. Abortion providers there have asked the U.S. Supreme Court to intervene.

Meanwhile, Arkansas’ abortion-ban battle is just getting started in court. On Monday, the American Civil Liberties Union filed an emergency motion challenging the state’s ban on abortion procedures during the COVID-19 pandemic.

FREE MINDS

Amash teases a presidential run. On Monday, Rep. Justin Amash (I–Mich.) responded to a tweet suggesting he should be America’s alternate option in the 2020 election for those who care about limited government by saying he was “looking at it closely this week.”

FREE MARKETS

Americans plan to stay away from some public spaces for months:

New polling from Morning Consult shows that some consumers won’t feel comfortable traveling or heading back to many public spaces at all for at least six months—with many unsure of how to even answer the question of when they’ll feel safe returning to normal life.

Related:

ELECTION 2020

Anti-drug war activist and judge joins Libertarian Party presidential contest. From Reason‘s Matt Welch:

Judge Jim Gray, the 2012 Libertarian Party (L.P.) vice presidential nominee and the first sitting jurist to come out against the drug war way back in 1992, announced to his email list Monday that he will seek the party’s presidential nomination in tandem with vice presidential candidate Larry Sharpe.

The L.P., America’s third-place finisher in the previous two presidential elections, is scheduled to determine its 2020 ticket during a national convention on May 21-25.

More here.

QUICK HITS

  • The U.S. has recorded more than 23,600 COVID-19 deaths since this time last month:

  • “There is no evidence that the virus now plaguing the world was engineered; scientists largely agree it came from animals. But that is not the same as saying it didn’t come from the lab, which spent years testing bat coronaviruses in animals,” The Washington Post‘s Josh Rogin reports.
  • Public service announcement:

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