Across America, city and town councils, mayors, public librarians, and even police chiefs are hopping mad. So are civil libertarians on the right and the left. The target of their ire: the USA Patriot Act, signed by President Bush on Oct. 26, 2001, which makes it far easier for the feds to obtain school, health, financial, phone, and Web records. In addition, it expands the use of wiretaps and eases the requirements for search warrants.
The civil liberties revolt surfaced first in such left-leaning burgs as Ann Arbor, Mich., and Berkeley, Calif. But it has spread to the likes of moderate Tucson and Reading, Pa., since an 86-page draft of proposed Justice Dept. legislation -- quickly dubbed Patriot II -- leaked out in February. An embarrassed Attorney General John Ashcroft first insisted that the Justice Dept. had no bill to strengthen the original act, then conceded that its lawyers had been working on one.
Conservative groups such as the Eagle Forum, the American Conservative Union, and Americans for Tax Reform joined the American Civil Liberties Union and People for the American Way in bombarding congressional leaders with protests. Says Grover G. Norquist, head of Americans for Tax Reform: "There's not a conservative organization out there that doesn't have concerns about this...."
Civil libertarians hit the ceiling again when Senate Judiciary Chairman Orrin G. Hatch (R-Utah) suggested in March that Congress remove the sunset provisions designed to repeal many of the Patriot Act's most controversial provisions in late 2005. Congressional skeptics had insisted on an expiration date because the law passed with such little debate in the wake of September 11.
How is local government resisting some of the powers the Bush Administration may want to set in stone? One example: The Patriot Act grants authorities the right to examine library and bookstore records without a criminal warrant. Now, the American Library Assn. has advised members to destroy records of book borrowing and Web-site visits by patrons. And in February, managers at Seattle-Tacoma International Airport refused orders from the feds to conduct random searches of cars during orange (high) alerts.
Some of the resistance can be traced to budgetary concerns, especially among cash-strapped police departments. But cops are also refusing to arrest illegal aliens during the course of normal police work, such as domestic-disturbance calls. About a third of the resolutions passed by municipalities advise their police forces to avoid cooperating with feds.
The Justice Dept. isn't losing any sleep over local protests. The resolutions are merely "political posturing" by "hyperventilating critics," says Justice spokeswoman Barbara Comstock. "If we have a terrorist we are pursuing, a local ordinance stating its opinion doesn't have any impact."
Still, most resolutions direct senators and representatives to oppose efforts to continue or expand the Patriot Act beyond its drop-dead date. That could complicate efforts by the Bush Administration to expand Washington's powers to fight terrorism -- most recently with an unsuccessful proposal to give the CIA a form of subpoena power. Certainly, as the populist uprising grows, so will the likelihood that Congress will listen. Now that they've cracked down on Wall Street analysts for conflicts of interest, federal and state securities regulators are training their double barrels on a new target: hedge funds. State authorities, alarmed by the explosive growth of these private investment pools and a string of fraud cases, are pressing the Securities & Exchange Commission to bring the lightly regulated industry to heel. Once again, states are admonishing the SEC to act fast -- or risk being upstaged. "We're not going to stand around and wait for something to happen," says S. Anthony Taggart, director of the Securities Div. of Utah's Commerce Dept.
But Round 2 in the rivalry may have a different ending. This time, SEC Chairman William H. Donaldson is determined to act -- in contrast to predecessor Harvey L. Pitt, whose slowness to address analyst abuses invited New York Attorney General Eliot Spitzer to steal the show.
With hedge funds managing $600 billion in assets -- up from $50 billion in 1990 -- and becoming more accessible to retail investors, Donaldson is making them a priority. He has set hearings for May 14-15. New rules making risks more transparent to small investors, some of whom got in with just a $25,000 investment, are likely to follow. Among them: requiring fund managers to register as investment advisers. This would give the SEC a peek at their holdings and trading strategies -- and a heads-up about risky bets. Donaldson also may raise the threshold for hedge-fund investment, now $200,000 in income or a net worth of $1 million.