The National Intelligence Bulletin is a weekly look at national security, domestic systems disruption, the risk of failing critical infrastructure, and threats to social, political, economic, and financial stability in the United States. This report is available each week for National Intelligence subscribers.
In this National Intelligence Bulletin… (4,949 words)
- House committee approves four bills aimed at securing critical infrastructure
- Critical industrial software flaws left U.S. infrastructure vulnerable to hackers
- Sanctuary cities, so far, are successfully battling the Trump administration
- More Americans believe civil clashes are inevitable
- Changing views on guns are emerging following the three deadliest mass murders in U.S. history
- Few Americans see political debate as civil
- The FBI is broken after years of mismanagement and politicization
- DHS wants more drones to patrol the U.S.-Mexico border
- And more…
InFocus: I continue to be alarmed by the rising risk of organized political violence. This week, I added another positive indicator to the Revolutionary Movement Tracker. That makes seven strong indications and six weak indications of Leftist revolutionary activities (and seven negative indicators), for a total of 13 positive indicators out of 20. We had six to eight in November 2016 when I first started tracking them, meaning they’ve doubled in the past year and a half.
There’s undoubtedly revolutionary sentiment growing in the U.S., as are warnings of civil unrest and potentially outright domestic conflict. (I wrote about this on Thursday in The Potential for Revolutionary Activity in 2018, 2020, and Beyond.) Mainstream media outlets like The Atlantic, Los Angeles Times, Foreign Policy, The New Yorker, and a host of others have published articles and opinion pieces about the potential for a civil war. Frankly, it’s a question worth asking: Will he have another domestic conflict?
I read a fascinating article this week by a hydrologist who made some observations and calculations. In his article, he pointed out that the average home in America stands a one percent chance each year of flooding. Over the course of 30 years, or an average mortgage, the total, cumulative risk is roughly 27%. That’s why home owners buy flood insurance. He points out that if an average of a 27 percent chance of flooding is worth spending all the money for flood insurance, then it makes even more sense to prepare for a national emergency.
By using the same formula to establish the risk of flooding, he came to the conclusion that the average American stands a 37 percent chance of experiencing a “violent nation-state transition”, such as a revolution or civil war, within his or her lifetime. We can play around with the dates and numbers of violent events, but any way you calculate the risk, it’s significantly higher than the chances that the average house will flood in a 30 year period. The article is entitled, “The Surprisingly Solid Mathematical Case for the Tin Foil Hat Gun Prepper” and it certainly lays out the case that this is something we should consider. Several of my friends still in the intelligence community couldn’t believe that I quit my job only to dedicate my life to community security and defense, and producing intelligence about collapse and domestic conflict. He’s doing what?!, some have asked. I never could articulate why there was a significant chance of this happening, outside of my abstract and rather mosaic approach. I ran one friend through an Analysis of Competing Hypotheses, a more advanced structured analytic technique, and he became open to the idea of organized political violence and potential collapse because of all the evidence. I’ll certainly be sharing this comparison of flood risk and revolution risk with him.
You and I share the same fundamental problem (one of many): convincing friends and family members of the risks associated with the future. I remember trying to explain to my parents back in 2008 about why they should be preparing for the future. They weren’t convinced overnight, but by sharing with them information over the course of months and years — information they weren’t getting on Fox News — they grew more concerned. That started ten years ago, roughly at the height of the financial crisis. We’ve won a lot of people over since then, and we’ve seen lots of reasons, like hurricanes, wild fires, and other natural disasters, to be prepared. We can use natural disasters as a basis to describe the risk of man-made disasters.
Take some time to read the article and use that as a case to, perhaps, win over friends, family, and neighbors as to the risk. Maybe between that and the coming recession, we can continue to win people to our side of the fence, become better prepared together, and stand a better chance of weathering whatever might be ahead.
Priority Intelligence Requirements
PIR1: What are the new indicators of systems disruption and threats to critical infrastructure?
PIR2: What are the new indicators of potentially disruptive social, cultural or political conditions or events?
PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?
PIR4: What are the new indicators of systems disruption and threats to the economic or financial industry?
PIR1: What are the new indicators of systems disruption and threats to critical infrastructure?
Harris County Emergency Management preparing for “above average” hurricane season
The Harris County, Texas Office of Homeland Security and Emergency Management in Houston is advising residents to prepare for another busy hurricane season. County commissioners designated the week of May 6-12 as Hurricane Preparedness Week and are urging preparedness ahead of what weather forecasters believe could be an above-average hurricane season. “Regardless of the number of hurricanes predicted, I would remind our residents that it only takes one to devastate a community,” Harris County Judge Ed Emmett said in a press release. “Be assured that the county will continue to work to prepare our communities, but it is up to each individual to prepare themselves and their families.” Authorities are advising residents to come up with their own emergency evacuation plans, to put together emergency supplies including food and water, to stay informed, and to keep vehicle fuel tanks full, among other preparations. [source] SC: Last August, Houston suffered a direct hit with Hurricane Harvey, and portions of the coast are still recovering. I was in the Houston area and remember seeing the flooding — homes, cars, interstates, and highways were still flooded for days after the hurricane had passed. This may be just an abundance of caution on behalf of Harris County, but it’s a good reminder that, after a 12 year hiatus from major hurricanes from 2005-2017, the U.S. coasts are still very vulnerable to major systems disruption. As always, now is the time to prepare.
House committee approves four bills aimed at securing critical infrastructure
The House Energy and Commerce Committee approved four pieces of legislation last month aimed at better securing the country’s critical infrastructure against cyber attack. The approved bills come amid new attacks and attempted attacks by nation states and other actors designed to access industrial control system (ICS) networks in advance of potentially malicious activity. Among the measures, two create a more streamlined pathway for public-private partnerships between appropriate government agencies and private-sector infrastructure businesses to share cybersecurity research and policy/hardware/software suite implementation. [source] Analyst comment: We detect a new sense of urgency within the present Congress and the Trump administration regarding cyber threats, and this level of legislative activity certainly substantiates that sense of urgency. We can’t remember a time when cybersecurity was such a pressing issue with government and the private sector, though cyber threats have been around now for quite some time.
Critical industrial software flaws left U.S. infrastructure vulnerable to hackers
A Maryland-based cybersecurity research firm, Tenable Research, found vulnerabilities in a pair of applications that are used widely by U.S. manufacturers and power plant operators, flaws which may have given hackers foothold access to some critical infrastructure. The firm said it recently found a new remote code execution vulnerability in Schneider Electric’s InduSoft Web Studio and InTouch Machine Edition. Both applications contain an overflow condition which is triggered when input is not validated properly, thus allowing a hacker to launch a denial-of-service attack or permit the execution of malicious code. The firm has issued security patches for both programs but it’s unclear whether hackers have accessed key critical infrastructure systems already. [source]
China seeking to become world leader in Artificial Intelligence
By 2030, China envisions a $1 trillion domestic artificial intelligence market, far outpacing anyone else on the planet but especially the United States — and not even a trade war would likely stop it, experts believe. Already Beijing has an advantage. Between 2012 and 2017 investors dumped $4.5 billion into 200 Chinese A.I. firms. What’s at stake is nothing short of the future of economic good fortune for both countries. The U.S. has made substantial advances in the A.I. space but China has been building its A.I. infrastructure largely in the background with an eye towards becoming the global leader in about a decade. Most global A.I. development has taken place at Google, Microsoft, IBM and Apple, but in China companies like Alibaba, Tencent, and Baidu hope to close the gap, and quickly. [source] Analyst comment: Mastering A.I. will be nothing short of mastering the technology universe, it’s that game-changing. Imagine trying to defend IT networks and critical infrastructure from software that can literally ‘think’ it’s way through defenses — that’s what’s at stake. SC: Add a virtually unlimited number of attackers with China’s advances in quantum computing, and we’re looking at the digital-age equivalent of nuclear weapons. This is a big deal, and we should absolutely be preparing for systems disruption, especially including the internet and in the energy sector. Chinese leaders have openly expressed their regard for the U.S. as their major enemy, and that sentiment is reflected in their race to weaponize space and the moon, their commitment to continue economic and industrial espionage against the U.S., their insistence on weaponizing and defending the South China Sea and the $5 trillion in trade that passes through their each year, and their view that the United States is in irreversible decline. This is not just about an advancement in technology; this is about China setting themselves up to become the world’s superpower in the 21st century.
PIR2: What are the new indicators of potentially disruptive social, cultural or political conditions or events?
Sanctuary cities, so far, are successfully battling the Trump administration
For the time being so-called “sanctuary cities” — cities and local jurisdictions that limit or ban local police from cooperating, in most cases, with federal immigration authorities — have been winning court battles with the Trump administration as it attempts to crack down on these jurisdictions and enforce all immigration statutes. On 19 April, a federal appeals court in Chicago upheld a lower court’s injunction against the Justice Department for its attempt to withhold federal funding in its effort to force cities to comply with federal immigration enforcement. The injunction covers the entire nation so for now, the administration cannot follow through with that strategy. “The attorney general, in this case, used the sword of federal funding to conscript state and local authorities to aid in federal civil immigration enforcement,” wrote Judge Ilana Rovner in a forceful 35-page opinion. As such, she continued, “It falls to us, the judiciary…to act as a check on such usurpation of power.” [source] Analyst comment: Immigration (as in illegal immigration, mostly) is the most explosive social issue since the civil rights movement of the 60s. The Justice Department is arguing that under the conditions of law enforcement grant awards, cities are required to prove they are at least not impeding the enforcement of federal immigration laws; sanctuary cities clearly violate that pre-condition. And though the vast majority of appeals court rulings never proceed to the Supreme Court, this one stands a great chance of advancing. The Trump administration appears to be on sound legal ground here regardless of this ruling and will seek to use every legal and judicial tool at its disposal to win. But winning at the Supreme Court, if that turns out to be the case, will only further inflame Left-leaning sanctuary cities and further embolden them to resist. Also, in the interim, it could be that the Justice Department ‘court shops’ and finds one that will agree with Attorney General Sessions. We’ll be watching to see.
More Americans believe civil clashes are inevitable
People on the Left are prone to blaming President Trump for the rank partisanship that exists between them and Right-leaning Americans, but the reality is our historic political division began during the Bush administration (after the ‘togetherness’ created by the 9/11 attacks wore off) and really deepened during the Obama administration. Barack Obama, a student of Marxist Bill Ayers, is probably the most hard-Left president in American history, and his political positions really polarized the American Right in a way not seen in modern history. With the election of Trump, the division and polarization have only deepened and now talk of a new “civil war” that actually began with the 44th president are increasing during the term of the 45th. Where we’re at today is reflected in a column by an accountant writing in a local newspaper in Deland, Fla. The writer, David Rauschenberger, says “after two tax seasons” with Trump as president he is convinced of this truth: “Our republic is being torn apart by a second civil war.” And what’s more, he blames the conflict squarely on the Democratic Party, whose members “are outside looking in” and “are angry.” He also makes an astute observation about the level of vitriol and hatred being directed at Trump — “every time they [the Left] stoop to a new low in trying to bring down my president, they open themselves up to that same political weapon being used against them in the future.” He also worries that Trump opponents in the FBI, Justice Department and intelligence community — he doesn’t use the term “deep state” but that’s what he’s talking about — are using the power of their positions “to swing a presidential election” after “one candidate” — Hillary Clinton — “was deemed innocent before the investigation really commenced.” [source] Analyst comment: Much of this is spot-on. When we think about the issue of slavery, one issue at the root of the first Civil War, history teaches us that it was a highly-charged, highly-emotional issue that festered for decades — practically since the birth of our nation — before the South decided it was politically impossible to remain within the Union. There is much difference between Left and Right politically today, and the chasm is only growing. It absolutely could lead to violence when one side finally decides that there are no political solutions.
Changing views on guns are emerging
Little by little, mass shootings are changing Americans’ views on guns and gun control, and not in a way that supports the Second Amendment, according to a new Gallup survey. Some takeaways: Support for stricter gun laws reached 67 percent in March — the highest since 1993. The NRA has been successfully vilified by its detractors, with more people now seeing the organization in a negative, rather than positive, light (41 percent positive; 49 percent negative). Nearly all respondents agreed that more training for first responders to active shooting situations and background checks for all gun sales are needed. Additionally, support for a ban on all so-called “assault rifles” is rising and is now about 50-50. [source]
Few Americans see political debate as civil
The country’s political divide has widened to the point where there’s no longer civil discourse, according to a new survey. There are very few Americans who see our political debate as “respectful”. And only 25 percent of respondents agreed that “The tone of debate among political leaders is respectful.” [source] Analyst comment: At the same time discourse is becoming less civil, political partisanship is growing more rank. Case in point: Recently, CIA Director Mike Pompeo, a former Republican congressman from Kansas, was nominated by President Trump to become secretary of state. Nearly all Democrats in the Senate opposed his nomination even though most of them supported him as CIA director. And this was after it was announced that Pompeo had had secret meetings with North Korean leader Kim Jong-un in advance of a meeting between him and Trump later this year. Once upon time Senate Democrats and Republicans, by and large, lived by the creed that a president should generally have who he wanted in key positions in his government. Not anymore. And what’s more, we believe the rancor is only going to get worse. SC: There’s been quite a debate inside Democratic circles as to whether to play hardball with Trump’s political picks. Democrats soured after the Republican Congress refused to hold hearings to confirm judge Merrick Garland, Obama’s nominee to replace the deceased Antonin Scalia on the Supreme Court. Turn about is fair play in politics, which is why we’ve seen such staunch opposition to some of Trump’s picks. Still, a continuation of these kinds of political hardball tactics means that they’re less likely to end once the Democrats get back into power. A break down of the political process is likely to spill over, which carries the potential to encourage politically-related violence.
How well Americans are doing, financially, has gone political
According to a new Gallup survey, Republicans tend to be much more optimistic than Democrats about their own finances — which is the complete opposite of how each group felt during the Obama years. As a whole, Gallup found that Americans are more positive now than two years ago, and they should be: The economy under Trump in just one year has grown by, on average, a full percentage point. But what makes these findings odder is that, based on government figures released just this week, unemployment claims are at their lowest since 1973, and the overall unemployment rate is has fallen below four percent. As labor markets tighten, the historical pattern is that wages tend to increase because there are fewer good workers in the labor force (and higher pay attracts better workers). So clearly, the country, economically speaking, is doing better now than during the Obama years, when average quarterly growth was about 1.5 – 2.2 percent, unemployment was higher, more people were collecting government benefits, and wages were stagnant. Presumably, now, both Republicans and Democrats are reaping the rewards of an improved U.S. economy. But because of partisanship that is worsening, some Americans who should be more optimistic based on economic numbers — aren’t. [source]
Militarization of law enforcement in Mexico to combat drug gangs leading to more deaths
Perhaps to get a better understanding of the influx of illegal immigrants from Mexico one needs to understand the scope of violence south of the border, which — according to a recent analysis — is being exacerbated by the hyper-militarization of the Mexican government’s efforts to combat the various drug cartels. In a 10-year period (2007-2017), which coincides with the Mexican government’s deployment of its military against the cartels, violent intentional homicides and forced disappearances of Mexican citizens and others have reached a quarter of a million people. The government “has continually stated” throughout the period “without evidence” that some 90 percent of all homicide victims are members of drug cartels, but that infers the “tens of thousands of slaughtered Mexicans” who were caught up in the violence were mere “criminals killing each other.” More than 95 percent of homicides are never fully investigated by Mexican law enforcement, so the conclusion that nine-of-10 homicides are cartel-related is impossible to verify. But the situation may be about to get worse. In December the government passed legislation empowering the Mexican military to act against “internal security threats,” which provides formal expansion of the militarization of Mexican law enforcement. [source]
The FBI is broken after years of mismanagement and politicization
A new analysis of the FBI finds that the nation’s premier law enforcement agency — also a vital national security asset — is breaking down after years of mismanagement and politicization by various administrations and actors. Insiders say that morale is tanking, something that is not helped by a president who publicly criticizes the FBI on a frequent basis, and that leadership appears to be more focused on political agendas rather than the bureau’s core functions. Priorities are reportedly mixed up and there’s a lot of negative publicity being brought to bear on the agency, thanks in no small part to the ongoing probes into President Trump, former Director James Comey’s book tour, and the firing of Deputy Director Andrew McCabe. There’s also the reportedly bad news coming from a Justice Department Inspector General investigation, which is expected to find much fault with the way Comey handled the Hillary Clinton email investigation in 2016. But other incidents are plaguing the bureau, such as the missed opportunity to prevent the Parkland, Fla., mass school shooting on Valentine’s Day (FBI agents were warned twice about alleged shooter Nikolas Cruz, the second time about a month prior to the shootings), as well as evidence of misconduct in the aftermath of standoffs with armed citizens in Nevada and Oregon (the latter of which an FBI agent has been held criminally liable for killing a citizen). [source] Analyst comment: Public support for the FBI is down to 61 percent. Current agents and officials who have weathered past storms are saying they’ve never seen things so bad. SC: A failure of public trust in public institutions is an indicator of instability that could lead to collapse. The more these public institutions — like the IRS, FBI, and others — are wielded for political ends, the more risk that the public will lose faith in their impartiality.
PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?
Congress wants Pentagon to form cyber reserve teams to assist states
The House Armed Services subcommittee on emerging threats and capabilities have requested a study on the feasibility and necessity of a cyber team assigned to each state in an era where cyber-threats are emerging faster than defense capabilities can be developed. The request directs the Defense Department to consider teams for a variety of tasks including response to major network attacks and measuring that cyber workforce capacity for homeland defense and national power. “The committee notes that in the last several years, the Department of Defense has employed cyber capabilities to achieve objectives in or through cyberspace,” the bill says. “Unlike military operations that occur in the air and land domains, cyberspace operations and the effects of those operations are not always visible to Congress and the American people. The committee believes that as the Department continues to conduct cyberspace operations, it will be critical that operations are fully aligned with the appropriate authorities, policies and doctrine, rules of engagement, plans, oversight mechanisms, and lessons learned processes.” [source]
2019 Defense spending bill may contain provisions to streamline Pentagon cyber-assistance with remainder of federal government
The Defense Department continues to focus on improving the nation’s cyber-defenses from great powers and regional powers alike as capabilities of potential enemies increase rapidly. The latest indicator of this is consideration of new cyber provisions in the 2019 defense spending bill that would streamline Pentagon cyber assistance with the remainder of the federal government. The House Armed Services Committee’s subcommittee on Emerging Threats and Capabilities released a markup of the 2019 National Defense Authorization Act last week that includes a host of cyber provisions and recommendations that focus on growing cyber forces, better protecting critical infrastructure, and consolidating cyber responsibilities. Provisions include a study of existing state cyber capabilities; protecting all critical U.S. infrastructure; increasing breach notification requirements; prioritizing tech at DoD facilities; integrating Silicon Valley tech into defense labs; mapping cyber vulnerabilities in weapons systems and giving CyberCom some of DISA’s responsibilities. [source] Analyst comment: To some, this might seem like rearranging deck chairs on the Titanic, but the Pentagon is deadly serious about increasing cyber defenses especially as the world gets more dangerous. The Pentagon and Department of Homeland Security know better than most what a nightmare scenario they (and local authorities) will have on their hands if our critical infrastructure is successfully targeted and outages remain for more than a few days, and even that will be a disaster.
April terror threat snapshot released
The House Homeland Security Committee, which tracks domestic terrorism threats on a monthly basis, released its April 2018 “Terror Threat Snapshot” report this week. The high points: Since 2013 there have been 150 homegrown “jihadist” cases in 30 states involving plots to attack, overseas travel, financial support, lying to authorities, and weapons charges. Since that same year there have been 79 cases where ISIS used or attempted to build explosives for use in the West; 56 cases where ISIS used an edged weapon; and 21 cases where ISIS used a vehicle as a weapon. [source]
DHS wants more drones to patrol the U.S.-Mexico border
The Department of Homeland Security will begin testing small drones with sensors that can identify people from the air, track flying objects and collect data on active shooters. The Robotic Aircraft Sensor Program – Borders (RASP-B) will be tested at an Army base in Hattiesburg, Miss. The program is part of a broad, continuing effort by DHS’ Science and Technology Directorate’s borders and maritime security division to test new drone technologies to enhance national security. RASP-B is primarily focused on the enhancement of border security and law enforcement along borders to assist Border Patrol and Customs Enforcement in performing “typical border security missions.” [source] Analyst comment: A clear effort to leverage technology and manpower, it can’t come too soon. After a post-Trump election drop in border crossings last year, the most recent data indicate that in April illegal immigration into the U.S. surged 230-plus percent, with 75 percent of those interdicted getting “catch-and-release.”
PIR4: What are the new indicators of systems disruption and threats to the economic or financial industry?
U.S. is rapidly approaching insolvency as single-quarter borrowing tops Great Recession levels
In the first quarter of 2018, the Treasury Department announced that the U.S. government borrowed $488 billion, or $47 billion more than it had anticipated just three months ago. The amount borrowed was a record in the post-Great Recession period, when during the final quarter of 2008 the government borrowed $569 billion in order to avoid an economic calamity of gargantuan proportions. There are a few things that make the first-quarter borrowing figure noteworthy and worrisome. First, it comes as the number of Americans in the workforce has grown substantially, meaning there are more people contributing to government coffers via income and Social Security taxes. By any measure the economy is doing fairly well, having hit 3-percent-plus for three quarters since Trump has been in office. But growth slowed to 2.3 percent in the first quarter of 2018 at the same time there was a post-recession borrowing record. So if the government is forced to borrow record amounts of money during a decent economy, what’s going to happen if the economy slows greatly or there is another Great Recession? We’re on pace to add $1.2 trillion to the debt just this year alone, and there is no way the economy can grow fast enough or high enough to sustain deficits that large, even for the short-to-mid-term. At some point, there has to be a day of reckoning — or massive cutbacks in government spending combined with substantially higher taxes. Which do you think is more likely? [source] SC: Earlier this year, I wrote about the Trump put, like the Greenspan Put and the Bernanke Put, which bets on economic growth outpacing increasing financial requirements to run the country. From the 23 March 2018 National Intelligence Bulletin:
Back when Alan Greenspan was the Federal Reserve chief, the term “Greenspan Put” was used to describe his commitment to use loose monetary policy to boost economic growth. (A “put” is an options trade that allows a trader to sell an asset at a set price in the future, despite the future market price.) Under his successor, Ben Bernanke, the “Bernanke Put” was also used to describe the absolute limitless commitment to lowering interest rates (to basically zero) and printing trillions of dollars to bail the economy out of the 2008 recession. Bernanke is credited in financial circles with averting a total economic collapse, but the “Bernanke put” also just delayed financial reckoning for the next generation. And this is how I view President Trump’s economic policy, now bolstered by economic advisor Larry Kudlow, of cutting taxes and regulations to spur growth. The one thing that’s not happening is drastic cuts to government spending that accompany those tax cuts, setting us up for the “Trump put”. President Trump and Larry Kudlow believe that the U.S. can grow its way out of the coming fiscal contagion of national debt and unfunded liabilities.
Meanwhile, I read articles mentioning that Bill Gates and Warren Buffet have a very optimistic view of America’s economic future. Undoubtedly, America’s economy is robust and there are several emergency actions the Federal Reserve and federal government could take to delay this financial reckoning (a déjà vu of 2008), but I ask at what cost? Printing trillions of dollars, which is inevitable, is going to harm America’s savers and drive up the price of goods, drive up home prices, and drive up inflation. That’s really, really bad for America. Americans don’t need higher home prices, they need more affordable home prices. They don’t need higher wages or a higher cost of consumer goods; they need sound money. And another period of quantitative easing is the opposite of sound money. Making predictions about what will happen or when it will happen is a fool’s errand, but we can estimate the long-term trajectory of America’s fiscal future. It likely includes another period of financial instability, another painful recession, and another bout of economic stagnation as the Fed tries to bail out the economy again using the same old tools.
No progress in the first round of U.S.-China trade talks
For those who were hoping for a quick resolution between the U.S. and China over various trade disputes and issues, forget it. Round one has ended and it’s been a draw, at best, meaning there are many more issues to settle. Essentially both countries have agreed to disagree and not much else. A major U.S. demand is to reduce the country’s large (and growing) trade deficit with China; Trump administration negotiators want to shave $200 billion off the trade deficit by 2020 and have Beijing drop its claim that China’s is a market economy. There are also issues of cyber-theft and industrial espionage. That said, U.S. Treasury Secretary Steve Mnuchin announced both sides have been having a “very good conversation,” but he did not elaborate. [source]
