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OPM breach highlights perils of big, stupid government

071115 editorial - pic
Archuleta's resignation, which came Friday under immense pressure, was appropriate. (AP)

Prior to her appointment as director of the federal Office of Personnel Management, Katherine Archuleta's most significant real-world experience had been as the national political director for President Obama's re-election campaign.

Hers was a typical patronage hire, but the results have proven anything but typical. OPM acknowledged this week another massive leak of personal data, much larger than the one disclosed earlier this year, when hackers compromised the records of 4.2 million current and former federal employees.

The new leak affects 21 million Americans — mostly applicants for security clearances, but also spouses and others who were investigated in their clearance processes. The data stolen by hackers includes all of the common identifiers, plus financial, employment, educational, familial, medical, residential, and criminal histories. Oh, and fingerprints, too.

The incident serves as a reminder that government isn't just a threat because of the powers it exercises or abuses. Government's very presence is dangerous wherever it has insinuated itself and its incompetent ways. In addition to the enormous national security implications of this breach is the more mundane problem that it threatens the finances of millions of American families.

Archuleta's resignation, which came Friday under immense pressure, was appropriate. Her agency's inspector general had found the security problems with OPM's systems to be so grave that he had called on her to shut it down last year. Archuleta and her aides ignored his advice.

But her exit in disgrace will not solve this problem. Americans now find their own government to be the greatest threat to their privacy — not in the narrow sense that government knows too much about everyone (which is also true), but in the broader sense that it is the weakest link for keeping their private data out of the hands of criminals.

This isn't the sort of problem that can be solved with extra effort or vague reassurances. Government has demonstrated time and again in the information age that it lacks the competence to keep custody of personal data. The Obama administration has been especially bad (HealthCare.gov, for example, is still not secure), but there is no reason to think that future administrations of either party will do much better.

What is really needed is a thorough review of some of the systems of the modern state, based not on what some people would like government to do but on government's known real-world capabilities. From a purely non-ideological and technocratic perspective, government should withdraw where possible from many sensitive administrative areas that have given it an outsized, and now proven dangerous, role in this nation's life. A serious effort is needed to make structural changes and stop inflicting passive but grave harm on the interests of innocent people.

There are already strong arguments for keeping people's personal financial information out of government hands wherever possible. But it is a compelling additional argument that government is terrible at data security — worse than the average large retail corporation, bank, insurer or credit bureau.

The fact that members of the public conduct nearly all private financial transactions using a government-issued identifier — the Social Security number — is an accident waiting to happen whenever a breach like this one occurs.

The OPM breaches should prompt businesses and credit bureaus to start discussions about dropping the SSN and devising their own private identifiers for tracking and rating customers, completely separate from any sort of federal government involvement.

And if such an untethering of the financial system from government creates problems for the federal law enforcement agencies that are so keen to track financial transactions, these problems pale in comparison to the those that one-tenth of the adult population can now expect to face as a direct result of government mismanagement.

A government that demands every American's most sensitive information and then cannot protect it is a government that doesn't deserve the public's confidence. Unfortunately, that's the government we have in Washington today.