A modest proposal

Some civil liberties types are whining about this issue:

It isn’t illegal to withdraw money from the bank, nor to compensate someone in recognition of past harms, nor to be the victim of a blackmail scheme. So why should it be a crime to hide those actions from the U.S. government? The alarming aspect of this case is the fact that an American is ultimately being prosecuted for the crime of evading federal government surveillance.

That has implications for all of us.

By way of background, financial institutions are required to report all transactions of $10,000 or more to the federal government. This is meant to make it harder to commit racketeering, tax fraud, drug crimes, and other serious offenses. Hastert began paying off the person he allegedly wronged years before by withdrawing large amounts of cash. But once he realized that this was generating activity reports, he allegedly started making more withdrawals, each one less than $10,000, to avoid drawing attention to the fact that he was paying someone for his silence.

Again, the payments weren’t illegal. But as it turns out, structuring financial transactions “to evade currency transaction reporting requirements” is a violation of federal law.

To see why that is unjust, it helps to set aside Hastert’s case and consider a more sympathetic figure. Imagine that a documentary filmmaker like Laura Poitras, whose films are critical of government surveillance, is buying a used video camera for $12,000. Vaguely knowing that a report to the federal government is generated for withdrawals of $10,000 or more, she thinks to herself, “What with my films criticizing NSA surveillance, I don’t want to invite any extra scrutiny””out of an abundance of caution, or maybe even paranoia, I’m gonna take out $9,000 today and $3,000 tomorrow. The last thing I need is to give someone a pretext to hassle me.”*

That would be illegal, even though in this hypothetical she has committed no crime and is motivated, like many people, by a simple aversion to being monitored.

I don’t much like the $10,000 reporting requirement: as I see it, behavior that lots of people engage in every day for perfectly legal reasons shouldn’t trigger surveillance. And it is certainly perverse to set a threshold for government scrutiny, only to make it a criminal offense to purposely avoid triggering that threshold.

Au contraire, the government needs to do much more of this.  For instance, we know that speeding laws are an excellent way to stop illegal activity near the Mexican border. Cops can pull over suspicious looking cars, and check for evidence of drug smuggling, or illegal aliens.

There’s just one problem.  Many smugglers will “structure” their speed to avoid detection by the police.  No red-blooded Texan is going to drive 55 mph on a highway. Remember that the goal of speed limit laws it to allow the police to pull over anyone they wish to.  But what if someone evades the intent of these laws by driving 54 mph?

I suggest allowing police to pull over anyone who seems to be obeying the law for suspicious reasons.  For instance, it should be a crime to structure your speed at just under the speed limit in an area where people traditionally drive much faster than the speed limit.

Some civil libertarians will inevitably complain that you’d then be breaking the law whether you speed or not.  That’s right, but how else are we going to catch the bad guys?

PS.  Thank God for the New York Times.  They have reported that presidential candidate Marco Rubio has been pulled over 4 times in the past 18 years for traffic violations, including not coming to a complete stop at a stop sign.  And to think that he was being seriously considered as a contender for the White House.

Sarcasm aside, this does raise a serious issue.  I’m very concerned about drivers who come to a total, complete, unequivocal stop at stop signs.  We all know that no normal person actually comes to complete stops at stop signs unless they are terrified of being ticketed by the police.  But why would they be so frightened of the police?  What do they have to hide? Which leads me to a second modest proposal . . .



44 Responses to “A modest proposal”

  1. Gravatar of D.O. D.O.
    7. June 2015 at 15:06

    Your joke is not that funny… Withdrawing more than $10,000 is perfectly legal (unlike driving more than the speed limit), it just gets you reported. That said, a really modest proposal (not Swiftean m.p.) would be to make evading $10,000 reporting legal if the purpose of the payments is in itself legal. Coming from another angle, Fed. Gov. may come up each month with a random cut off number for reporting requirements. And do it post factum so nobody can be sure that their transaction is not reported.

  2. Gravatar of Major_Freedom Major_Freedom
    7. June 2015 at 15:13

    The elite want to force a removal of cash from society not to catch terrorists or drug smugglers, those are smokescreens, but rather because they want to eventually bring about a micro chipped population, with money being stored on those chips. If you don’t do what they say, then they will just turn off your chip.

    This is the ultimate goal of the powers behind the central banks.

    Weak minded bloggers with a penchant for associating the meaning of their life with government power, love to be “sarcastic” about what makes them giddy on the inside.

    PS INB4 “tin foil”, “lizard”, “reptile”, lol

  3. Gravatar of Ray Lopez Ray Lopez
    7. June 2015 at 15:28

    Sumner’s good humored sarcasm. Or at least sarcasm that some of his reader’s will confuse due to Godwin’s Law.

    Dr. Sumner: what do you think of “Narrow Banking, 100% reserve banking, full-reserve banking, the Chicago Plan”? The diverse group of Cochraine, Minsky, Krugman, Wolf and your fellow Bostonian Kotlikoff of Boston University in his book ‘Jimmy Stewart is Dead’ all endorse narrow banking. Cochraine in his paper feels technology has made the liquidity arguments behind fractional-reserve banking moot. And NGDPLT might be made more effective with narrow banking, since arguably it could involve disintermediation of the banks. Not to mention fiscal stimulus can be made easier with point-to-point ‘helicopter drops’. A future blog on this topic is kindly requested. And narrow banking really would ‘catch the bad guys’ more easily.

    PS–I launder money, legally. I report everything to Treasury and buy real estate with the money overseas, and it then becomes untraceable. Lots of Mexican drugs gangs (which I have no part of) also do the same thing at the Tex-Mex border, and lawyers there service them, all perfectly legal.

  4. Gravatar of ssumner ssumner
    7. June 2015 at 16:22

    D.O. It’s illegal for a bank to facilitate a withdrawal of over $10,000 and not report it to the Feds. And now it’s illegal for the banks to not report it if is less than $10,000 but seems suspicious. So I don’t agree with your your comment, the analogy works.

    A better idea is to have the Feds stop paying attention to what Americans do with their own money, and start minding their own business.

    You said:

    “Your joke is not that funny”

    I’m sure you are right, since I have a lousy sense of humor. But at least it must of been funny enough to have been recognizable as a joke?

    Ray, Narrow banking is fine, but it has zero chance in Congress, where both Dems and the GOP would oppose it (because it hurts bankers.)

  5. Gravatar of Don Geddis Don Geddis
    7. June 2015 at 18:19

    @Ray Lopez: “some of his reader’s will confuse due to Godwin’s Law


    Also, you’re confused about being confused about Godwin’s Law. What are you, some kind of Nazi? No, even Hitler would have gotten that one right.

    (Oh … wait … never mind…)

  6. Gravatar of Don Geddis Don Geddis
    7. June 2015 at 18:22

    @Sumner: Read your intro phrase, then clicked over and read the link (before reading your post). And was thinking, “wait, this all sounds reasonable … why did he say it was whining?” Clicked back, befuddled about what your post would be. All the more effective, that way! (And I even got the title reference. But still didn’t clue in.)

  7. Gravatar of Don Geddis Don Geddis
    7. June 2015 at 18:26

    @Ray Lopez: P.S., you were probably thinking of the BDLPSWDKS Effect

  8. Gravatar of CA CA
    7. June 2015 at 20:35

    Geddis is a ninja.

  9. Gravatar of TallDave TallDave
    7. June 2015 at 22:04

    People rationalize stop signs, and should. On the other hand, I understand why people come to a complete stop — it’s easier than looking around for cops.

    I wonder if someday soon we will be arguing for the legalization of rationalization behaviors that can be programmed into self-driving cars, or if we’ll just shrug and let them stop.

  10. Gravatar of Major_Freedom Major_Freedom
    7. June 2015 at 22:19

    To be a ninja apparently requires a lack of originality.

  11. Gravatar of Vivian Darkbloom Vivian Darkbloom
    7. June 2015 at 22:38

    On the other hand, we’ve got very respectable economists arguing that eliminating paper currency in favor of electronic currency would help eliminate tax evasion and make monetary policy more effective. This would have very profound negative effects on privacy.


    Whadd’ya say about that, Scott?

  12. Gravatar of D.O. D.O.
    7. June 2015 at 23:11

    Well, everything that’s titled “A modest proposal” is automatically a giveaway. Anyways, of course, federales should just drop reporting requirements without at least a reasonable suspicion. But they are not going to…

  13. Gravatar of CMA CMA
    8. June 2015 at 00:00

    “Yes, the essence of the business cycle is monetary shocks and sticky prices.”

    How can you exclude the finsector if it a major contributor to monetary shocks?

  14. Gravatar of aretae aretae
    8. June 2015 at 04:19

    There’s a rather substantial claim that made by some alt-right folks that the entire drug war fits this model well. Once Miranda rights were invented ated by the Supremes in the 60’s, the police needed some method for harassing folks they wanted to harass…

  15. Gravatar of Luis Pedro Coelho Luis Pedro Coelho
    8. June 2015 at 04:35

    From the NYT article:

    “Things got more complicated in 2011 […] His lawyer, Alex Hanna, paid a $16 fee to delay the suspension and eventually it was dismissed.

    That was not the last time Mr. Rubio was ticketed. In 2012 he was caught failing to obey a stop sign, but the infraction was dismissed.”

    All the fines mentioned barely add up to a few hundred dollars (over a period of almost 20 years).

    This is beyond parody. It’s really good.

  16. Gravatar of ssumner ssumner
    8. June 2015 at 04:52

    Talldave, Good point.

    Vivian, Yes, and I’ve been very critical of those proposals.

    D.O. Good point about the title.

    CMA, Models often exclude the drug smuggling sector, which is probably an even bigger contributor to monetary shocks. The only time in my life when the financial sector had much impact on money demand was late 2008.

    aretae, And if they legalize drugs, the Feds will switch over to the war on terror, which (as George Orwell predicted in 1984) will last forever.

    Luis, It does say something about the NYT. I’m not sure I’d want a president who came to complete stops at stop signs. I doubt even Mitt Romney would do that.

  17. Gravatar of Ray Lopez Ray Lopez
    8. June 2015 at 05:06

    @Don Geddis – yes, I meant Poe’s law not Godwin’s.: “Poe’s law is an internet adage which states that, without a clear indicator of the author’s intent, parodies of extremism are indistinguishable from sincere…”

  18. Gravatar of Jose Romeu Robazzi Jose Romeu Robazzi
    8. June 2015 at 05:18

    I think there is no problem the bank store the information, and after that the police can ask for them under a court ruling. That would not prevent police work, and would perhaps preserve a little more citizen’s privacy.

    But what strikes me more about the financial institution obligation to report is that the cost of that surveillance is a bank’s cost, the government just imposed another form of taxation on society. The bank should actually get a tax rebate for being mandated to keep such records…

  19. Gravatar of collin collin
    8. June 2015 at 06:06

    Of course this is the worst example why current banking law is bad. Because Dennis Hashert acted so foolishly, it is incredible poetic justice he was outed this way. He is going plea out of jail anyway.

    The odd point, I am guessing banks like some of these laws as it saves them from dealing with such large bills and cash sums. (Now they can claim it is not their fault when they carry limited cash.) I do believe one of the primary reasons crime has fallen so much the last 25 years is our cashless society limits profitability. How many Breaking Bad subplots were about Hanks inability to use and protect his cash.

    Otherwise, the numerous speedking tickets for Rubio

  20. Gravatar of collin collin
    8. June 2015 at 07:50

    Otherwise, the speeding tickets for Rubio late night comedy material and may even endear him to the voters.

  21. Gravatar of Randomize Randomize
    8. June 2015 at 08:43

    4 tickets in the past 18 years? My God, why haven’t they locked him up!?

    But yeah, most people have that many before their 21st birthday. Way to troll us all, NYT.

  22. Gravatar of Liberal Roman Liberal Roman
    8. June 2015 at 08:46

    For once I have to agree with Major Freedom.

    We are all marching towards a surveillance state future. The sooner we accept this, the easier it will be for all of us. Privacy will really no longer exist. Some it will be voluntary, as social networks make it easier and easier to share every bit of our lives. (It’s amazing, South Park had an episode just a year or so ago about celebrities streaming their every thought to everyone. And now, with the Periscope & Meerkat app, that’s almost exactly what is happening)

    And some of it will be involuntary, but we will inevitably accept it. I almost feel like fighting it is futile. We are far, FAR past the slippery slope. We are slipping and sliding all the way down now.

  23. Gravatar of Blue Eyes Blue Eyes
    8. June 2015 at 09:53

    @collin similar to the gold bugs’ conundrum, I guess!

  24. Gravatar of Liberal Roman Liberal Roman
    8. June 2015 at 10:54

    Good article by Economist on America trying to essentially setup a one world government. I once found those the “One World Government conspiracy” claims ludicrous. But now I see it’s pretty much what we are headed to.


  25. Gravatar of Doug M Doug M
    8. June 2015 at 11:21

    Goodwin’s law?
    Bad money forces out the good…

    oh, that is Gresham’s law. I get confused as this is sometimes a monetary policy blog.

  26. Gravatar of ssumner ssumner
    8. June 2015 at 11:23

    Collin, I almost never watch TV, but decided to watch the first two episodes of Breaking Bad, because it got good reviews. What a waste of time.

    What Hastert did or didn’t do as a teacher has no bearing on this recent case.

    Liberal Roman, You said:

    “We are all marching towards a surveillance state future.”

    Unfortunately you are right. I really wish the high schools would stop having their students read 1984—it just makes them look naive. Surely the students must see the hypocrisy.

    I agree with that article by The Economist.

  27. Gravatar of ThomasH ThomasH
    8. June 2015 at 16:56

    The problem here is common to much of Federal criminal law, the government not having to prove criminal intent.

  28. Gravatar of Benny Lava Benny Lava
    8. June 2015 at 17:42

    Kind of a dumb article. Who would buy a video camera with cash? Can you even pay cash for one? Dumb nonsense example.

    “A better idea is to have the Feds stop paying attention to what Americans do with their own money, and start minding their own business.”

    Money laundering for all!

  29. Gravatar of ssumner ssumner
    8. June 2015 at 17:50

    Thomas, Good point.

    Benny, You said:

    “Who would buy a video camera with cash?”

    The article said a used camera. But a better example is someone is blackmailing you because of an extramarital affair, or something else that is embarrassing but perfectly legal.

    You said:

    “Money laundering for all!”

    Instead of worrying about drug dealers how about legalizing drugs?

  30. Gravatar of Mike Sax Mike Sax
    8. June 2015 at 18:05

    I don’t agree with much of this but I will grant the Atlantic that it’s hard to think of a less sympathetic figure than Dennis Hastert.

    He led the Puritans with Pitchforks brigade in the 90s to impeach Clinton for: ‘hiding a legal act’ from a partisan Congress intent on a witch hunt.

    Some might call it poetic justice that he kind of goes down for the same thing as Clinton-to be sure what he did was considerably worse. At least Lewinsky was of age.

  31. Gravatar of ssumner ssumner
    8. June 2015 at 18:14

    Mike, NBC reported that Bill Clinton raped a women. But then you wouldn’t have heard of that accusation, would you?

  32. Gravatar of Mike Sax Mike Sax
    8. June 2015 at 18:41

    I heard about that accusation-I remember the conservative radio talk show host Howie Carr,you might know him being from Massachusetts-loved that accusation.

    That’s just it though, it’s just another-unproven-accusation-and the impeachment wasn’t over this unproven accusation but not divulging his affair with Lewinsky. It is that which I’m comparing to Hastert’s situation.

    My point is that I’d find all these ‘whining libertarians’ more compelling here if they weren’t all for Clinton’s impeachment in the 90s.

  33. Gravatar of ssumner ssumner
    8. June 2015 at 18:51

    Mike, I don’t know any libertarians who favored Clinton’s impeachment, I certainly didn’t. But you seem awfully anxious to lynch Hastert based on “unproven allegations”. Why the double standard?

  34. Gravatar of Mike Sax Mike Sax
    8. June 2015 at 19:04

    My only point is that it’s kind of ironic that he of all people is in this position now and from a poetic justice standpoint I find it hard to feel sorry for him.

    I don’t know that I’m anxious to see him lynched but I’m certainly not interested in defending him.

  35. Gravatar of Mike Sax Mike Sax
    8. June 2015 at 19:11

    My point about libertarians supporting impeachment is simply because most libertarians are in the GOP and the GOP led this deeply anti civil libertarian campaign in the 90s and those folks didn’t have a problem with it or at least it didn’t stop them from voting GOP.

  36. Gravatar of Benny Lava Benny Lava
    8. June 2015 at 20:13

    Despite the Breaking Bad reference not all money launderers are drug dealers.

  37. Gravatar of Benny Lava Benny Lava
    8. June 2015 at 20:16

    Fun fact: anti money laundering works the opposite direction too. Not just big cash withdrawals but deposits. So basically every stripper in America is on an FBI list for money laundering alerts. **the more you know**

  38. Gravatar of ssumner ssumner
    9. June 2015 at 04:42

    Mike, So I presume you believe that impeachment of Clinton also would have been “poetic justice?” Didn’t he sign the sexual harassment law?

    You said:

    “My point about libertarians supporting impeachment is simply because most libertarians are in the GOP”

    I see that your grasp of logic hasn’t improved over the years.

    Benny, I have no objection to an investigation if they have reasonable grounds for suspicion. That was not true in the Hastert case.

  39. Gravatar of Gary Cunningham Gary Cunningham
    9. June 2015 at 04:50

    How to evade the cash withdrawal problem. Don’t deposit cash, currency, money, or any type of like-kind of exchange medium in the first place. Stay out of banks. Instead, conduct all of your transactions through barter and avoid/evade currencies entirely.

  40. Gravatar of Jeff Jeff
    9. June 2015 at 11:09

    @Liberal Roman: David Brin has been talking about this for years. He says that with ongoing miniaturization, it is inevitable that privacy is a thing of the past. The best we can do is make sure that the government and its agents are just as exposed as the rest of us are.

    @Scott: I style myself a libertarian, and I think Clinton should have been impeached. We put people in jail for perjury all the time, so how can we tolerate a chief executive who lies under oath? I don’t care what he did with Monica, but lying under oath is a serious offense. How can we prosecute anyone for perjury when the President himself is a known perjurer? He could have simply refused to answer questions about his relationship with Ms Lewinsky and he would have weathered the storm just as easily as he ended up doing. He didn’t have to perjure himself.

  41. Gravatar of Dan W. Dan W.
    10. June 2015 at 04:19

    I agree with Jeff concerning Clinton’s behavior deserving impeachment. Clinton thought it necessary to hide what he had done. This suggests that he would have been susceptible to blackmail. For this reason alone impeachment was necessary. If Clinton had told the truth about Lewinsky then the political Left could have said impeachment was “just about sex”. But Clinton lied and as such impeachment was about a matter far greater than sex. That Clinton was sanctioned for lying under oath proves this point.

  42. Gravatar of ssumner ssumner
    10. June 2015 at 07:28

    Gary, I don’t think that’s a satisfactory response.

    Jeff, Because of our absurd overregulation it’s very hard to go through life without violating the law. Most Presidents violated at least some laws. Obama’s Treasury secretary was a known tax evader.

    Sorry, but lying about sex is not very high on my list of priorities, especially when living in a country where both parties are basically totally insane when it comes to issues relating to sex, gender, etc. (What the Dems tried to do to Judge Thomas is no different.)

  43. Gravatar of Dan W. Dan W.
    10. June 2015 at 10:49


    It was not just that Clinton lied about sex. Several factors make his situation far different than that of Thomas.

    (1) There was evidence of Clinton’s sex. If there had been evidence of Thomas and the harassment claim against him I am near certain he would not have received the necessary votes (as it was he confirmed by a margin of 3 votes – VP Quayle would have broken a tie in favor of Thomas)

    (2) Clinton lied under investigation for an actual crime. You just don’t do that. Any common American would be prosecuted for doing this. The President should be held to the same standard.

    (3) Clinton actions made him susceptible to blackmail while he was serving in high office. For there was proof of what he did and what he had done was at a minimum morally egregious. If Lewinsky had turned on him and accused him of harassment it would have been a literal crime and consistent with other claims of harassment. With Thomas there was no room for blackmail as there was no evidence he had done wrong and there was no pattern of harassment.

    The issue of blackmail is relevant for Hastert. If he was willing to pay millions in hush money what favors might he have been coerced to perform as Speaker? Now saying this, I do not support the current criminal prosecution of Hastert. But there should be a review of his time in congress.

  44. Gravatar of ssumner ssumner
    11. June 2015 at 12:44

    Dan, You talk to any liberal and they’ll agree that the two cases are totally different. Except they’ll have 5 bullet points on why the Thomas case was far worse.

    Me, I don’t see much difference.

    You are on stronger ground with Hastert. I kind of doubt it actually affected his voting, but it’s a valid point.

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