A Tipping Point in the Privacy vs. Security Battle

Amid concerns that the NSA overstepped its bounds, Congress eyes surveillance limits.

The events surrounding 9/11 cleared the way for the government to play down personal freedoms and led to Uncle Sam’s secretive and massive effort to collect, review and store previously private data. Americans, and some allies abroad, say it’s gone too far and they’ve have had enough of the National Security Agency’s clandestine activities.

How to Shut Out Online Snoopers

"The American people rely on the intelligence community to provide forthright and complete information so that Congress and the courts can properly conduct oversight. I remain concerned that we are still not getting straightforward answers from the NSA," said Senate Judiciary Committee Chairman Patrick Leahy (D-VT).

Pressure from two areas will drive the shift toward restoring Americans’ privacy: First, a political outcry from Europe and elsewhere over the extent of the U.S.’s data sweeping activities, revealed by leaks from ex-government contractor Edward Snowden, the whistle-blower who now hides from U.S. authorities in Russia.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Second, a dramatic reversal of public opinion in America over just a few months.

Snowden’s most recent revelation, made public in the Washington Post, proved that the NSA overstepped its authority thousands of times since President Obama took over the White House. Obama’s campaign pledge in 2007 to protect the privacy of Americans was trampled on as the NSA even defied court orders and delved into the personal lives of innocent Americans, though the White House claimed the missteps were “unintentional.”

After many years of the feds having carte blanche on security issues, the growing pushback will force Congress to act, and sooner, not later. Expect some changes within the next year. The rest will come by mid-2015, when key provisions of the Patriot Act face renewal.

Look for Leahy to convene more hearings this fall. The liberal lawmaker’s allies in this fight include Sen. Rand Paul, R-Ky., a libertarian who has drafted a far-reaching bill to curb domestic data gathering and to protect privacy.

It will be a gradual effort. First up, expect to see added transparency on snooping from the NSA and other agencies. Uncle Sam will reveal more about what is collected in an effort to get Americans to take caution and act judiciously to protect their privacy. Look for new guidelines for storing the data, too. Most records will be erased quickly — in somewhere around three months, maybe even sooner — instead of being archived for six months or more, as they are now.

In addition, companies will have new freedom to disclose that they gave citizens’ private information to the government under subpoena. There will eventually be limits on using data and rules for challenging its use in court. A privacy advocate will be charged with challenging unsavory cases that target Americans without probable case. The jurisdiction will fall to the secret U. S. Foreign Intelligence Surveillance Court, but that’s better than no avenue for appeal.

Obama says publicly that the federal government is taking all necessary steps to ensure that no illicit spying is done on Americans, but privately he knows he cannot make that guarantee anymore.

Even some lawmakers who are big on security started feeling misled by the scope of the snooping after it became clear that Director of National Intelligence James Clapper lied to Congress in April when asked if the government collects data on average Americans. With lawmakers getting an earful about the NSA’s antics from voters back home this month, many will be quick to hop on the privacy bandwagon as congressional elections approach next year.

But the pushback against the government isn’t all about freedom. There are economic reasons for Washington to take some speedy steps, too. More foreign firms will stop using cloud-based storage hosted in the U.S. if they think company secrets and data are being vacuumed up by Washington. Some companies, wary of what Uncle Sam can pull from the cloud, are already out. In the next three years, U.S. firms could lose $35 billion of digital storage business, about 20% of foreign virtual storage expenditures. The losses will mushroom if there are concerns that Congress and the White House aren’t moving fast enough.

And more countries, even allies, will restrict operations of U.S. companies, including such digital powerhouses as Google, Microsoft, Apple and Amazon. Some will also threaten to wall off parts of the Internet through government control, creating what some call the “balkanization” of cyberspace.

Security concerns won’t go away, nor will government surveillance efforts. But Americans, and the world at large, will have a better handle on them when privacy is no longer an afterthought.

John Miley contributed to this report.

Kenneth R. Bazinet
Associate Editor, The Kiplinger Letter