Friday, October 21, 2005

Subscriber Only TNR Article of the Day

Act Out
by Chip Pitts

"For years, it's been widely understood that the Republican majority rested on the union of two very different constituencies: social conservatives and big business. In the last two weeks, social conservatives have claimed headlines by voicing their displeasure with President Bush's nomination of Harriet Miers to the Supreme Court. Now the administration is facing a quieter revolt from big business, and over an unlikely issue: the Patriot Act.

Two weeks ago, leading business organizations including the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Association of Realtors, the Association of Corporate Counsel, and the Financial Services Roundtable all expressed strong reservations regarding the law. In a letter to Senate Judiciary Committee chairman Arlen Specter, they criticized the Act's notorious "library provision," which, despite its moniker, isn't limited to libraries. It allows the FBI to search any kind of business records and seize "any tangible thing" with only rubber-stamp approval from a secret foreign intelligence court. Renewal of the provision, which was slated to sunset at the end of this year, has already passed both the Senate and House; but, crucially, the Senate version would require investigators to produce evidence connecting the records sought to a person suspected of terrorism or espionage, whereas the House version would not. The Bush administration has said it prefers the House version. (In their note to Specter, business groups also criticized another provision of the Patriot Act that allows the use of administrative subpoenas or "national security letters" to demand records--without any court oversight at all. That provision, however, does not sunset and has therefore received scant review.)

It may be surprising to see business leaders lining up against an administration that has fought for so much of their agenda--from tax cuts to tort reform--and yet it isn't really surprising to see the business community sticking up for civil liberties. That's because, at a general level, the Patriot Act slows the machinery of the U.S. economy. Its requirements affect everything from buying a car to leasing a copier to opening a bank account, inconveniencing both businesses and consumers, and slowing productivity in the process. Business leaders have specific complaints about the Patriot Act as well. For one thing, they would prefer not to give up confidential information regarding customers, employees, and trade secrets, all of which are possibilities under the Act. For another, Patriot Act provisions trump any guarantees of privacy given to customers, meaning that the law could threaten the reputation of businesses that are forced to comply. Finally, in an era of globalization, many business leaders think it's important for the United States to set a positive example for the rest of the world by fostering a model business climate--one in which judicial independence is respected and government intrusion and bureaucratic red tape are kept to a minimum. Perhaps, then, it's no surprise that in a recent PricewaterhouseCoopers survey, financial service industry board members listed Patriot Act-compliance as their number-one concern--placing it above issues such as the housing bubble and off-shoring.

But why is this dissent from the business community emerging only now? After all, even before business leaders spoke out, the House and Senate had already approved separate versions of the renewed Patriot Act provisions; and a House-Senate conference is expected to finish reconciling differences between the two bills any day.

A key reason, according to Susan Hackett, general counsel of the American Association of Corporate Counsel, is that gag orders in the original Patriot Act slowed efforts to assemble information about the law's full economic impact by preventing individual businesses from revealing the details of subpoenas they had received under the law. But as the number of subpoenas grew and as federal courts questioned whether the gag orders violated the First and Fourth Amendments businesses began to step forward--and the law's burdensome impact became clear.

There were other factors, as well. Business leaders, perhaps hoping to avoid unnecessary conflict with an otherwise pro-business White House, may have been waiting to see whether civil liberties groups--more traditional opponents of the Bush administration--would carry water for them; now, with the bill soon to land on President Bush's desk, business leaders seem to have realized (perhaps too late) that they need to be part of this fight after all. Corporate executives may also have been expecting to exercise more influence behind the scenes than they were ultimately granted. "No one was really consulted before the House and Senate bills," Hackett says. And with Bush's popularity sinking, business leaders might have judged the political costs of publicly opposing the White House to be lower than they once were.

Whatever the reasons, the business community's stance is good news for those who think the Patriot Act is seriously flawed. Big business and President Bush have been allies for a long time, but big business is nothing if not practical. It knows what works for the bottom line and what doesn't. Even if its erstwhile friend in the White House has forgotten."