A Cautionary Tale on Government Spying

Who enforces the law? Most people would answer that this is the central function of government.

However, America’s federal government has increasingly distanced itself from this role, promulgating regulations that effectively deputize private businesses against their will, threatening them with prosecution if they don’t comply.

The recently proposed E-Verify employment verification system provides an excellent example. E-Verify, as prescribed by the Legal Workforce Act of 2011 (H.R. 2885), requires that employers use an online database to verify the legal worker status of potential employees.

This requirement turns employers into de facto federal immigration agents, as they check into the background of potential employees. Rather than focusing on the qualifications of the employee, E-Verify forces employers to concern themselves with enforcing border controls.

Businesses should not be burdened by the federal government’s failure to secure the border. According to a 2011 Bloomberg study, E-Verify would have cost U.S. employers about $2.6 billion to implement in 2010.

A 2008 Congressional Budget Office estimate found that E-Verify implementation would cost taxpayers more than $40 billion over 10 years. No one compensates businesses for these costs, which represent nothing more than an additional tax, which is paid for by consumers.

Worse, if employers consider the regulations too burdensome, the law quickly transforms them from cops into criminals facing huge penalties and prison time. This most recent bill, introduced by Rep. Lamar Smith, R-Texas, would impose up to 10 years in prison and thousands of dollars in fines for noncompliance.

Other industries face similar policing requirements. Pharmacists, for example, are dragged into drug enforcement. Drug Enforcement Agency regulations state that, “[T]he pharmacist who deliberately ignores a questionable prescription when there is reason to believe it was not issued for a legitimate medical purpose may be prosecuted along with the issuing practitioner.”

In other words, pharmacists must police the actions of doctors on the DEA’s behalf. The regulations also impose significant reporting requirements for pharmacists that cost the industry billions each year and help the DEA imprison doctors who the agency believes give too much pain relief to their patients. If these unpaid DEA agents fail in their duties, they go to jail — unlike the paid ones.

The Patriot Act forcibly deputizes businesses in a similar manner. Financial brokers and accountants are required to monitor — and demonstrate that they have monitored — their clients’ transactions, presumably in order to catch money launderers.

But brokers are not IRS or FBI agents, and spying on their customers is not in their job description. If they don’t report suspicious activity, the law treats them as criminals.

As Euro-Pacific Capital CEO Peter Schiff told Fox News recently, “[T]he government regulations that came in after the Patriot Act and Anti-Money Laundering Act have made it so expensive for me to accept business from foreigners that I had to set up a whole new business out of the country and have all foreigners who want to do business with me do business with my offshore company instead. It would be much easier for me to do business with them here, but the regulations make it too expensive.”

Regulations that turn law-abiding businesses into unwilling agents of the state destroy jobs, hurt the economy and undermine personal liberties. The Constitution vests the “faithful execution of the laws” on the president and the executive branch, not the people.

Requirements to spy and report on neighbors, business partners and clients are incompatible with a free society.