Going Offshore in the 2016 Election Campaign - Eye-Opening on Our Tax-Haven World!

By Nomi Prins and Craig Wilson, TomDispatch

07 May 16

 

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Here’s a riddle for you: What do Donald Trump and Hillary Clinton have in common? And no, it’s not that if Donald Trump were a woman he’d garner less than 5% of the vote. And it’s not that Hillary rolls her eyes just like Mary Pat Christie when she hears The Donald going after women. And it’s not that Hillary attended The Donald’s wedding to Melania (though she did). And while The Donald is the first American presidential candidate to openly campaign on a platform of American decline, Hillary is still stuck in a world of too-many-superlatives for the waning American century. (“Despite what other candidates say, we believe in the goodness of our people and the greatness of our nation.”)

So none of the above.  And yet they do have something in common, an address they share.  And no, it’s not Trump Tower in New York City or even the Trump International Hotel and Towers in Panama City that TomDispatch regular Nomi Prins, author of All the Presidents' Bankers: The Hidden Alliances That Drive American Power, discusses in today’s post. It’s 1209 North Orange Street, a “squat, yellow brick office building” in Wilmington, Delaware, one of three states -- the other two being Nevada and Wyoming -- that operate right in this country like onshore Panama Cities. It’s there at the blandly named Corporation Trust Center, according to Rupert Neate of the Guardian, that Trump and Clinton (along with Apple, Walmart, Coca-Cola, a pile of other Fortune 500 firms, and several hundred thousand more outfits) have registered companies capable of taking full advantage of “strict corporate secrecy rules, business-friendly courts, and the ‘Delaware loophole,’ which can allow companies to legally shift earnings from other states to Delaware, where they are not taxed on non-physical incomes generated outside of the state.”

So, as Prins points out today, the two leading candidates for the presidency actually share a secret life. Think of it as a kind of private assignation -- for their monies, if not themselves -- in a place that may still be located in the United States but is nonetheless offshore from where most of the rest of us live. They are both, in other words, tax haven aficionados, and in this election season if you want to become one, too, then head offshore with Nomi Prins into the borderless world where so much of our money disappears. Tom

-Tom Engelhardt, TomDispatch

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Gimme Shelter (From the Tax Man)
Disappearing Money and Opportunistic Candidates

here’s a pile of money hiding offshore. It’s true that jobs are also leaving the United States because American companies find it convenient to cut labor costs by moving manufacturing abroad, the economic issue you’re hearing most about in this election season. But the stunning amount of money that continues to flow across American borders (and those of other countries), and eventually disappears into the pockets of the corporate and political elite, ultimately causes even more damage to our finances and our lives.

While the two leading candidates for the presidency, Donald Trump and Hillary Clinton, have indeed suggested cosmetic fixes for a situation that only grows more extreme with the passage of time, they have themselves taken advantage of numerous tax “efficiency” strategies that make money evaporate. Of course, you shouldn’t doubt for a second that they’ll change their ways once in the Oval Office.

As with so much in our American heritage, there’s a history to the “offshore” world, too. Finding places to shield money from tax collection first became commonplace among upper-crust industrialists, bankers, and even public servants back in the 1920s. Treasury Secretary Andrew Mellon, a millionaire mogul who served presidents Calvin Coolidge, Warren Harding, and Herbert Hoover (and had a knack for cutting taxes on the wealthy), left office under mounting congressional probes into his tax evasion strategies.

Fast-forward about a century and tax dodging has been woven into the fabric of the lives of the affluent and corporate worldwide in an extraordinary way. According to an April 2016 Oxfam report, the top 50 U.S. companies are hoarding more than $1.4 trillion in cash offshore.

What’s more, for every dollar that these firms spent lobbying Congress for “favorable” tax treatment (a collective total of $2.6 billion between 2008 and 2014), they received $130 dollars in tax breaks and $4,000 in subsidies from the U.S. government. These companies, including Pfizer, Goldman Sachs, Dow Chemical, Chevron, Walmart, IBM, and Procter & Gamble, created “an opaque and secretive network” of more than 1,600 company subsidiaries located in tax havens that they decided to disclose. (Because of the weak reporting requirements of the Securities and Exchange Commission, there could be thousands more.) According to a March 3rd report from the Citizens for Tax Justice, the Fortune 500 companies are now saving $695 billion in federal income taxes on a total of $2.4 trillion in offshore holdings.

Americans can’t afford to ignore such tax games, since we’re the ones who, in effect, wind up paying the taxes these firms don’t. For government policymakers, such tax evasion is a grim matter of attrition, since the U.S. (and other countries) plunge ever deeper into debt thanks to such antics and then find themselves cutting services or raising taxes on us to cover the gap between the money they’re losing and the taxes they’re collecting.

Not only are such firms unpatriotic, they are parasitic and while they’re at it, they use similar techniques -- let’s not call it theft (though it is) -- to avoid tax payments in the poorest places on Earth. As Oxfam reports, “the biggest burden” of tax havens “falls on the poorest people.” In the process, they only increase already oppressive levels of inequality globally.

Tax “secrecy” specialists -- people working in the money-hiding field -- help rich individuals, multinational corporations, political leaders, terrorists, and organized crime groups divert cash and capital, sometimes in staggering amounts, from local economies into an obscure, complex, multi-layered global financial network that operates outside any national or international regulatory or tax system. Given this, isn’t it a little surprising that the top candidates for the presidency barely pay lip service to the impact of such hidden money?  What toothless policies they have proposed to deal with the phenomenon will do little or nothing to change it.

The Panama Papers

U.S. trade agreements generally include rosy promises about partnering with regional economies around the world to encourage the flow of goods and services across borders. At the same time, they generally are focused on the obliteration of barriers that in any way restrict money from flowing out of the United States or into the embrace of other nations. The free movement of capital, or financial globalization as it’s called, has been a bedrock Washington policy for a century and, since the 1980s, places like Panama -- a renowned tax haven -- have abetted this process.

A month ago, the International Consortium of Investigative Journalists released a trove of documents, 2.6 terabytes of them, including “more than 4.8 million emails, 3 million database files, and 2.1 million PDFs.” These were turned over by an undisclosed source (“John Doe”), communicating through encrypted channels to avoid repercussions. Now known as “the Panama Papers,” they reveal how elite multinational companies, the super rich, and government figures have engaged in tax-dodging practices engineered by a single Panama City-based law firm, Mossack Fonseca (MF).

In addition to public officials and billionaires, more than 500 global banks, their subsidiaries and branches, have registered at least 15,600 shell companies there using MF’s services. That word “shell” is descriptively accurate since such “companies” rarely have employees and are commonly no more than a post office box providing a façade through which books can be doctored, taxes dodged, losses concealed, and money-laundering and other criminal actions carried out.  And keep in mind that MF, which acts for approximately 300,000 companies, is only the fourth largest provider of such offshore services globally. 

One mega-bank that used its services extensively was HSBC, which created an astonishing 2,300 shell companies with that law firm’s help. We’ll return to HSBC.

Mossack Fonseca’s official mission, it claims, is “to deliver quality, reliable and comprehensive services to our worldwide clients in the legal, trust, investment consultancy, and digital solution fields.” That’s code for helping select establishment outfits and dubious enterprises to avoid paying taxes on profits, investments, or money made from buying and selling real estate, luxury yachts or planes, oil wells, weapons, or drugs, among other things.

Secrecy is its calling card. Tax havens, or locales amenable to tax dodging, whether in the Caribbean, Central America, Switzerland (still the world’s top location for financial secrecy), or for that matter the state of Delaware, exist to circumvent tax laws. Period. And these operations are so shady that even the functionaries working in the shadows to establish such secret accounts are barely aware of exactly who owns them, where the money came from, or where it’s going. For regulators, prosecutors, and tax collectors, the opacity is far worse.

You don’t necessarily have to be rich or powerful to access the services of such offshore firms and banks, but it helps. Some havens take anyone ready to put up a minimum of $25,000, while others demand staggering sums. Western Samoa, for instance, requires a cool $10 million to get started.

The most alarming aspect of the Panama Papers revelations was not MF’s clientele or even its secretive practices, but that what it does is completely “legal.” Nor was this the first such disclosure. In November 2014, for instance, the “Luxleaks” scandal involving a whole “menagerie of Luxembourg-based tax schemes,” as the Guardian put it, was disclosed by two whistleblowers from the accounting firm PricewaterhouseCoopers. (Luxembourg is a major European tax haven.) Citigroup, Deutsche Bank, Facebook, HSBC, JPMorgan Chase, and Microsoft were on the list of its more than 350 multinational “tax avoiders.”

Avoiding vs. Evading Taxes and Corporate Inversions

Avoiding and evading taxes are technically considered different kinds of acts, the former being legal in the U.S., the latter not. According to the Internal Revenue Service, “Taxpayers have the right to reduce, avoid, or minimize their taxes by legitimate means.” Tax evasion, on the other hand, involves an “act to evade or defeat a tax, or payment of tax” by “deceit, subterfuge, camouflage, concealment, attempts to color or obscure events, or make things seem other than they are.”

The line between the two is obviously thin and vague, but both practices result in the same thing: paying fewer taxes or hiding money.

The subject of tax avoidance and evasion has generally gotten little traction on the campaign trail in election 2016, the exception being corporate “inversions.” These happen when, for example, an American company merges with a foreign one in a tax haven, and so gets a lower tax rate by re-incorporating (filling out some paperwork) there. This, too, is “legal,” although it represents the purest form of corporate tax evasion.  Perhaps you won’t be surprised to learn that the practice began in Panama about 30 years ago.

In 2014, companies with household names like Apple, Microsoft, Pfizer, and General Electric avoided paying a collective $90 billion in taxes through inversion strategies. Apple led that list, holding $181.1 billion offshore.  That’s a lot of iPhone sales.

The Leading Candidates and Hidden Money

Tax havens are, in essence, perfectly “legal” criminal facilities designed to steal money from the rest of us. The two leading candidates in this election season, however, aren’t talking about closing down tax havens for good (which would piss off lots of rich people, banks, drug cartels, and terrorists). They are instead focused on getting companies to voluntarily repatriate, or return, profits made abroad for taxation purposes or on closing tax “loopholes” that allow money to disappear.  Neither, however, offers much detail as to what that means. 

Both do share one thing, however, when it comes to tax havens: Hillary Clinton and Donald Trump have companies registered at the same address (also “shared” by 285,000 other companies) in Wilmington, Delaware. In other words, they make use of the “Delaware loophole,” which allows for the legal shifting of earnings from elsewhere in the country to the ultimate tax haven state in the U.S.  Neither, as Rupert Neate of the Guardian has written, has been willing to offer any explanation for this. That’s the political beauty of loopholes: closing one is different from eradicating an entire practice but suffices as a promise.

Hillary

Hillary has gone after tax havens before. In 2004, as a New York senator, she vowed to close tax loopholes for “people who create a mailbox, or a drop, or send one person to sit on the beach in some island paradise and claim that it is their offshore headquarters.”  She introduced no bills to do so, however.

She has spoken out against corporate tax inversions, too. She wants Congress to prevent them by imposing what she calls a “commonsense 50%” threshold on them; in other words, as long as a company keeps at least half of its operations in this country, it would be considered a U.S. company for tax purposes, no matter the inversions. She also has favored an “exit tax” to ensure that multinationals pay a “fair” share of U.S. taxes owed on earnings stored overseas. Both of these suggestions would put some modest limits on offshore tax dodging (after the fact), but not come within a country mile of banning it.

On such subjects, she can sound strong indeed at appropriate moments. In February 2016, for instance, she said, “We need to go after a company like Johnson Controls that is trying to avoid paying taxes after all of us bailed it out by pretending to sell itself in a so-called inversion in Europe.” It evidently didn’t matter to her that the same automotive parts company set to merge with Tyco International (based in Ireland to dodge taxes) had donated money to the Clinton Foundation charity as recently as December 2015. (Johnson Controls denied Hillary’s claims that it had received a bailout during the financial crisis.)

Hillary, lest we forget, joined the board of directors of the the Clinton Foundation, the family charity, in 2013. She resigned in April 2015 to run for president. Now, keeping it in the family, her husband, Bill, and her daughter, Chelsea, remain standing members of the board. Spawned from the William J. Clinton Foundation, founded in 1997, the charity has raised $2 billion, has about 2,000 employees (including at times members of Hillary's political team), and boasts an annual budget of $223 million.

Like many gilt-edged couples, Hillary and Bill Clinton have themselves utilized onshore and offshore tax loopholes. In 2010, they used a common tax-dodging technique by placing their multi-million dollar home in Chappaqua, New York, in a “residence trust.” After he left office, Bill spent five years as an “adviser” to billionaire (now-ex-pal) Ron Burkle’s investment fund, Yucaipa Global, which had funds registered in the Cayman Islands and Dubai. That alliance netted Bill at least $15 million.

Hillary’s bedrock thinking on money flowing out of the U.S. and into the offshore world can best be seen in her support for the 2012 U.S.-Panama Trade Promotion Agreement when she was secretary of state. The agreement removed “barriers to U.S. services, including financial services,” which actually simplified the process of squirreling money away in or through Panama by allowing it to flow freely into that country.

The Clinton Foundation inhales donations from people using tax havens (including Panama). Although Hillary denounced Mossack Fonseca’s dealings on cue after the Panama Papers story broke, a number of individuals and multinationals that have contributed to the foundation used MF to establish offshore accounts, according to McClatchy. These include Canadian mining billionaire Frank Giustra who features in the foundation’s $25 million top-tier donor bracket, and two firms tied to Ng Lap Seng, the Chinese billionaire implicated in a major donor scandal involving the Clintons and the Democratic National Committee.

Similarly, in a speech she gave at the New School in July 2015, Hillary highlighted the “criminal behavior” of global bank HSBC. In 2012, the behemoth financial institution agreed to a record $1.92 billion settlement with the Department of Justice and the Treasury Department for enabling drug cartel money laundering and violating U.S. sanctions by conducting transactions for customers in Iran, Libya, Sudan, and Burma. She vowed, “On my watch, it will change.”

Yet, in 2014, the Clinton Foundation accepted between $500,000 and $1 million from that bank. 

The Panama Papers are but one conflicted instance in which Hillary’s stated beliefs, her actions, and the generosity of her friends and acquaintances came together in a contradictory fashion. The evidence suggests that tax-dodgers will, in fact, be able to breathe a sigh of relief if she becomes president.  Her actions are likely to -- if you’ll excuse the expression -- trump her words when it comes to curtailing the behavior of offshore scofflaws in significant ways.  And speaking of Trump...

The Donald

Consider the fact that The Donald won’t even disclose his tax returns. His indignantly delivered explanation is that they are “under audit.” Under the circumstances, don’t hold your breath. Perhaps he doesn’t make nearly as much money as he claims -- or maybe he has an embarrassing tax haven habit. Who knows?

Ironically, Mossack Fonseca’s Panama City headquarters is located a mere seven-minute drive from the Trump International Hotel and Towers in Panama City. (If you’re interested, its website is pitching a bargain on rooms at “15% off our currently available Best Unrestricted Rate.”)  That decadent complex is one of many sketchy enterprises to which Trump lent his name for licensing purposes. According to his (unaudited) personal financial disclosure report filed with the Federal Election Commission, the deal earned him $5 million. In true Trumpian style, lawsuits and battles surround the endeavor.

Under the tax plan he’s touting in his presidential campaign, U.S. businesses would see a reduction in their maximum tax rate from 35% to 15%. This lower rate (“one of the best in the world”) would, he claims, render corporate inversions unnecessary. The Donald apparently hopes that corporate America will be so eternally grateful to him that they’ll move their money back onshore and pay taxes on it voluntarily (though most of them already don’t pay the top tax rate here anyway).

Trump’s views on a “repatriation tax holiday” that would let companies bring home their overseas stashes on a one-time basis for little or nothing have shifted over the course of his candidacy. Last year, he proposed the repatriation of hidden funds without penalty or taxation of any kind. Now he’s advocating a more populist one-time 10% tax on them.

Although a key promise of his tax reform plan is to end the practice of stockpiling money in offshore accounts by American companies, he has personally invested in many of the companies that do so. As CBS News noted, in October 2015, Trump owned stock in 22 of the top 30 Fortune 500 companies ranked by their number of offshore subsidiaries. It’s a group that has engineered 1,225 tax-haven subsidiaries holding $1.4 trillion. Of course, Trump has a keen understanding of the practices that disguise or shelter money from taxes. As he explained to supporters in Iowa this January, when it comes to his own business enterprises, "I pay as little as possible. I use every single thing in the book."

Bernie

As far as we know, Bernie has no personal experience with tax havens and has a far more structured plan than either of the leading candidates to combat their money-sucking, tax-dodging prowess. His policies would prevent American companies from avoiding U.S. taxes through inversions, block them from escaping taxes by establishing a post office box in a tax haven site, and end the practice of letting corporations defer paying taxes on profits from offshore subsidiaries.  

In the real world, financial speculation, crime, and tax evasion -- sorry for this word again -- trump the highly touted goal of “free trade” when it comes to tax havens. Bernie understood this well when he voted against the Panama “free trade” agreement of 2011. In a Senate speech on the subject, he presciently noted that “Panama is a world leader when it comes to allowing large corporations and wealthy Americans to evade U.S. taxes by stashing their cash in offshore tax havens. And the Panama free trade agreement would make this bad situation much worse.”

He was right then and he remains right today. Unfortunately, no one was listening or interested in acting on his warning -- certainly not Hillary, who, as secretary of state, characterized the agreement as “an example of the Obama Administration’s commitment to economic statecraft and deepening our economic engagement throughout the world.”

In practical terms, Sanders went significantly further than Hillary by formulating actual legislation on the subject. Last April, he introduced the Corporate Tax Dodging Prevention Act of 2015 in the Senate. Among other things, it aspires to “prevent corporations from sheltering profits in tax havens like Bermuda and the Cayman Islands and would stop rewarding companies that ship jobs and factories overseas with tax breaks.”

Regarding inversions, he would treat companies as American for tax purposes if they were majority-owned by U.S. interests and operating in this country. Even his plan, however, would fall short unless it made inversions illegal -- and too many companies are invested in not letting that happen.

Ted

Ted would abolish the Internal Revenue Service and enable people and companies to file taxes on a postcard, so there’s no real point in further analysis of his “positions” on tax havens.

Missing Money Costs

As of 2014, according to Gabriel Zucman, University of California economist and author of The Hidden Wealth of Nations, at least $7.6 trillion, or approximately 8% of global financial wealth, was “missing” somewhere offshore. His analysis demonstrates that the sorts of tax-dodging practices we’ve been discussing put governments across the planet in the red by approximately $200 billion annually. Tax avoidance by major U.S. companies costs governments an additional $130 billion per year since nearly a third of their profits are hidden offshore.

The U.N. estimates that tax dodging by multinational companies costs developing countries $100 billion a year, an amount “equivalent to what it would cost to provide basic life-saving health services or safe water and sanitation to more than 2.2 billion people.”

There are, in other words, harrowing costs to tax dodging. When the wealthy and powerful hide money from governments or speculate with it in sneaky ways, it destabilizes economies and enables the commission of crimes that place a further burden on ordinary people. When money flows from the economic necessities needed by the less privileged to the top fraction of a percent of the world’s population and is then hidden offshore, essentially “disappeared,” it’s a net drain on and a blow to the world economy. This impacts jobs and the quality of our future. Unfortunately, the leading candidates in this election year aren’t championing a major change for the better.

Nomi Prins, a TomDispatch regular, is the author of six books, a speaker, and a distinguished senior fellow at the non-partisan public policy institute Demos. Her most recent book is All the Presidents' Bankers: The Hidden Alliances That Drive American Power (Nation Books). She is a former Wall Street executive. Special thanks go to researcher Craig Wilson for his superb work on this piece.

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How Obama 'Legalized' the War on Terror

By Michael Brenner, Consortium News

07 May 16

 

Among the troubling legacies of Barack Obama’s presidency is his consolidation of the dubious legal principles that George W. Bush cobbled together to justify the Global War on Terror, explains Michael Brenner.

resident Barack Obama’s uneasy encounters with the law in devising numerous innovative means to prosecute the “War on Terror” are treated exhaustively in Charlie Savage’s much discussed book, Power Wars. This compendious volume is destined to be a landmark in the writing of the period’s history.

It also should be seen as a marker of its times as it at once explains how Obama sought legal grounds by which to justify methods that skirt the Constitution and takes at face value the assertions of those who claim to have done a conscientious analysis of the laws and the Constitution without prejudice.

Therein lies the heart of the dilemma associated with an account of this kind. For there are two broad approaches available. One is to surmise that policy preferences were made prior to and independent of the legal exegesis – however elaborate that exercise may have been.

The other is to give the participants, in the Oval Office on down, the benefit of considerable doubt in ascribing to them an earnest dedication to ascertaining where the legal boundaries lay before the decisions were taken on policies and programs.

Savage doesn’t make a choice – explicitly. He does so implicitly, though, by concentrating on a systematic account of the deliberative process among the lawyers charged with demarcating legal territory. For this purpose, he spent hundreds of hours interviewing those officials. The strategic and political dimensions are present only as background factors.

Rarely does Savage address the key question of how the latter intruded on the former – and then only obliquely. The author apparently did not press the respondents very hard to reflect on how their legal opinions might have been affected – wittingly or unwittingly – by what they knew of the Obama White House’s predispositions.

Consequently, the analysis is caught in the snare of literalism. So much so, that Savage refrains from facing squarely the possibility that the officials queried may have had an incentive of a careerist nature to view issues in a particular light.

Favorable Reviews

Most reviewers of the Savage account accept the validity of its underlying premise. As David Luban writes in The New York Review of Books: The lawyer’s “domain is the arcane network of laws that constrain the president as he wages” the War on Terror. “If the president’s lawyers tell him that a policy is illegal, he will have a hard time carrying it out.”

This is what we Americans would like to believe. But is it true? The record suggests otherwise. One must strain mightily to find instances where the White House did not do what it wanted to do – or, where the President felt compelled to override a contrary interpretation by his lawyers in order to act as he was inclined.

Savage can only cite two instances in support of this thesis. The first concerns the administration lawyers’ tergervisations in trying to find some statutory basis for the military intervention in Libya.

As Luban paraphrases Savage: “the lawyers didn’t think the solution they eventually came up with was the best reading of the law, merely that it was ‘legally available.’”

This satisfied Obama because what he wanted, and expected, was a record of legal deliberation rather than a clear-cut judgment of what the law approved. Ambiguity was fine. Surely, his lawyers were well aware of this – as on other matters.

The other case centered on the question of whether the Patriot Act of 2001 provided sufficient grounds for attacks on al-Shabaab in Somalia, which at that time was not officially affiliated with Al Qaeda. The Defense Department’s General Counsel, Jeh Johnson, created some static by issuing the stunning opinion that al-Shabaab could not be judged as “associated force” as stipulated by the statute. Technically, this countermanded a planned strike by Special Operations Forces.

Did the law make a difference – as Savage asserts? Manifestly, it did not. The United States has launched drone strikes and raids into Somalia steadily for the entire seven years of the Obama presidency. Three weeks ago, it boasted about the success in killing over a hundred “fighters” at a supposed training camp.

The drone campaign develops: the Pentagon has announced that it has devised a new formula for estimating what level of “collateral” civilian casualties is acceptable from a conjectured strike – relevant factors include the value of the target, chances of success, and the demographics of the hypothetical “collaterals.”

Moreover, the White House also has sent Special Forces teams into 42 other countries to deal with militants whose Al Qaeda (or ISIL) connections were vague or non-existent, without an official formula for measuring unwanted casualties.

The place of the Patriot Act in these lawyerly discourses is of central importance. Time after time, the debate turns on the question of whether the provisions of the Act are applicable to a particular place or action. There was a strong tendency, glossed over by Savage, to take the Patriot Act to be tantamount to a Constitutional Amendment – or, at least, some sort of Basic Law superior in legal standing to all other statutes.

Of course, there are no legitimate grounds for doing so. Indeed, several provisions of the Act are of dubious Constitutionality. They have not been fully adjudicated because two successive administrations have fought tooth-and-nail to deny plaintiffs access to the courts, usually with the acquiescence of a supine judiciary.

The invocation of “state secrets,” especially in regard to rendition and torture, has been one of the preferred stratagems for doing so – in direct contradiction of solemn pledges given by candidate Obama in 2008.

Legal Architecture

The legal architecture of Obama’s version of the “war on terror” is as resistant to adjudication as was Bush’s more ramshackle structure.

How does a defendant prepare a defense when he is denied accusatory evidence on the grounds that it entails “state secrets?” How does a defendant in a non-terrorist case protect himself from the prosecution’s exploitation of evidence obtained without a court warrant when its source is kept secret because it was the fall-out from a national security surveillance case?

How does a plaintiff gain standing to bring suit when the courts agree with the Executive’s assertion that the individual in question must demonstrate having suffered personal damage? How does some American citizen on Obama’s “kill list” appeal for redress when required to make a personal appearance in a United States court – transit to which might make him vulnerable to murder by American authorities?

Anwar al-Awlaki’s father made a legal attempt to question his son’s inclusion on the ’kill list’ but was denied standing. It remains unclear whether the presentation of the cadaver would have changed the court’s ruling. Following the Court’s logic, Awlaki would have been required to address his complaint from beyond the grave.

Two weeks later, Awlaki’s Denver-born teenage son was a collateral victim of a second Predator strike that killed an alleged Al Qaeda in the Arabian Peninsula member.

It seems that only another branch of the federal government, or a state government, has a chance of forcing judicial review of Executive actions of questionable legality/constitutionality.

Where there is consensus among them that a state of national emergency renders that pursuing such a theoretical option itself constitutes a threat to the country’s security, no citizen or group of citizens has recourse to the courts for redress of grievances. Savage disregards this overarching issue.

Think for a moment where that leaves us. On the one hand, a Christian Salafist in Texas can be heard by the Supreme Court in complaining that his fundamentalist interpretation of the Bible doesn’t permit him to administer paycheck withholdings of health insurance premiums where the coverage extends to the policy-holder (with whom he has no personal relationship) a right to certain procedures – procedures that he, the employer, judges abhorrent – and win his case.

On the other hand, someone whom the President of the United States, acting at his own discretion behind his Oval Office desk, has checked off as a Hellfire missile target has no judicial recourse whatsoever.

That reality may not require a 700-page book; however, there is a convincing case to be made that it is far more important for the future of law in this Republic than the nuanced phrasing in a memo drafted by a lawyer deep in the engine room of the Executive legal machine which the ultimate decision-maker never reads – and, had he noted it, never would have done anything different.

A Glaring Omission

Savage’s lengthy account has another, more glaring omission. He makes no reference to the White House/CIA hacking of the Senate Intelligence Committee computers in Fall 2014 at the time of the standoff over release of the Committee’s report on rendition and torture.

CIA Director John Brennan was battling to squelch the report. He was most desperate about retrieving a document originating with the Agency’s own Inspector General that provided damning evidence, i.e. the so-called “Panetta Report.”

Although transmitted voluntarily, the Director saw that as a crucial mistake and wanted it back – by any means fair or foul. President Obama approved the break-in. We know of no legal opinion, memos or argument justifying this unconstitutional action.

The CIA under John Brennan’s direction did not act as a rogue organization. The removal of the “Panetta Report” and other documents from the Senate Committee computers, the hacking of the staff files, and the sending of a “crime report” to the Department of Justice requesting that Senate staffers be investigated for criminal acts occurred with the knowledge and approval of President Obama.

Publicly, the White House declared its “neutrality” in the dispute between the CIA and Congress. He went on to distance himself from the matter: “that’s not something that is an appropriate role for me and the White House to wade into at this point.” That statement is deceitful.

Is this not arguably an impeachable offense? Why does Savage totally ignore it?

(Alert: the reader must plow through all 700 pages in order to make that assertion since the book lacks an Index. That is odd for a scholarly work destined to remain a reference source for years to come, and where there are notations of numerous persons, offices, documents etc. on almost every page. It is likely that most reviewers, therefore, have only a faint knowledge of its contents – Luban excluded).

An Alleged Distinction

Much of Savage’s interpretations have as their pivot an alleged distinction between “civil liberties” and the “rule of law.” Luban claims that “confusing the two is understandable” but seriously mistaken. However, this is by no means self-evident.

The “rule of law” includes obedience to the Constitution, which means the Bills of Rights among other provisions. Admittedly, the Bill of Rights does not automatically take precedence over those other provisions. Still, neither can they simply be traded-off against the supposedly good intentions behind some proposed governmental act or other.

Luban gives the game away in stating: ”Obama and his team aimed to provide a firm legal foundation for his policies, including – preventive detention, targeted killings, and extensive surveillance.” They succeeded.

As John Brennan, Obama’s muse on all matters “terrorist,” concedes: “I have never found a case that our legal authorities … prevented us from doing something that we thought was in the best interest of the United States to do.”

The FISA Court recently reconfirmed that the FBI is free to search Americans’ email that have been intercepted without a warrant while supposedly gathering foreign Intelligence. Mission accomplished!

The juxtaposition of “civil liberties” and “rule of law” can have insidious implications. For the distinction easily lapses into the proposition that “civil liberties” as stipulated in the first Ten Amendments can be compromised according to circumstances. That idea of a “trade-off” has been accepted even by many on the libertarian side of debates about various aspects of the “war on terror.”

The debate about privacy and surveillance in particular too often accepts the presumed need to “strike a balance” between “security” and civil liberties as its pivot. Those who argue that Fourth Amendment guarantees are not liable to attenuation or limitation because of exigent conditions are declared to be absolutists.

For the overwhelming majority of commentators, some concessions to those conditions are deemed incontrovertible. Even distinguished law professors from prestigious law schools tell us that. [See Jeffrey Rosen “Naked Scanners, GPS Tracking, and Private Citizens: Technology’s Role in Balancing Security and Privacy,” 57 Wayne Law Review 1-10 (2011); David Cole “What Hope for Human Rights?” New York Review of Books September 17, 2013]

False Dichotomy

But it is a false dichotomy – in two respects. At the practical level, there is no evidence that transgression on our liberties makes us safer – as noted. More fundamentally, unlawful and/or unconstitutional conduct is unlawful and unconstitutional whatever the supposed motivation and purpose.

That is the essence of a rule-bound system – a system of law that delimits the valid, acceptable actions of individuals – including public officials. Expedient need is not accepted as grounds for murdering someone – even if you suspect him of harboring designs to kidnap your child. Hunger is not an acceptable excuse for mugging somebody and stealing their purse.

Motivation may be acknowledged as a mitigating factor when it comes to meting out punishment. The illegality of the act itself is not obviated, though. If searches and seizures without warrant are legally proscribed, then it should make no difference that General Clapper of the NIO, or Admiral Rogers of the NSA, or Mr. Brennan of the CIA – or Mr. Obama in the White House – thinks that it would be a good idea to violate the law and/or Constitution.

That sort of rationalization marks the road to autocracy and the subordination of law to individual will. It means wounding democratic government as we know it.

Any reasonable concern about the inherent right of public authorities to act when a situation demands the resort to coercive action or some other exceptional behavior that “exigent circumstances” and “public safety exceptions” dictate have long been incorporated into Fourth Amendment and other constitutional jurisprudence to accommodate the rare “ticking time bomb” situation.

As former FBI official Coleen Rowley has pointed out: “There’s a big difference between allowing an individual officer to determine he/she can dispense with a warrant under exigent circumstances which will have to be defended later in a court of law, however, and creating a blanket, hierarchal ‘exigent circumstances’ during wartime. It’s essentially the difference between an individual’s right to self-defense and a country making the determination to justify going to war. The law made sense as it’s the ‘group think’ that is most dangerous, not the rogue ‘bad apple.’”

There are inalienable rights as ensconced in the Constitution. They are not eligible to be treated as commodities for haggling among the CIA Director, the Attorney General and the man in the Oval Office and his political operatives. We contravened that principle in 1942 to our everlasting shame – or so we thought afterwards. Exactly 60 years later, we went down that same road of infamy.

We have seen the tangible consequences of playing fast and loose with legal principle. President Obama recently felt no qualms in absolving former Secretary of State Hillary Clinton for her violating the law and federal regulation through her use of multiple email accounts and a home server.

“There is classification and there is classification,” he reassured us. That distinction, though, was not applicable in the relentless persecution of leakers like Thomas Drake whose sole, selfless motivation was to expose abuses by their government which Mr. Obama had taken pains to conceal and to deny.

Yet more egregious was the Obama-Holder arbitrary amendment of the Constitution in pronouncing that the country’s biggest banks could escape both criminal and civil prosecution because punishment for their illegal actions might do serious harm to the economy. The two men, in effect, unilaterally and without any process other than their own political calculus placed an asterisk after the Constitutional stipulations regarding “equal protection of the laws.”

There is no way of knowing with precision the avenues of thought and psychology by which those previous episodes helped shape a policy-maker’s mindset leading to later actions. It is entirely reasonable, though, that egregiously bending the law and Constitution in one domain by referring to the demands of politics makes it easier to do so in other domains, subsequently.

Nowhere in the book is there a sign that Obama, the lawyer, appreciates the menace to the country’s constitutional underpinnings from a systematic strategy of “legalism” which deforms the law. Nowhere does Savage suggest that this is a serious deficiency and a lasting cost of the GWOT.

Stretching Credulity

Back to the question of lawyers’ analytical autonomy. It stretches credulity beyond the breaking point to claim that these outcomes were a coincidence. That administration lawyers just happened to make interpretations that favored the policy preferences of the man in the Oval Office.

Savage’s fatal error of omission in his approach is the glaring failure to prod his dozens of interviewees to address the issue of bias. After all, they are not going to volunteer it.

Who would ever offer the observations: “we fixed the facts around the policy proposal;” “it was a stitch-up;” “I was so terrified at the prospect of another 9/11 that I bent over backwards to give the Executive the benefit of the doubt;” “my husband/wife admonished me: are you out of your mind! – risking having to look for a job in Boston/New York and taking the kids out of school in mid-semester?;” “I relish life in the corridors of power and wouldn’t do anything to jeopardize it?”

Or, further down the ladder, “if I really ticked off Holder, I might have to spend the last 10 years of my career adjudicating disputes between the EPA and the National Park Service over the environmental impact of septic tanks at Yellowstone.”

Is this an exaggeration of the internalized pressures that the Obama lawyers experienced? Was there solid basis for their supposed fears of “consequences?” No; yes. Consider the enormous pressures felt by the lawyers and regulators who had some measure of responsibility for imposing some restraint on the financial predators in the wake of the 2008 crash.

It is very hard to avoid the judgment that, due to his user friendly and accommodating attitude, Savage’s respondents at times took him for a ride. The most striking case in point is their audacious assertion that the White House’s implacable persecution of leakers did not represent a general strategy, but rather was the coincidental outcome of cases treated on an individual basis. Savage swallows this line whole.

Crude Fabrications

The worldly lawyers who are Savage’s subjects shy away from the crudest fabrications. An appropriate analogy is baseball’s “in-the-vicinity” rule. That refers to the unstated, universally accepted norm that, when turning the double-play, the shortstop – or usually the second baseman – need not have his foot clearly on the bag at the moment of pivoting to throw to first with a hard-sliding runner bearing down on him. He merely has to be reasonably close to it. Nowhere is it written down; yet, all accept and observe it.

So, too, a legal interpretation about some dubious Executive action in the “war on terror” need only be in the vicinity of what law and precedent say is valid for it to pass muster. The courts play a role similar to the umpires’ in ruling accordingly.

FISA Courts, for their part, accept the pivot foot being anywhere on the diamond. The difference is that all baseball fans know of the in-the-vicinity rule while citizens are kept in the dark about the large inventory of similar unwritten rules in the judicial domain insofar as “terrorism’’ is concerned. Savage seems oblivious of this reality – or else, does a good job of pretending so.

(FISA Courts, as the record attests, are something of a joke insofar as they agree to 99.9 percent of the Executive’s requests, often grant broad open-ended authority that extends the requested powers well beyond the particular case at hand – something they have no legal mandate to do, and usually don’t bother to write an explanatory opinion. This is pretty much what one would expect from judges 85 percent of whom are hard-core Republicans hand-picked by Chief Justice John Roberts who characteristically doesn’t hesitate to let his personal policy predilections dictate his judicial behavior.)

Lacking Context

Context is the big missing ingredient in Savage’s 700-plus-page opus. Fear and dread permeated the government as it did the country. President Obama’s one fixed reference point from the day he entered office was to avoid another traumatic act of terrorism that likely would make him a one-term President. That reality warped perceptions down the line.

The mania for secrecy about everything – including official documents that contained the legal justifications for dubious acts – infected everyone. ”No more white papers” ordered White House Counsel Neil Eggleston – they might leak. In short, no paper trail.

This is not the mindset of a lawyer who believes that the justifications of the Obama legal team provided a “firm” legal basis for what they were doing. That supposedly “firm” legal basis, in several instances, resembles the legal basis for acquittal in the notorious Texas “affluenza” case.

Savage, in one of his rare digressions into the political realm, recounts how shaken Obama was by the failed attempt by the “underwear bomber” to blow up a plane during Christmas week of 2009. It motivated an emotionally convulsed President to double down on the draconian methods incorporated in now his “war on terror.” This overwrought response was a reflection of the times – and of the man.

The quietus since 9/11 rightly should have been taken as evidence that Al Qaeda and friends were incapable of mounting anything like that again. A botched effort by a rank amateur to bring down a civilian aircraft by setting his Fruit-of-the-Looms on fire hardly amounts to a threat to the country’s national integrity and well-being. Perhaps, a single tragic event – but nothing more. Yet, it spurred the campaign to “do what we must,” dragging the equally shaken and willing lawyers along with it.

There is a strange intermingling of edgy intensity and the casual in all this. Our leaders, at all levels, are supposedly in a sweat of anxiety about terror and instill that feeling in the populace. Yet, their approach in conducting the “Global War On Terror” often has been haphazard.

FBI Director James Comey told us on April 20 that the Bureau incurred a cost of $1.3 million in opening the infamous San Bernardino Apple I-phone. That was the fee charged by private consultants. Fourteen years into the GWOT and after the expenditure of close to a trillion dollars, the Intelligence agencies have to go to outsiders to find someone qualified to do a job that is daily fare for Apple software specialists.

So the FBI, our ultimate protector which relies overwhelmingly on technical tools to do its job, in effect resorts to the equivalent of renting a screwdriver from a high tech hardware store. Equally bizarre, the technical staff of this commercial enterprise sells its services worldwide. This stunning incongruity is shrugged off as just doing what’s necessary to keep the terrorists at bay.

Obama’s Legacy

The truth is more insidious. If the government authorities thought that the United States actually was endangered to the high degree they claim, this kind of slipshod organization wouldn’t be tolerated.

The GWOT, in this and many similar instances at home and abroad, shows itself to be a macabre game wherein the currency of success is money, power and status as much as it is keeping Americans safe.

Reviewing the voluminous record, it is hard to avoid the conclusion that, for all the prolix lawyerly discussion, the Obama people reached the same conclusions as did John Yoo and David Addington in the Bush administration: the President could do pretty much as he pleased.

The thousands of hours of process and deliberation were not just theatre; however, in terms of practical effect, they might as well have been. Indeed, the long-term consequences are likely to be more pernicious since all three branches of government now have persuaded themselves that there are ‘firm’ legal grounds for doing things that a generation ago would have been judged clearly illegal and/or unconstitutional by any disinterested court.

Obama legitimized and thereby institutionalized the illegalities of the “war on terror.” That is his legacy.

The discomforting truth is that the high-powered Obama lawyers, drawn from elite backgrounds, suffered from an emotional ailment – the exaggerated dread of Islamist terrorism – just as have their fellow citizens. Consequently, they were prepared to subordinate good sense and their oath to preserving American legal principles to giving a veneer of legitimacy to a slapdash series of ineffectual policies that have compromised our democracy while making us less safe than we were in 2002.

Those lawyers, unlike their untutored compatriots, should have known better – and had a professional obligation to maintain the critical edge of distinguishing between going through the motions of legal reasoning and acting with full probity.

Belief that the United States is in grave and imminent danger from serious terrorist attack is the cornerstone premise holding up the massive edifice of our Intelligence apparatus. To acknowledge that this rendering of reality is groundless is to undercut the pervasive view that extraordinary measures to protect the United States’ security are imperative.

As William Pitt warned us: “Necessity is the plea for every infringement of human liberty. It is the argument of tyrants; it is the creed of slaves.”