[Posted by WLS]

This correction published in the New York Times yesterday should cause the hair on the back of your neck to stand up — and not simply because the reporting of these “quotes” might have impacted the market.

Here’s what the correction says:

An article about the effect of the Wall Street crisis on Morgan Stanley and Goldman Sachs cited two sources who were said to have been briefed on a conversation in which John J. Mack, chief executive of Morgan Stanley, had told Vikram S. Pandit, Citigroup’s chief executive, that “we need a merger partner or we’re not going to make it.”

On Thursday, Morgan Stanley vigorously denied that Mr. Mack had made the comment, as did Citigroup, which had declined to comment on Wednesday. The Times’s two sources have since clarified their comments, saying that because they were not present during the discussions, they could not confirm that Mr. Mack had in fact made the statement. The Times should have asked Morgan Stanley for comment and should not have used the quotation without doing more to verify the sources’ version of events.

This correction immediately took my thoughts to this review by Jack Goldsmith of New York Times’ reporter Eric Lichtblau’s book “Bush Law: The Remaking of American Justice.”

Lichtblau was the reporter who broke the story of the Terrorist Surveillance Program, and the story on the cooperation of the international bank consortium SWIFT in tracking terrorist financing through international banking transactions. His book recounts his reporting on both these subjects in detail, as well as his and James Risen’s struggle with the New York Times’ editors to get his blockbusters published on the front page of that paper.

Goldsmith’s is an extremely thoughtful article, and those interested in the implications of the New York Times‘s decisions to reveal classified intelligence programs on its front page should take time to read and consider Goldsmith’s thoughts. I only came across this article in the last few days — it was published in The New Republic back in August — but it’s very sobering in its analysis.

As a reminder, Goldsmith was the former head of DOJ’s Office of Legal Counsel — the DOJ office responsible for advising the Executive Branch on the legality of its operations. It was Goldsmith who had great difficulty with the legal analysis of his predecessor, John Yoo, with regard to detention of terror suspects at Gitmo, the use of enhanced interrogation techniques, and most significantly here, the legality of the Terrorist Surveillance Program as it was first designed and put into place.

It was Goldsmith who withdrew the OLC opinions as to the legality of these programs and then set about to rewrite the opinions in order to put the Executive Branch on a more solid legal foundation.

But Goldsmith has significant and severe criticism of the New York Times‘s reporters and editors with respect to their hubris in deciding to publish the details of classified intelligence programs on their front page. And he ridicules Lichtblau’s self-righteous and sanctimonious claims justifying the conduct of the New York Times and its reporters.

I want to highlight a few passages here:

It is often said that modern communications technologies–the Internet, anonymous and encrypted email messages, disposable cell phones, and the like–give terrorists an asymmetrical advantage. Yet the same technological advances that help terrorists … can also make it easier for the government to discover and preempt terrorist plots. Since September 11, the government has aggressively exploited its technological advantages.

These advantages work best, and often only, in secret. When terrorists learn how we monitor them, they adapt to prevent detection. Unfortunately, they have learned a lot in the last seven years. Beginning on December 16, 2005, every one of the [US intelligence] programs, and another one about which I knew nothing, was disclosed by the nation’s leading newspapers. On that date, The New York Times published a story by Eric Lichtblau and James Risen about what became known as the Terrorist Surveillance Program… [a] secret program of monitoring suspected terrorists’ international phone calls and e-mail messages without a warrant. Over the next eight months, Lichtblau and Risen followed up this blockbuster with scoop after scoop purporting to disclose many classified details about the government’s surveillance capabilities.

Prying these closely held secrets from the government and publishing them in the Times is an impressive journalistic feat… Lichtblau has now written a book that tells… how the Bush administration overreacted to September 11, swept up innocents, broke the law, and damaged American traditions. The most interesting aspect of the book is Lichtblau’s insider account of why the Times decided to publish his surveillance stories, and of how the paper views its role in reporting on secret government actions to protect national security. It is not a pretty story–not for the Bush administration, and not for the Times.

Goldsmith recounts the decisions as reflected in Lichtblau’s book:

Congress created two other mechanisms to replicate checks and balances out of public view. The president must report important surveillance activities to the congressional intelligence committees in a classified setting; and he must seek a warrant from a secret court before listening in on many communications by foreign agents, including suspected terrorists.

In the summer and fall of 2004, Lichtblau and Risen learned that the executive branch had been secretly skirting this system and wiretapping terrorism suspects on American soil without a warrant. The Times sat on the story through the presidential election, and, according to Lichtblau, killed it in December 2004. It did so, he says, because the White House insisted that the program was lawful, and that its disclosure would “do serious and perhaps irreparable harm to national security” by tipping off the terrorists to our capabilities. Lichtblau was unpersuaded by these arguments.

But the editor of the Times, Bill Keller, reacted differently. He would later claim not to have thought much about the program’s legality in the fall of 2004. But he worried a lot then about national security… On this basis Keller decided not to run the story. “It was a close call,” reports Lichtblau, but his editors felt “the concerns about the national security threat posed by public disclosure of the program held sway.”

The Times revived the story in the autumn of 2005, according to Lichtblau, because Risen, frustrated with the paper’s decision to kill his piece, had the “heretical idea” of disclosing the Terrorist Surveillance Program in his own forthcoming book about the CIA. Once the fear of being scooped by its own reporter persuaded the Times‘ editors to reconsider running the story, Lichtblau and Risen did new reporting that confirmed their suspicions that the White House had been breaking the law. “There were deep concerns within the administration that the president had authorized what amounted to an illegal usurpation of power,” Lichtblau concluded. “The image we’d been presented a year earlier in our meetings with the administration of a united front–with unflinching support for the program and its legality–was largely a facade. The administration, it seemed clear to me, had lied to us.” This lie, says Lichtblau, was the main reason the Times‘ editors reversed themselves. For Lichtblau, this episode vindicates the press’s role as a watchdog over government.

Goldsmith then goes into some detail on the fact that Lichtblau and the New York Times editors should have felt a very real threat of prosecution with respect to their decisions to publish.

But judging what the Times did is really a more complicated affair. For one thing, the government had taken steps to fix its legal problems before the Times got the story or published it. For another, the Times’ unauthorized disclosure of the Terrorist Surveillance Program and related details about American surveillance capabilities was itself probably a crime. Most news media publications of classified information do not implicate criminal liability because the pertinent laws … are not drafted clearly enough … to survive the scrutiny that the First Amendment… Yet there is a law that is perfectly clear, which is directed at what the Times did in its original Terrorist Surveillance Program story and in subsequent stories about the government’s surveillance capabilities.

That law is Section 798 of the U.S. Criminal Code. Section 798 ban[s] publication of … “communication intelligence,” a term defined to mean “all procedures and methods used in the interception of communications.” Section 798 says that “whoever knowingly and willfully … publishes … in any manner prejudicial to the safety or interest of the United States … any classified information … concerning the communication intelligence activities of the United States” shall be fined or imprisoned not more than ten years. This law is a “model of precise draftsmanship” that shows “concern for public speech” by limiting its prohibitions “to a narrow category of highly sensitive information,” noted Harold Edgar and Benno Schmidt in 1973, in their definitive study of Section 798. It was supported by the American Society of Newspaper Editors (including The New York Times) as a reasonable national security restriction on the press, and passed the House and Senate with little controversy.

Lichtblau does not mention Section 798 in his book, but he rejects the idea that journalists should be prosecuted for reporting classified information. His view is “modeled after the independent press corps envisioned by Justice Hugo Black in the Pentagon Papers case [in 1971], when he wrote that the rights of a free press were protected in the Constitution ‘so that it could bare the secrets of the government and inform the people.'” …The Supreme Court declined to enjoin The New York Times and The Washington Post from publishing the Defense Department’s classified internal history of the Vietnam War, because Congress had not authorized such an injunction and the First Amendment placed a high bar on prior restraints. But the Pentagon Papers case did not say that journalists are immune from post-publication punishment… [T]hree justices stated that the First Amendment was not a bar to prosecutions, and at least two others implied as much. Justice White, joined by Justice Stewart, said he would have “no difficulty in sustaining convictions” of the newspapers under Section 798 even though a prior restraint was unwarranted.

To say that the Times and Lichtblau committed a crime is not to say that they will be prosecuted for it. The government has never prosecuted a member of the press for revealing classified information… because a successful prosecution would invariably reveal yet more classified information. Just as important, it would be very controversial for the government to use its most powerful coercive tools against press critics who disclosed controversial and possibly illegal government action… This is why an administration angered by leaks and not normally shy about pushing legal prerogative has been unwilling to pull the trigger on prosecuting the Times.

The next passage made me laugh:

Lichtblau does not explain how the publication of “vital” communications intelligence in the name of democracy can be squared with the democracy’s judgment that this sort of publication is wrong and should be punished. Perhaps he would say he was engaging in civil disobedience–that what the government was doing was so bad, and its disclosure so important, that he is willing to suffer personal sanctions to vindicate higher principle. But I doubt it. Throughout his book, Lichtblau displays a surprisingly thin-skinned and even self-pitying attitude toward criticism of his work, which he likens to the “Swift boating” of John Kerry. He also complains that Justice Department investigations of his and Risen’s sources have made his job harder and less rewarding.

I didn’t know it was the government’s responsibility to assist make his job easier and more rewarding. What did he want? To have the NSA run off copies of the surveillance program for him to look through? Give him transcripts of the intercepts?

But it is this next subject that strikes at the heart of the issue for me:

Saying the editors are a check on what the Times publishes is like saying we can trust the president to curb the excesses of his subordinates. It affords little comfort, especially since the public has no access to the process of the editors’ decision-making. One wants to know precisely how the editors weigh the public interest in knowing against national security harm. Even if the editors possess the expertise to identify and to assess these trade-offs (something that is doubtful), is their judgment distorted by the pursuit of fame and profit? The separation of powers, the institution of elections, and the free press help to ensure that government’s self-directed motives do not get out of hand. But there are few checks on the press itself. The most powerful constraint on the press is the marketplace of ideas–but this marketplace is designed to sort out truth, and it is no corrective when journalists irresponsibly disclose sensitive national security information. The absence of a real sanction from the government should make us worry that the press’s judgments about whether publication unduly harms the national interest are skewed.

The press pillories the Administration for skating around checks in the system on its decision-making on matters of civil liberties, while at the same time the press’s decision-making on matters of national security has no equivalent firewall against abuses.

Which leads you to the question — who appointed those guys the guardians of the security of my friends and family? Eric Lichtblau? Bill Keller? Arthur Sulzberger? What arrogance. But at least with respect to the Terrorist Surveillance Program they had the prior illegality to use as a figleaf to hide behind. Not so with respect to their exposure of the SWIFT program:

These worries are borne out less by the original Terrorist Surveillance Program story than by the flood of Lichtblau-Risen stories that followed. In June 2006, for example, Lichtblau and Risen reported on a secret government program involving the Society for Worldwide Interbank Financial Telecommunication (SWIFT)… Soon after September 11, it began providing the United States with financial information related to possible terrorist-related transfers in response to U.S. administrative subpoenas. This information … helps the government to disrupt terrorists’ financial transfers and thus makes it harder for them to kill. And it helps to identify terrorists and their sympathizers and thus makes them easier to stop.

When the Times got the SWIFT story, the government again begged it not to publish, and the Times again went ahead. Lichtblau’s explanations are revealing. He says the SWIFT program rested on a “largely untested legal theory” and was “arguably extralegal.” Lichtblau is not a lawyer, and beyond quoting such conclusory judgments from anonymous sources, he does not tell us how or why he reached these conclusions. But his insinuations that the government was acting illegally are simply wrong. Of course the government was trying new and more aggressive tactics after September 11, but the SWIFT program violated no American privacy laws and is a straightforward exercise of the power that Congress gave the president in the International Emergency Economic Powers Act. These facts eventually led the Times‘ public editor, Byron Calame, to criticize the paper for running the story. Lichtblau does not mention his criticism.

Lichtblau also tries to downplay the significance of the SWIFT program for national security. He quotes from a 9/11 Commission staff report that says that “completely choking off the money to al Qaeda and affiliated terrorist groups has been essentially impossible.” That is true, but the report goes on to say that the goal is not to completely cut off the money, but rather to make it harder to obtain. Lichtblau also neglects to tell his readers that the otherwise critical Final Report on the 9/11 Commission Recommendations, issued six months before his SWIFT story ran, gave the government its only A grade–an A-, to be exact–for “vigorous effort against terrorist financing…” Lichtblau finds “oblique at best” claims that his SWIFT disclosures harmed national security. “That the U.S. government was actively monitoring terrorist-financing was no secret,” he reasons. Perhaps not, but how it was doing so was a secret until disclosed. Lichtblau reports that the SWIFT program helped capture an Al Qaeda associate named Hambali, the architect of the bombings in Bali in 2002. It is much less likely to work now that the Times has told everyone about it.

So the Times incorrectly evaluated both the legality of the SWIFT program and the impact on national security from its disclosure. Lichtblau implicitly responds to this criticism when he claims that the aim of the Times “was never to declare the program legal or illegal, effective or ineffective.” Its objective was instead to “lay out the facts of the program and let people decide for themselves what they thought of it.” And Lichtblau adds that the story was, “above all else, an interesting yarn about the administration’s extraordinary efforts since 9/11 to stop another attack,” as if its aesthetic merit were relevant to the decision to publish. This is hardly the careful exercise of judgment about whether public accountability warrants a compromise of national security that Lichtblau and the Times promised us. It is, instead, the casual renunciation of such judgment.

THAT is the section that got my blood boiling. The SWIFT program was incredibly important. And its disclosure was arguably more harmful than the disclosure of the Terrorist Surveillance Program because of the damage it did to our relationships with foreign intelligence agencies as well as national and international corporations who were enlisted to provide technological assistance:

Lichtblau and his colleagues did not just report on the fact that the United States was aggressively tracking terrorists. They disclosed, much more damagingly, many operational details about how it did so. They reported not only the details of the SWIFT program, but also on data mining and pattern analysis of telephone and e-mail information, the government’s listening in on purely international communications that “transit” through the United States, the close cooperation of private telecommunications firms in these efforts, and government analysis of ATM transactions, credit card purchases, wire payments, and more… Their disclosure helped terrorists to avoid forms of communication that we were good at monitoring, and instead to switch to channels of communication in which we lack comparative advantage.

The Times also reported on private industry’s secret cooperation with the government. Such cooperation is an essential element of our national surveillance capability, and its disclosure has dimmed the willingness of corporations to help. Lichtblau notes, for example, that his SWIFT program revelations diminished the banking consortium’s cooperation. And it is well known that foreign intelligence services are ever more wary about sharing information and engaging in joint intelligence operations–including, presumably, surveillance operations–because American secrets tend to end up on the front pages of American newspapers.

It’s worth noting again that the SWIFT program was not illegal, it relied on the issuance of subpoenas authorized by statute, it entangled private industry and foreign governments in the operation, and it was extraordinarily successful in tracking terrorists and their financing.

And Lichtblau’s justification for publishing it in violation of a lawful and valid criminal statute is “to let everyone decide for themselves what they thought of it.”

I wonder if he would have done the same thing had the invasion plans for D-Day fallen into his lap at the New York Times.

Goldsmith sums up the issue quite well here:

Last year Michael McConnell, the national intelligence director, declared that public discussion of American surveillance capabilities “means that some Americans are going to die, because we do this mission unknown to the bad guys because they’re using a process that we can exploit and the more we talk about it, the more they will go with an alternative means.”

Lichtblau … calls McConnell’s claim a “startling assertion” that represents a “philosophy antithetical not only to a free press, but to a free country.” McConnell was not attacking a free press; he was merely describing the consequences of the exercise of its freedom. It is not startling, nor is it antithetical to a free press and a free country, nor is it demagoguery, to acknowledge that public discussion of the government’s once-secret surveillance techniques in a war that depends on stopping terrorists before they strike will help the bad guys and will likely result in more people dying than would otherwise be the case. It is simply to state the realities of terrorism and counter-terrorism. Lichtblau’s failure to acknowledge these realities, and his suggestion that doing so is somehow un-American, reflects a flawed understanding of both the First Amendment and national security, and exacerbates concerns that the press cannot be trusted to get the balance right.

Heck, the editors at the New York Times can’t get right whether their source(s) did or did not hear a Wall Street Executive say his firm was going under. Yet they take it upon their judgment to decide how the government can best defend its citizens in a shooting war.

— WLS