03-04-2000

CONGRESS: A Little Privacy, Please

For years, the public's worries about privacy violations have been "a
mile wide but an inch deep," say advocates of additional protections
for financial and other personal information. The issue has never decided
an election and has stayed mostly on the back burner in Congress. But
lately legislators, especially Democrats, have been watching privacy
concerns move up in public opinion polls, so they're scrambling to
act-much to the distress of industry lobbyists.


Privacy is an issue that "resonates with the American people,"
said Sen. Robert G. Torricelli, D-N.J. "There will be partisan
competition to do something about it."


In his State of the Union speech in January, President Clinton said he
would ask for tougher privacy legislation. In recent weeks, Senate
Minority Leader Thomas A. Daschle, D-S.D., has formed a privacy working
group, headed by Sen. Patrick Leahy, D-Vt. Daschle and House Minority
Leader Richard A. Gephardt, D-Mo., have also added privacy to their
"Families First" agenda. They promised that Democrats will
"empower consumers to protect and control the privacy of their
personal, financial, and medical records."


This new emphasis was underlined on Feb. 10 when Torricelli, the chairman
of the Democratic Senatorial Campaign Committee, offered a privacy bill
that was strongly opposed by financial and insurance firms in his state
and in nearby New York.


But some Republicans don't want to cede the issue of privacy to the
Democrats. "I don't think they can capture it," said Sen.
Richard C. Shelby, R-Ala., who pushed through a strong financial-privacy
law last year. "This is not a Democratic issue.... [Republicans] see
that this is an issue they'd better get behind."


At the same time, many other Republicans, such as Rep. Tom Davis, R-Va.,
the chairman of the National Republican Congressional Committee, champion
a free-market approach: They say consumers are free to choose to buy from
companies or Internet vendors according to whatever mix of quality, price,
and privacy commitments they offer.


At least some politicians are watching the polls. In a Jan. 25 survey by
NBC News and The Wall Street Journal, 16 percent of the 1,010 respondents
said Congress's highest priority this year should be to protect the
privacy of people's health care and financial records. The only issue that
ranked higher-at 23 percent-was the addition of prescription benefits to
Medicare.


Much of the concern over privacy is driven by the public's increased
familiarity with-and occasional fights against-the high-tech data
gathering performed by Internet companies and traditional markets. In
fact, a November poll sponsored by IBM Corp. showed that 29 percent of
Americans believed that a business had invaded their privacy.


Still, this is not a one-sided debate. Many citizens seem happy to trade
some of their privacy to vendors for discounts and useful advertising. In
the IBM Poll, 65 percent said they believe that most businesses act
appropriately, whereas in the NBC-Wall Street Journal Poll, 13 percent
said that privacy legislation should be a low priority for
Congress.


For their part, financial, medical, and merchandising conglomerates fear a
rush by Congress to pass a slew of laws that restrict the information
sharing they favor. Many of these vast corporations rely on analyzing
mountains of customer data to reveal the most-likely buyers and the
most-promising products.


Industry is particularly concerned about possible congressional support
for "opt-in" policies that would force companies to get a
customer's explicit permission before his or her data could be transmitted
to affiliates, subsidiaries, or outside corporations.


Such concerns may be warranted. During last year's debate on sweeping
legislation to modernize the financial services industry, Shelby and
Democratic legislators inserted unprecedented restrictions on banks' use
of customers' data. Financial industry lobbyists are now worried that the
Treasury Department will approve even tougher rules in implementing the
new financial services law. Similarly, lobbyists for the health care
industry are worried about medical-privacy rules being drafted by the
Health and Human Services Department.


To fend off such regulation, high-tech companies are offering consumers
more information about how their data would be used. Businesses also are
organizing new coalitions to lobby against broad curbs. A dozen large
non-Internet companies have formed the National Business Coalition on
E-Commerce and Privacy to lobby on privacy legislation at the federal and
state levels. The companies, including General Electric Co., Deere &
Co., and Fortis, "want restrictions and limitations to be fair and
reasonable," said Thomas M. Boyd, the head of the legislation and
public policy group at Alston & Bird, a Washington law firm.


Industry lobbyists are also eager to undercut claims that privacy
legislation will be important come election time. The Democrats "are
preaching to the converted, the privacy extremists who already tend to be
Democrats," said Harris Miller, the president of the Information
Technology Association of America. "They're not developing any
broader base for the party, [and] they are potentially alienating the
leadership of the new economy." Miller argued that most executives
and workers in the high-tech sector oppose broad regulations and said they
represent the independent "real swing voters."


But despite such protests, the issue "is not going to go away,"
said Shelby. "Ultimately, the American people will win this issue, no
matter how many lobbyists prowl the floor."


Neil Munro

National Journal