Last Thursday, ThinkProgress revealed that lawyers representing the U.S. Chamber of Commerce, one of the most powerful trade associations for large corporations like ExxonMobil and CitiGroup, had solicited a proposal from a set of military contractors to develop a surreptitious campaign to attack the Chamber’s political opponents, including ThinkProgress, the Change to Win labor coalition, SEIU, StopTheChamber.com, MoveOn.org, U.S. Chamber Watch and others. The lawyers from the Chamber’s longtime law firm Hunton and Williams had been compiling their own data set on some of these targets. However, the lawyers sought the military contractors for assistance.

As ThinkProgress has reported, the proposals — created by military contractors Palantir, Berico Technologies, and HBGary Federal, collectively known as “Team Themis” — were discussed at length with the Chamber’s lawyers over the course of several months starting in October of 2010. The core proposals called for snooping on the families of progressive activists, creating phony identities to penetrate progressive organizations, creating bots to “scrape” social media for information, and submitting fake documents to Chamber opponents as a false flag trick to discredit progressive organizations.

In addition to the Team Themis plans that ThinkProgress and other outlets have reported on, a closer look at the proposals show that the firms had planned to use exploits to steal information from the Chamber’s opponents, or worse. On November 2, HBGary Federal executive Aaron Barr sent John Woods, a lawyer at Hunton and Williams representing the Chamber, two documents discussing tactics for assisting the Chamber (view the e-mail here). One presentation (click here to download) boasted of HBGary Federal’s capabilities in “Information Operations,” a military contractor term for offensive data extraction techniques typically reserved for use against terrorist groups. The slide includes sections on “Vulnerability Research/Exploit Development” and “Malware Analysis and Reverse Engineering.” View a screenshot below:

HBGary, the parent company of HBGary Federal, specializes in analyzing “malware,” computer viruses that are used to maliciously steal data from computers or networks. In other presentations, Barr makes clear that his expertise in “Information Operations” covers forms of hacking like a “computer network attack,” “custom malware development,” and “persistent software implants.” The presentation shows Barr boasting that he had knowledge of using “zero day” attacks to exploit vulnerabilities in Flash, Java, Windows 2000 and other programs to steal data from a target’s computer.

Indeed, malware hacking appears to be a key service sold by HBGary Federal. Describing a “spear phishing” strategy (an illegal form of hacking), Barr advised his colleague Greg Hoglund that “We should have a capability to do this to our adversaries.” In another e-mail chain, HBGary Federal executives discuss using a fake “patriotic video of our soldiers overseas” to induce military officials to open malicious data extraction viruses. In September, HBGary Federal executives again contemplate their success of a dummy “evite” e-mail used to maliciously hack target computers.

Some of the initial e-mails discussing the Chamber deal with Team Themis stress the fact that HBGary Federal would provide “expertise on ‘digital intellgence collection’ and social media exploitation.’”

Barr also sent another document to the Chamber’s attorney describing in greater detail Team Themis’ hacking abilities (download a copy here). In one section, Team Themis claims that “if/when Hunton & Williams LLP needs or desire,” they can use “direct engagement” to “provide valuable information that cannot be acquired through other means.” This cryptic pledge appears to be in reference to same malware data intrusion techniques proposed in the other Team Themis documents. View a screenshot below:

In an e-mail on November 9th, Barr sent Chamber attorney John Woods an e-mail about his data extraction capabilities (view a copy here). Barr had compiled a dossier on a top Chamber attorney, Richard Wyatt, and hoped to use it as an example of what they could do to the Chamber’s adversaries. However, in the e-mail, Barr claimed that he realized that Wyatt’s wife’s computer had core vulnerabilities that could be exploited to gain access to Richard’s personal data. “If I can exploit her account through one of her social connections I can exploit the home network/system,” he wrote. This explains why Team Themis devoted so much time to researching the families and children of progressive activists, to find vulnerabilities in their computer systems.

It should be noted that the Chamber’s attorneys and lobbyists were well aware of Team Themis’ plans. A sample demonstration of Team Themis work had “sold the Chamber” at one point. Throughout the conversations made available by the leaked e-mails, neither the Chamber or its attorneys ever raised ethical complaints.

View a timeline of the ChamberLeaks scandal composed by the Wonk Room’s Brad Johnson here.

Our guest blogger is Mike Elk, a freelance labor journalist and third generation union organizer based in Washington, D.C. You can follow him for more updates on Wisconsin on twitter at @MikeElk.

Today, 14 Democratic Wisconsin State Senators walked out of the chamber holding up solidarity fists — denying Republicans the quorum to hold a vote on the Budget Repair Bill, which would strip public employees of their right to collectively bargain. According to reports, the State Senate Democrats have fled the state to avoid state troopers forcing them to come back into quorum. Sen. Jon Erpenbach (D) told WisPolitics this afternoon that “Senate Democrats left the state in an attempt to force Republicans to negotiate a compromise to proposed changes to the bargaining rights of public employees.”

Some state troopers have already told union leaders that, in a sign of support for striking workers, they are refusing to track down or arrest any state legislators that they encounter. Capitol Police already have refused to kick out of the State Capitol the nearly 5,000 protestors that the Wisconsin Department of Administration has announced are there. Early today, reports from Twitter and sources on the ground said that protesters were literally blocking members of the Wisconsin State Senate GOP from re-entering the chamber in case they tried to take a vote on the bill without a quorum being in place.

The mass protests in Wisconsin seem to be turning public support strongly behind the unions there. President Obama, who in the past had upset public employees union by his endorsement of the mass firing of unionized teachers in Rhode Island last year and calling for a federal wage freeze, gave a strong statement of support for the workers to Milwaukee TV station saying:

Some of what I’ve heard coming out of Wisconsin, where you’re just making it harder for public employees to collectively bargain generally seems like more of an assault on unions. And I think it’s very important for us to understand that public employees, they’re our neighbors, they’re our friends. These are folks who are teachers and they’re firefighters and they’re social workers and they’re police officers.

The DNC and OFA also launched campaigns to support the mass protests going on in Madison, Wisconsin, where an estimated 30,000 protestors are gathered outside of the state Capitol. It is the first time that the DNC and OFA have gotten involved in worker’s right issues and might preview help to come in the assault on public employees across the country.

Protests are expected to spread as public support rallies behind workers in Wisconsin. Sources on the ground in Madison, tell me City employees in Madison are now debating going out on a general strike. Also, over 6,000 students at the University of Wisconsin in Madison walked out of classes in a sign of support.

It now appears that the only way Wisconsin Governor Scott Walker might be able to disperse the estimated crowd of 30,000 outside of the Capitol is to call in the National Guard as he threatened. The question on everyone’s mind is if Governor Walker will resort to martial law in order to stop the protesters.

Our guester bloggers are Jordan Eizenga, Economic Policy Analyst at the Center for American Progress, and Seth Hanlon, Director of Fiscal Policy for the Doing What Works Project.

In their zeal to slash spending and tear down government programs, many conservatives seem unfazed by the fact that some of the programs they’re targeting actually make government leaner and more efficient. Case in point: The Build America Bonds program, which enjoyed a short, successful life from its creation in early 2009 until its untimely death at the end of 2010. The Build America Bonds (BABs) program was an innovative finance tool that saved state and local governments $12 billion in financing costs.

In his budget released this week, President Obama proposes to bring the program back. But Sen. Orrin Hatch (R-UT), the ranking member on the Senate Finance Committee, dismissed the proposal, claiming that BABs are “simply a disguised state bailout.” They are nothing of the sort.

For nearly a hundred years, the federal government has promoted investments by state and local governments through the tax exemption for municipal bonds. By carving out a special, permanent tax break for municipal bond buyers, the federal government allows states and localities to issue bonds that pay lower rates. Tax-exempt bonds are therefore a $31 billion subsidy program for state governments.

This is a clumsy and highly inefficient way of providing a federal subsidy. Of that $31 billion in lost revenue, 20 percent is siphoned off as a windfall to high-income bond buyers. Only 80 percent of it actually helps lower municipal borrowing costs.

For decades, people have asked: Why not cut out the middle-man and provide the subsidy directly to states? In 2009, BABs were created to do just that. BABs are bonds issued by states that pay taxable interest. But that interest is directly subsidized by the federal government. That makes Build America Bonds a more efficient subsidy.

Before the BABs program expired, states and localities had the option of issuing Build America Bonds or regular tax-exempt bonds. Over the program’s two-year lifespan, BABs grew increasingly popular.

Build America Bonds were “the biggest thing to hit the municipal bond market in a generation. It’s clearly been a success as a means of stimulating the economy,” said Amy Resnick, the editor in chief of Bond Buyer newspaper.

Perhaps most importantly, BABs expanded and stabilized the market in the months following the 2008 financial crisis, when demand for traditional tax-exempt bonds was dangerously weak.

Today, the market is distressed again, partially attributable to Congress’s failure to extend BABs at the end of 2010. President Obama proposes to bring back BABs at a revenue neutral subsidy rate that results in zero net cost to the federal government while saving taxpayers at the state and local level.
Doing so, will provide crucial support for job-creating infrastructure investment at a time when state and local governments face unprecedented difficulty in raising funds.

Yet critics like Senator Hatch perpetuate the myth that the program bails out irresponsible states. It’s a misleading smokescreen. BABs subsidize the interest on state and local government debt in the same manner as tax-exempt bonds — a permanent federal government program whose inefficiencies conservatives show no interest in addressing. The only meaningful difference between tax-exempt bonds and BABs is that BABs are 20 percent more efficient.

What explains the knee-jerk opposition to such a successful program? It seems in part based on the fact that BABs entail direct government spending, while tax-exempt bonds spend money covertly through the tax code.

This is a meaningless distinction. A $31 billion program is a $31 billion program. Conservatives who think they are making government smaller by eliminating successful alternatives like BABs are really only making government worse.