Priorities For The Next Mayor Of New York

Let's get back to why this blog is called Manhattan Contrarian.  The intellectual orthodoxy around here is really completely preposterous.  A couple of weeks ago I covered a forum for the mayoral candidates where the chosen topic of the sponsors was "environmental sustainability.," and where the candidates competed by one-upping each other for the most ridiculous ways to undermine the economy of our city.  Now the Association of the Bar of the City of New York, aka the City Bar, aka the club of the great and the good, has scheduled a mayoral forum for June 6 and, in advance of that, put out an 81 page report of recommended policies for the new mayor.  We'll review that in a minute.

But first, recall that I have had a few things to say already about priorities for the new mayor.  Far and away the number one priority must be dealing with the cost of pensions and other benefits for city workers.  That cost is not just out of control, but set to explode over the next several years, to increase by far more than any tax increases could hope to cover, and to crowd out all other spending priorities.​  For example here, in a post titled "The Mayoral Candidates Are In For A Rude Surprise" I predicted that "there is a very nasty surprise coming down the road for whoever is the next mayor, in the form of vastly increased pension contributions."  In another post titled "State And Local Government Financial Data Are Also A Problem" I did some calculations of the magnitude of the problem.

With that ​in mind, let's consider the City Bar report, available by following a link here.  First, because I know you're dying to know -- Do they even mention the problem of city worker pensions and benefits?  No.  Please, such issues are far beneath the great personnages of the City Bar.  Well, how about the fact that essentially all city workers are unionized and are working with long-expired contracts, refusing to deal with current Mayor Bloomberg, pouring money into the campaigns of the contenders and plotting to cut a deal with a new guy they have just put in office?  No, they don't even mention that either.

So what do they mention?  I'm not saying that I'm against every single one of their many dozens of proposals, but still, it is not an exaggeration to say that this is a complete left wing wish list, mostly not just stupid but also ridiculous.  Many of the proposals call for the expenditure of additional money without the slightest recognition that the money is already spent, let alone that somebody needs to do some prioritization here.​

Let's start with topic II, "Infrastructure, The Environment, And Emergency Preparedness."  You are thinking, they must be advocating for better water and sewers?  Puh-lease.  Topic "A" under Infrastructure is "Continue to Pursue an Ambitious Environmental Agenda," and has five sub-topics, every one of which is about committing the City government to fight the global warming dragon.  ​Continue to Advocate for Municipal, National and Global Action on Climate Change . . . Encourage and Empower New York City Residents and Commuters to Reduce their Carbon Footprint . . . .  Support Energy Efficiency and Renewable Energy . . . . etc., etc. 

How about topic III, Public Safety and Civil Liberties.  Well, the number one issue there is "Continue to Champion Gun Control Measures."  Among the pooh-bahs of the City Bar, the term "civil liberties" actually means the suppression of our Federal constitutional rights.  The pooh-bahs are also completely impervious to evidence that gun control does not work. 

Of course there is a long section on "Access to Justice," otherwise known as spending more money on lawyers, although the crass subject of money is not actually mentioned.  Instead we use soft euphemisms like "Support Initiatives to Decrease the Number of Unrepresented Litigants in Civil Cases."​  If I might suggest a response of a mayoral candidate to a question on this subject, it would be, "Hey, City Bar, that's your job."

Anyway, even as the people who ought to be our civic leaders are completely lost, Mike Bloomberg, for all his faults, has it right on this one.  Presenting his budget last week, Bloomberg warned that "The next mayor has to face the fact that our expenses keep going up . . . ."​  The other source that has it right is the New York Post.  Their lead editorial today is titled "Mayoral Math" and has some of the grim pension numbers.  Try this:

In 2002, for instance, the city shelled out just 34 cents on benefits for every buck it spent on salaries. A decade later, it was laying out 72 cents on the dollar, more than double. By next year, the figure is projected to balloon to 78 cents. At the fire and police departments, the cost of pension and benefits has already outstripped salaries.

An attached chart shows that we are already spending 116 cents on pension and benefits for every dollar spent on active firemen; for police the figure is 104 cents; for sanitation 88 cents; and so forth.  And all those percentages are set to jump to far higher levels based on formulas long agreed to and slowly doing their inevitable destruction through the system.​

I'd say I'm embarrassed by my colleagues at the City Bar, but they are not really my colleagues.  I have long refused to join that organization.  Very few of the big firm partners have followed my lead on that.​

Medical Insurance Is About Asset Protection, Not Health

Before I had this blog I used to talk (my wife would say "pontificate") about my theories to anyone who would listen.  In the health insurance debate leading up to Obamacare a few years ago, one of the points I would make endlessly was that "medical insurance is about asset protection, not health."  Of course, like my famous prediction in the 80s that Communism would shortly collapse, there is no written record of my saying this.  But I do have many witnesses.

Anyway, additional results from a major randomized study out of Oregon are just in, and to summarize the results in one short phrase:  medical insurance is about asset protection, not health.​

Whether medical insurance is about asset protection versus health is a big deal.  ​The argument justifying massive government intervention in health insurance is almost entirely about alleged improvement in health outcomes, as in "By refusing to allow government to provide health insurance for all, you are causing people to die!!!!!!!"  That argument goes away if the health outcomes for the insured and uninsured are basically the same.  A few people (most notably the execrable now Senator from Massachusetts Elizabeth Warren) have made the different argument that government has an interest in providing health insurance even if it is not about health, because lack of health insurance was causing millions of "medical bankruptcies."  But I never understood why that was a good argument for universal medical insurance -- if a person has substantial assets, such as large equity in a house, and chooses not to buy medical insurance, why exactly shouldn't he have to contribute that value to his own medical care before the taxpayers step in?  If you have substantial assets, by definition you can afford insurance to protect the assets.  If you are uninsurable, use your brain and don't keep major assets in your own name.

When I made my point about health insurance a few years ago, the main evidence cited against me was a large study from the Institute of Medicine in 2002 called "Care Without Coverage."   That study purported to show that lack of health insurance led to 18,000 additional deaths per year among the uninsured population.  When I got the Institute of Medicine study, it looked like so much hocus pocus.  There was no randomized trial, but rather a meta-analysis of some hundred or more studies in the medical literature.  There is extensive recognition in the report of numerous confounding factors that I would say make it impossible to come up with any number like the supposed 18,000 additional deaths from any study of this sort.  For example, the insured tend to be wealthier and more educated than the uninsured, and to smoke less.  How to weigh such factors in a study of this type is not a matter of statistics, but rather entirely a judgment call, here made by people who were clear advocates of universal health insurance.  But none of that slowed the authors down from making their highly politicized conclusion, and claiming the imprimatur of the IOM brand for their conclusions.  The report was not funded by the government, but rather by the Robert Wood Johnson Foundation.  That's the Johnsons of Johnson & Johnson -- do you think they might have any interest in increasing government spending on health care?

The run-up to Obamacare in 2009 then led to a frenzy of advocates putting out increasingly imaginary numbers as to the "additional deaths" among the uninsured.  A report from the Urban Institute in 2008 upped the IOM's number to 22,000 additional deaths per year.  If you look at their abstract, the result comes entirely from an assumption that the uninsured have a mortality rate 25% higher than the insured.  The basis for that?  They claim to rely on the IOM's previous hocus pocus.   In September 2009, as the Obamacare bill approached its end game in Congress, Harvard released a study purporting to estimate the additional annual deaths at 44,789.  Again, no randomized study.  This time it is based on an assumption of 40% increased risk of death among the uninsured.  Perhaps we should note that two of the three authors were co-founders of something called Physicians for a National Health Program.

Meanwhile, a guy named Richard Kronick, who had been a senior health policy advisor in the Clinton administration, and became chief of the division of Health Care Services at the Department of Family and Preventative Medicine at the University of California at San Diego, did his own careful review of the IOM's findings and published a paper in 2009.  His conclusion:  after adjusting for demographic and health factors (such as smoking), the uninsured were at no greater risk of dying earlier than people who had employer-sponsored group insurance.  I don't even remember coming across Kronick's study at the time.  As a former Clintonista, he clearly would not have minded coming to the opposite conclusion, and he should be congratulated for his honesty.  But he was drowned out by advocates making up their own numbers.​

Anyway, the world has been waiting for the results of an actual randomized controlled experiment.  (Actually, there was one previous randomized study, done by the Rand Corporation in the 70s.  It found no mortality benefit from health insurance according to Megan McArdle here.)  ​Recently Oregon has handed the world an opportunity for randomized study, in the form of a 2008 Medicaid expansion that was underfunded, so they allowed people into it by lottery.  Two years of data are now in, and the results of analysis of that data were published in the New England Journal of Medicine last week.  Conclusions:

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.

​Hmmm.  "No significant improvements in measured physical health outcomes."  And as to that business of "reduced financial strain" -- do we get to count financial strain on the government here?  How many trillions are we spending on Obamacare again?

​As I said, medical insurance is about asset protection, not health.

A Closer Look At "Austerity" In Britain

The forces that oppose absolutely any reduction of government spending anywhere and at any time use the current situation in the U.K. as their Exhibit A.​  But when you look at the situation more closely, it's a classic example of the "austerity" scam.  By the "austerity" scam, I mean the confused use of a term combining spending cuts with tax increases as a device to claim that spending cuts do not work, when in fact the destructive force is the tax increases.

​In the 2010 election, the Tories promised an attack on problems labeled as "debt" and "deficit."  From the 2010 Conservative manifesto:

A Conservative government will act now on debt to get the economy moving. We will deal with the deficit more quickly than Labour, so that mortgage rates stay lower for longer with the Conservatives.

​To achieve those goals they proposed a number of reductions (or at least slowed increases) in spending (one year public sector pay freeze, raising the retirement age, reducing welfare dependency, etc.) and very little about taxes.  Three years later, economic growth remains sluggish, to say the least:  1.1% for 2011, 0.1% for 2012, and a big 0.3% for the first quarter of 2013.

Of course this has the advocates of maintaining all government spending (posing as enemies of "austerity") ecstatic.  ​For example, from Britain's left-wing Guardian newspaper, an article from January 2013 titled "Austerity plan is failing, IMF tells Osborne."  (George Osborne is the Chancellor of the Exchequer.).  Excerpt:

​The IMF has never been wildly enthusiastic about Osborne's tough austerity plan for the British economy and has been saying for at least a year that the Treasury should ease off if recovery falters. But up until now it has tended to avoid telling Osborne that his policy is failing.  No longer, it appears. "We said that if things look bad at the beginning of 2013 – which they do – then there should be a reassessment of fiscal policy", Blanchard said.

​Or, from the New Yorker magazine, an article entitled "It's Official:  Austerity Economics Doesn't Work."

Any decent economics textbook will tell you that, other things being equal, cutting government spending causes the economy’s overall output to fall, tax revenues to decrease, and spending on benefits to increase. Almost invariably, the end result is slower growth (or a recession) and high budget deficits. Osborne, relying on arguments about restoring the confidence of investors and businessmen that his forebears at the U.K. Treasury used during the early nineteen-thirties against Keynes, insisted (and continues to insist) otherwise, but he has been proven wrong.

That "any decent economics textbook" would undoubtedly be the Paul Samuelson opus, from the guy who made the most spectacularly wrong economic prediction of all time., namely that the demobilization from World War II and associated cuts in government spending would lead to economic disaster.

Well, do either these or the many other articles claiming vindication for opposition to "austerity" actually tell you what were the policies adopted by Britain during this 2010 - 2013 period?  No.  But Nicole Gelinas of the Manhattan Institute is just out with a long and detailed article in the current City Journal that goes into specifics as to what policies Britain has followed.​  So what were the actual policies?  Very simple:  after promising large spending cuts and few or no tax increases, what they actually did was immediately increase taxes; as to spending cuts, they may have slowed future increases, but overall spending has gone up and not down.

Start with the VAT:  ​"Just after Christmas 2010, the VAT rose from 17.5 percent to 20 percent."

And how about the income tax:  ​"In early 2010, Osborne waved through Brown’s earlier plan to boost income taxes by 25 percent for people earning more than £150,000 annually, for a top rate of 50 percent."   ​How did that big income tax increase do at raising revenue?

As Osborne acknowledged two years later, “the behavioural response has been larger than expected.” Supposed to raise £2.5 billion annually, the hike raised £1 billion or less—and once enough time passes, the government has concluded, “it’s quite possible” that the result “could be negative.”

​So, they did increase taxes, but did they also cut spending?

In his final budget document, in 2009, [former Labor] Prime Minister Brown had proposed to spend £646 billion for the fiscal year ending in 2011, up from £601 billion the previous year. In his first budget, Osborne lowered Brown’s £646 billion to £637 billion, and the government ended up spending even less than that: £629 billion. The deepest austerity that Britain had seen in a generation, then, was a 4.7 percent spending increase relative to the previous year. Yes, spending must keep pace with inflation if it’s going to buy the same quantity of goods and services. But the coalition’s 4.7 percent increase exceeded Britain’s 2011 inflation rate, which peaked at 4.5 percent.

​So in fact the big 2011 "austerity" budget actually represented a spending increase.  And Gelinas reports that the plan for the coming year calls for spending 672 billion pounds, yet another increase, and 43.1% of GDP.  Recall that Thatcher's great accomplishment was cutting government spending from 48% to 38% of GDP.

So when you read that "austerity" economics doesn't work, apply a very healthy dose of skepticism.  Find an example of a country that actually cut government spending meaningfully as a percent of GDP without major tax increases, and check the result.  Hint:  Latvia, Estonia.  ​

New York Courts Adopt New Pro Bono Disclosure Requirements

A number of years ago, New York imposed upon its lawyers, basically as a revenue-raising measure, a requirement to "register" every two years and, in connection with filing the form, pay a fee.​  Seemed pretty innocuous.  But what an opportunity for a little social engineering by the unaccountable!

A couple of days ago on May 1 we got an announcement from our Chief Judge, Jonathan Lippman, that the court system has now adopted a requirement that on the registration form each lawyer must disclose how much "voluntary unpaid pro bono services" he/she has performed and how much he/she has made in the way of "voluntary financial contributions . . . to organizations primarily or substantially engaged in the provision of legal services to the underserved and to the poor" during the two-year period prior to the registration.  At the same time, the courts amended Rule 6.1 of the Rules of Professional Responsibility to up the guideline for pro bono work from 20 hours per year to 50.

Don't worry though, people:  while disclosure is required, the actual work or contributions are "completely voluntary."  ​ From the report in Wednesday's New York Law Journal:

He [Chief Judge Lippman] added, "My every instinct is not to do mandatory pro bono. This is not a nose-under-the-tent kind of an approach."  But he said the mandatory reporting will provide court administrators with by far the clearest picture yet of the extent to which lawyers in New York are performing pro bono or giving money to pro bono providers.

The great and the good of course are of course unanimously behind this.  For example, this from ​New York City Bar President Carey Dunne:

"It presents a minimal burden on practicing lawyers," said Dunne, a partner at Davis Polk & Wardwell.

Or from Michael Grohman, head of the New York office of Duane Morris:​

"If you look at the balancing act of what we may be disclosing or divulging versus the ultimate increased benefit to so many who can't get this help by themselves, then the equities are strongly in favor of the underserved," he said.

The less well-heeled express a large measure of skepticism, viewing this as precisely the nose-in-the-tent on the way to mandatory pro bono.  For example, from W. Adam Mandelbaum in the NYLJ comments:​

Sure, it's voluntary, but the handwriting is on the wall. How many hours of pro bono does Mr. L do? It's always the guys with the guaranteed salaries and benefits that are willing to sacrifice every last drop of somebody else's blood who has to chase cases and pray for payment. How many hours of unintentional pro bono does a solo or small firm lawyer do a year?

But there is another aspect of this that I haven't seen anyone comment on, so let me.  So-called "pro bono" in New York has a long and ignominious history as the method by which lawyers unsatisfied with the grants made by the legislature to their preferred causes use the courts to circumvent the state constitution, with the goal of establishing "rights" to various handouts and giveaways that the legislature will not enact.  The game is particularly distasteful because the lawyers backing the cases "pro bono" are among the wealthiest of New York's citizens, yet they will not fund their causes with their own money, and instead seek through the courts to have the burden of their programs paid by far less wealthy average taxpayers.​

To take just one particularly notorious example, consider the long-running "homeless rights" litigation that began c. 1983 and may still be going on as far as I can tell.  Advocates sued the City for failure to provide homeless shelter on demand to anyone who asked.  The City (in a huge mistake by then Mayor Ed Koch) promptly settled, basically agreeing to provide the shelter.  And then the advocates have spent the past 30 years suing the City for failing to live up to its agreement.  Billions have been spent in complete circumvention of the legislative process for appropriating money and of the executive prerogative to manage the delivery of services.  The advocates found a sympathetic judge in the state court system and ran from there for decades.  Here is a report from the New York Times in 2002.  Excerpt:​

[The judge] has, for instance, ordered that the city make infant formula, bottle warmers and Pedialyte available to homeless families waiting for shelter assignments and told the city that it cannot interview families seeking shelter over a hot line but must meet with them in person. She has told the city that any women claiming domestic abuse should skip the normal fraud investigation, and she has forbidden the city to review homeless mothers for workfare eligibility while they await shelter.

​And this is just one case among many such.  For example, there are very similar decades-spanning "welfare rights" and "prisoner's rights" cases. 

I can say with confidence that I will not offend Chief Judge Lippman in the slightest by saying that he regards the work of these advocates as the highest calling of lawyers and that encouraging more such cases is exactly what he has in mind with his new pro bono ​rules.  The problem here is that there is a huge disagreement in the world between those who think that entitlement-based giveaways to the poor are helpful or harmful to the intended beneficiaries.  Is our Chief Judge using his powers to force people onto his side of this essentially political dispute?

Yesterday I submitted a letter to the editor of the Law Journal as follows:​

Chief Judge Lippman's recent amendment to the attorney registration rule, requiring disclosure of "voluntary pro bono services," raises a question of what is intended to count as "pro bono," or "for the good" of the poor.  The classic New York "pro bono" endeavor has very often been a counterproductive and destructive demand for government handouts and giveaways, all of which have manifestly failed to eliminate or reduce poverty, and serve mainly to deprive the poor of their dignity and independence.   I think particularly of the long-running and hugely expensive "welfare rights" and "homeless rights" cases.  These types of cases should more correctly be called "pro malo."  If we really seek to improve the lot of the poor, we should instead engage in efforts that would do some real good for them, like advocacy to reduce these poverty traps, reduce taxes and eliminate barriers to entrepreneurism throughout our economy.   Surely, such real pro bono activities must be what our Chief Judge is asking us to disclose.

They did not publish it this morning.  We'll see if it turns up on Monday.  I wouldn't count on it.​

​

At The Church Of Fallacy Economics, Burning The Heretics

I have refrained from commenting on it up to now, but there is something quite extraordinary going on in the world of economic policy, namely an incredible piling on against two economists who wrote a 2010 scholarly paper thought to support the view of "austerity" being a good thing.  The fallacy Keynesians are out in great force and viciousness.  It resembles nothing so much as the burning of heretics for daring to question the faith.

​​It started with economists Carmen Reinhart and Kenneth Rogoff, professors at Harvard, writing an article called Growth In A Time Of Debt in January 2010 for NBER.   In the article, the authors did a quantitative analysis of a large dataset, and concluded that at debt levels "above 90 percent" of GDP, "median growth rates fall by one percent, and average growth falls considerably more."   The consequences of this result for appropriate economic policy may not be obvious to the readers of this blog, but the explanation is not complicated.  In the world of fallacy Keynesianism, economic policy is divided into two alternatives, called "stimulus" and "austerity."  "Stimulus" means some combination of government spending increases and tax cuts, thus, debt increasing.  "Austerity" means some combination of government spending decreases and tax increases, thus debt decreasing (or, more likely, increasing a little more slowly).  So the Reinhart/Rogoff conclusion can be used to advocate that Keynesian "stimulus" policies don't work at least when debt has hit 90% of GDP.   More broadly, if you don't get your government spending under control before the debt his 90% of GDP, you will go into stagnation with no obvious way to get out.

You can understand how the advocates of endlessly increasing government spending would hate the Reinhart/Rogoff conclusion, let alone the fact that they come from big-name Harvard, where all the other economists worship at the Church of Keynes.  And the hatred was aggravated by the fact that known vampires like Paul Ryan had cited the Reinhart/Rogoff work in advocating for spending restraint.  Well, a couple of weeks ago a grad student named Thomas Herndon and others at much less big-name U Mass - Amherst published their own article at the Political Economy Research Institute, claiming to find "coding errors, selective exclusion of available data, and unconventional weighting of summary statistics" in the Reinhart/Rogoff paper.   Let the inquisition begin!

I'll give just a few choice quotes from very many that are out there:​

"This is a mistake that has had enormous consequences," wrote Dean Baker of the Center for Economic and Policy Research. "If facts mattered in economic policy debates, this should be the cause for a major reassessment of the deficit reduction policies being pursued in the United States and elsewhere."

From the official Worst Economics Writer In America, Paul Krugman:​

So the Reinhart-Rogoff fiasco needs to be seen in the broader context of austerity mania: the obviously intense desire of policy makers, politicians and pundits across the Western world to turn their backs on the unemployed and instead use the economic crisis as an excuse to slash social programs.

And this, reported by Matt Clinch of CNBC:​

The two economists have also said they have received "hate-filled" and "threatening" emails since the debate began to rage two weeks ago.

Now I'm not going to get into the math of the Reinhart/Rogoff paper, whether it contains errors, and whether those errors are important to the result.  The evidence of the Reinhart/Rogoff paper is a minuscule part of the vast evidence that Keynesian stimulus doesn't work.  If it did, Japan would have boomed for the last 24 years.  If it did, Greece and Spain would be success stories instead of needing one bailout after another.  If it did, France, with spending at 56% of GDP, would be a growth model for all, instead of barely eking out 0.5% growth for the past 5 years and currently shrinking.  If it did, Latvia and Estonia would have collapsed when they dramatically shrank government spending as a percent of GDP a few years ago.  If it did, Hong Kong and Singapore would be basket cases instead of growth leaders.  All you have to do is look around for the most basic statistics as to national economic performance.

​But the Reinhart/Rogoff story is about the enforcement of orthodoxy in academia.  After the firestorm hit, the pair have sent out a series of waffling missives, defending their work but also partially backing down:

"Borrowing to finance productive infrastructure raises long-run potential growth, ultimately pulling debt ratios lower. We have argued this consistently since the outset of the crisis," they said in the Financial Times.

It may be enough to avoid burning at the stake, although perhaps not excommunication.  Remember all ye economists, this is what happens to all those whose work may suggest that government should be cut!​

Things The Government Gets Wrong By 180 Degrees -- Privacy

Despite what you may have heard about Supreme Court cases like Roe v. Wade, the Federal Constitution doesn't ever mention a right to "privacy," at least not using that word.  What it does mention, in the Fourth Amendment, is "[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures . . . ."  In other words, to the extent there is any right to privacy mentioned in the Constitution, it is a right as against the government only; there is no privacy protection as to other private individuals or companies.

That seems right to me.  It's the government that has the monopoly on legitimate coercive force, the government that can put you in jail, the government that can perpetuate its own power by getting and using potentially damaging information about its challengers and opponents.​  The serious threat to privacy is from the government.

Well, advance forward to today's upside-down world.  Today the Federal government passes endless laws and regulations supposedly to protect our privacy, but always those laws and regulations offer protections only against private actors.  As to the government itself, all the statutes just give the government more and more access to our information.​

​For example, consider the new Health Information Privacy rules coming out of HHS.  They are extremely complex and expensive to comply with.  God help the doctor or hospital that accidentally discloses your health information to the wrong private entity.  But don't worry, here in the list of permitted disclosures of your information we have no fewer than twelve exemptions for the government, for anything from "public health activities" to "health oversight activities" to "research" to "law enforcement purposes."  So if the FBI wants your health information, no more need for clearing a "reasonableness" hurdle with a judge or getting one of those those pesky warrants.  And besides, how can we expect to achieve perfect fairness in the delivery of healthcare if the government can't monitor the details of everybody's diseases and treatments?

Or consider the Fair Credit Reporting Act.  That's the Act that's supposed to protect your information in the hands of the credit bureaus from improper disclosure.   But after long lists of restrictions supposedly to those with a "proper purpose" to be seeking your information, we come to this in Section 1681(f): "a consumer reporting agency may furnish identifying information respecting any consumer, limited to his name, address, former addresses, places of employment, or former laces of employment, to a governmental agency."   Again, no need for subpoena or warrant.  If you are the government (at any level) ask and ye shall receive!

Well, you say, that's not too bad because it's only identifying information; they can't actually get the details of your financial transactions behind your back, can they?  Well, yes they can.  The main source of authority is Section 505 of the USA PATRIOT Act, authorizing what are called National Security Letters.  These are the things that the government can send to banks, cell phone companies, or ISPs instructing them to turn over all their information about you and, by the way, don't tell the subject that you have gotten this letter or it is a felony.  Any need for a warrant for that?  The government's position is no, because in dealing with a third party (such as a bank or telephone company) you gave up any "reasonable expectation of privacy."  Of course, it's impossible to challenge a NSL if the bank or telephone company doesn't tell you about it, and they are not allowed to tell you about it.

As noted by me here, in March a Federal judge in California declared unconstitutional under the First Amendment the portion of the NSL statute that purported to make criminal the public disclosure of the receipt of the letter.  With any luck that will get to a higher court and get affirmed.  But even if it is affirmed and sticks, you will be relying on the decency of your bank or telephone company to tell you if the government comes snooping around.  Meanwhile, you have no choice but to assume that the government is monitoring all your financial transactions and phone calls behind your back. 

It just seems like the concept of privacy has turned around 180 degrees from where it started out.