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The Stealthy Wealthy; Who Are The "Stealthy Wealthy" And How Do They Make Their Monday; DEM Candidates Face Scrutiny After Biden Drops out; Facial Recognition Used In NOLA Escape Manhunt. Aired 9-10a ET

Aired May 24, 2025 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[09:00:28]

MICHAEL SMERCONISH, CNN ANCHOR: Congratulations to the class of 2025. Now go forth and make some money the boring way. I'm Michael Smerconish in Philadelphia. It's commencement season. This year's speakers they include military leaders, politicians, sports stars, captains of industry, celebrities, even a famous frog.

Admiral James Stavridis spoke at Adelphi. Henry Louis Gates at the Georgetown Law Center. Kermit the Frog at the University of Maryland. Sandra Oh will speak at Dartmouth. Grant Hill at Duke. And today, President Trump will speak at West Point. They'll all be addressing many young graduates saddled with college debt and aspirations of making money.

At present, the median net worth for somebody in their 20s, it's under $8,000. But too often, the perception of where and how to make the most money is media and personality-influenced. In television, film, and music we glamorize Wall Street and Silicon Valley, not Middle America. But business ownership in any town, USA is increasingly the foundation for our very highest wage earners.

As Juliet Chung of the Wall Street Journal recently reported, "Behind a paycheck, the largest source of income for the 1 percent highest earners in the U.S. isn't being a partner at an investment bank or launching a one in a million tech startup. It's owning a medium-sized regional business. Many of them are distinctly boring and extremely lucrative, like auto dealerships, beverage distributors, grocery stores, dental practices, and law firms.

That analysis was based on the work of Owen Zidar, a Princeton University economist, and Eric Zwick, an economist at the University of Chicago. Dr. Zidar will join me in just a moment. The two are soon to publish a book on this very subject.

They studied animized tax data from 2000 to 2022. Their focus S corporations and partnerships. Typical of those were medium-sized businesses with annual sales of 20 million and 100 employees. Their findings built off a previous academic paper for which they were co- authors called capitalists in the 21st century.

From that analysis quote, "Our findings draw attention to a class of entrepreneurs hidden from public view who prevail among top earners and whose human capital income is key for understanding top incomes." The takeaway from both the prior and more recent analyses is that if we examine everyone in the United States and then focus on the top 10 percent of earners. For most, their main source of income is wages, but for the very top, those at the 0.1 percent level, it flips. And most of them are getting more of their income through profits from their businesses.

Those businesses are typically not in finance, but rather they actively produce goods or services across the diverse industries. Professor Zidar and Zwick, they gained access to data about who owns private jets and super yachts, and what do they find among the latter? Sure enough, dozens of auto dealers who live in random towns across America and beverage distributors and people like Dick Portillo. You're wondering, who's he?

Well, he's a guy who created a billion-dollar business empire by selling hot dogs. As Zidar explained to me recently, Portillo grew up in a Chicago housing project, didn't go to college, but as a hardworking ex-marine, he started his business with a single hot dog stand in a parking lot and had to clean things in his bathtub. As a matter of fact, it had a ring around it from all the mustard.

Portillo knew nothing at the start. He would sneak into the back of restaurants to learn how they did things. It was a huge struggle, he said. Growth came from passion, and sacrifice, and hard work. But over the years, his business grew along with his menu until today, Portillo's is one of the top casual dining chains with numerous spots not just in Chicago, but around the country.

When he met with private equity firms who wish to purchase his business, he told them that success won't come from an MBA but from getting a PhD, a Portillo's hot Dog. For a long time, it's been said, build a better mousetrap and the world will be the path to your door. Nowadays people would replace Build a better mousetrap with Build a better app.

But as Portillo's demonstrates, it can be just as good to make a better hot dog. This Wall Street Journal article also had examples of entrepreneurs who defy stereotypes and show that you can make money at anything in America as long as you do it right. There's Derek Olson, his Minnesota-based business, National Flooring Equipment. They make machines that rip up flooring. He makes millions due to the need for carpet removal at elementary schools in particular. They've got a lot of carpet and the kids make a lot of mess.

[09:05:05]

Then there's David McNeil. He dropped out of college and sold cars. On a trip to Scotland, he noticed they had superior car floor mats. So he took out a second mortgage, shipped over a bunch of these mats to sell. In the first year he made $40,000. Two years, later he made ten times that amount.

Today, his Illinois-based company, Weathertech, you've heard of them, they sell hundreds of millions in auto accessories. The point is, America is still the land of opportunity. In fact, it may be truer today than it was 25 years ago. The data show that business owners worth 10 million or higher have more than doubled in the past quarter century, even adjusting for inflation.

Sure, it's true that one third inherited their businesses, but most are self-made. And many of these now 1 percenters did not grow up themselves in privileged homes. They're ambitious, they're smart, but nor did they graduate from the most prestigious schools.

In fact, many didn't go to college at all. And today they don't live on the coasts. They tend to live somewhere in the middle of the country. There's even a name for this type of success coined by Professor Zidar. They're called the stealthy wealthy. Or as a book first published in 1996 called them, The Millionaires Next Door.

The authors of that book, Thomas Stanley and William Danko. A compelling takeaway from that book was that many of the millionaires profiled were not doctors, lawyers, or executives, but skilled tradesmen and small business owners. And you could say that book has aged well.

Its authors found that a significant portion of millionaires were self-employed in what might be considered blue-collar or middle market industries. Think plumbers, think electricians, contractors, or pest control operators. These individuals often built modest businesses over time. They exercised strict financial discipline, and reinvested profits rather than indulging in lifestyle inflation.

Unlike high-income professionals who sometimes live paycheck to paycheck in high-status neighborhoods, these tradesmen lived well below their means. They avoided debt. They focused on wealth accumulation rather than status signaling.

As we discussed here recently, there's an overdue return now at play to teaching some of the trade skills to high school students rather than a continuation of the college for all mindset. Hopefully, that will lead to more blue-collar workers getting to the 1 percent.

So graduates of the class of 2025 go forth, strive to establish a medium-sized regional business, seek to deliver goods and services, and you will prosper. Joining me now is Owen Zidar, professor of economics at Princeton. Dr. Zidar, why hasn't this registered with the popular consensus?

OWEN ZIDAR; PROFESSOR OF ECONOMICS AT PRINCETON: Thanks for having me. That's a great question. And I think one of the biggest misconceptions for graduates is that the way you get rich is by earning high wages. And that's just not true in the data, as you said. When you look at the very top.

SMERCONISH: Is it a culture thing? I can't think of too many that get all the attention in the media, in pop culture, music, film, TV shows that fit the bill. You and I are describing, like, the guy who's pulling up the carpet, you know, in elementary schools and making a fortune because they need a lot of carpet and they got a lot of schools. Some. Some is cultural, I think. Some. It's just really hard to know

who's wealthy. You know, wealthy people don't answer surveys. And, you know, so you have to rely on who you see in the news and some investigative reporting, but it's hard to get a systematic take of what's going on. I think one of the easiest ways to see it is to ask yourself, who's the richest person in your high school? And almost always the answer is going to be something like one of these beverage distributors or someone, you know, like in St. Louis, the Tracy family is a food redistributor. And, you know, these companies can make hundreds of millions of dollars, and, you know, they just don't show up on anyone's radar.

SMERCONISH: I made reference to the yacht and the private jet data. What did you look at and what did you find?

ZIDAR: So, you know, we have a sense from looking at the whole. The whole population of who's wealthy, but it's hard to identify them in other data sets. And so one of the ways to do it is to say, look, if you have a private jet, you're probably considerably wealthy.

Now, some people don't, you know, who are very wealthy, don't fly jets. They drive a Volvo and have a nice quiet life. But some show up in these data, and it's amazing. We found dozens of car dealers all over the country, Indianapolis, you name it, who show up in these data. There's a guy, for instance, in the Boston area named Herb Chambers who owns a couple really large yachts, and he's not even in the top 20 of the biggest auto dealers in the country.

SMERCONISH: You and I are having this conversation just after the house has passed what the President calls his big, beautiful tax bill. As I was reading some of your studies and analyses. It occurred to me this all, these has public policy considerations, right? What might they be? What are the lessons? I'm trying to speak to graduates today by addressing this and having you here. But what are the lessons for lawmakers?

[09:10:23]

ZIDAR: I think the lessons for lawmakers is, you know, it's very clear the signatures of this group on the bill that you mentioned. So there was an $820 billion component of the big beautiful bill that passed the House that lowered rates for this group from 20, basically made a deduction more generous from 20 to 23 percent. And that's more expensive than the reductions in Medicaid in the bill, which are really controversial.

And when you ask people why is this part included in the bill, I'm surprised it was more generous than the first Trump tax cuts. A reporter from the Wall Street Journal was kind of searching around, and they said, oh, we just wanted to give a little bit more. But if people are looking to cut the deficit, that seems like a very clear place to go.

Last time it was a 20 percent deduction and it was a couple more points more generous. But because there's so much money here, it's really expensive. And so I think in terms of graduates, there should be this question of why are you mortgaging our future by taking out huge deficits that are already exacerbating a big fiscal problem we have that should really be pro-growth things. From the last time, it didn't seem like there was a lot more investment from these sizable tax cuts for pass-through owners.

SMERCONISH: Dr. Zidar, final question. Do your students get it? You're a professor of economics at Princeton University in the Ivy League, do you sense that your students understand, hey, maybe there's a future for me and I'll quote the Graduate and date myself plastics or recycling garbage. I want to go to Princeton and be an auto dealer. I want to go to Princeton and I want to rip up carpet from the elementary school.

ZODAR: I am doing my best to spread the gospel. In fact, I was meeting with somebody yesterday who reached out to me after he saw the Wall Street Journal story because he wants his 27-year-old daughter to get the gospel, so to speak. I think one of the issues is that if you want to go and find some of these companies, they're not all in San Francisco and Brooklyn, and you need to have a broader sense because they really are everywhere in the country. My hope is that people will realize you can have a really good life if you own some of these companies, they can return much more than if you're reporting to someone else as a salaried worker.

SMERCONISH: Right? I want to own an HVAC business in Mississippi. Path to success. Thank you Dr. Zidar. I find it fascinating. I look forward to your book.

ZIDAR: Thank you very much.

SMERCONISH: Speaking of commencement season, the Washington Post's Matt Baih caught my eye with this essay recounting instances where students were punished by universities after injecting pro-Palestinian messages into their commencement speeches, something that Matt Bait called cowardice. But it inspires today's poll question@smerconish.com because these incidents, they happen every year. Should universities punish students who make political statements during commencement addresses? If they go rogue, should the universities now seek to punish them? Go to smerconish.com and cast a ballot on that.

Up ahead, President Biden's debate performance was a turning point, but what came after? The silence, the deflections all may matter more. Which 2028 likely candidates saw the decline and said nothing, or still propped him up? Don't forget, sign up for the newsletter when you're voting@smerconish.com in the daily poll question, you'll get the work of the likes of Scott Stantis.

(COMMERCIAL BREAK)

[09:18:13]

SMERCONISH: You know the expression, if you see something, say something. The hottest book in the country is Original Sin by Jake Tapper and Alex Thompson, chronicling the impact of former President Biden's decline while in office and the impact that had on the 2024 election. Chances are this book is going to have a lasting impact, maybe all the way to the 2028 cycle, as the list of likely candidates is forced to answer why they saw one thing but said another or said nothing.

Consider Kamala Harris. Back in September of 2023, the Vice President said, quote, "I see him every day. A substantial amount of time we spend together is in the Oval Office, where I see how his ability to understand issues and weave through complex issues in a way that no one else can to make smart and important decisions on behalf American people have played out.

When the post-debate pressure mounted, she held the line, quote, "Harris has emerged as Biden's strongest public defender. She then embarked on a cleanup tour on behalf of Biden. This comes from the book telling voters, donors, and some celebrities to look past the debate and judge the president on his record.

Then there's Gavin Newsom. Page 89 of Original Sin. We learn about a June 2023 fundraiser that President Biden attended with the governor of California. "Attendees were shaken by Biden's meandering remark. The contrast with the younger, agile Newsom didn't help. I remember leaving that fundraiser thinking, oh, f. One attendee said. We got so desensitized and how bad it had gotten.

But publicly, here's what Newsom was saying.

(COMMERCIAL BREAK)

GOV. GAVIN NEWSOM; (D) CALIFORNIA: I've seen him up close. I've seen him from far. But here's my point. It's because of his age that he's been so successful.

SMERCONISH: Even after the debate, Newsom called criticism "gaslighting" and stood by Biden's side. Then there's Governor Josh Shapiro of Pennsylvania. He did the same. He stood at a watch party the night of the debate urging focus on the stakes rather than Biden's age. Reminded the crowd that 2024 was then a binary.

[09:20:03] Senators Governor Josh Shapiro of Pennsylvania, he did the same. He stood at a watch party the night of the debate urging focus on the stakes rather than Biden's age. Reminded the crowd that 2024 was then a binary choice, claiming Biden, quote, loves this nation and Trump doesn't love America.

In the book Original Sin, Shapiro shares an encounter he had with the former president and first lady on the campaign trail in Philadelphia that July. When asked by Biden, how's it going out there? Shapiro, for quote, decided to give it to him straight. That expressed concerns including that the campaign wasn't sufficiently acknowledging the pain that inflation was causing and that the president needed to prove the debate was an aberration. Weeks later, still no wavering in public from Shapiro.

"Asked by Politico in August of 2024 if he had any concerns that Biden had slipped, Shapiro said, not at all. And I've been in regular contact with the president. And it's not just Harris and Newsom and Shapiro. Many more Democratic a-listers had access to the president while assuring the public that all was well. That might not matter to Democrats when 2028 ramps up, but it might matter to independents. And you can already imagine the Republican commercials that will have a split screen with footage of an enfeebled Biden one side and those Democrat reassurances in quotes on the other.

Joining me now is Alex Thompson, national political correspondent for Axios and a CNN contributor. He's of course, the co-author of Original Sin. President Biden's Decline, its cover up and his disastrous choice to run again.

Alex, I'm going to ask you the same question that I asked Jake Tapper on radio. Who among the 2028 likelys on the Democratic side of the aisle is most vulnerable for having seen one thing but said another publicly?

ALEX THOMPON, CO-AUTHOR, "ORIGINAL SIN": Well, Kamala Harris is top of the list given that she was the vice president and that even after Robert Herr's special counsel report which said suggested that he was an old man with a poor memory, she basically became the tip of the spear in defending him and saying that he was on top of it. But you know, you really did an excellent job of laying out that there is not -- if this becomes a political liability, there is almost no senior Democrat in the entire party that is not touched by this.

Gavin Newsom, all the top Democrats, there is tape on almost all of them attesting to Biden's acuity, that he is as sharp as ever, that he is on top of it. And if the Trump presidency goes the way that some Democrats believe it will, which is constitutional, rolling constitutional crises you know, if the Trump presidency becomes sort of a disaster in democratized, I think the anger at people that covered for Biden will become more, more significant and it will become a factor in the 2028 primary.

SMERCONISH: Those commercials write themselves. I don't know to what extent it will matter to Democrats. I mean, maybe, as you say, if the Trump presidency continues as it is in the eyes of Democrats, then maybe Democrats will be inflamed as an issue pertaining to this. But for sure, in a general election, you can just see the split screen.

THOMPON: Absolutely. And you know, some Democrats -- Democratic treasures I've talked to have compared this to the Iraq war vote and 2003, where basically almost every senior democrat voted for the war. And at the time it was seen as sort of a shrewd, you know, we're going to be hawkish decision. But by, obviously by 2007, 2008, it ended up being actually a political disaster. If Hillary Clinton had not voted the way that she did, she may have very well been president in 2008.

SMERCONISH: Relative to Vice President Kamala Harris, she has an interview with Anderson Cooper post-debate. You write about this in the book, by the way. I've got to do an Eats, Shoots, and Leaves. If you remember the book and the importance of punctuation. I've got to do an Eats, Shoots and Leaves analysis of one graph of your book, Alex, and it comes on page 290 and it's getting a lot of attention today. This MFER doesn't treat me like the damn vice President of the United States. She said to colleagues, I thought we were better than that.

I'm being real persnickety now, but that there are not quotation marks around that in the book. Is that a direct quote from Kamala Harris about Anderson Cooper?

THOMPON: I will go back to my copy, but my understanding is that it is that she was incredibly frustrated with Anderson Cooper asking the same question over and over again, which Anderson Cooper, this was the night of the debate. And Anderson was like, have you ever seen him act that way behind the scenes? Because if the vice president of the United States had seen the president act that way, on you know, behind the scenes as he acted on the debate stage and said nothing, I think it would have been incredibly indicting. But you know, Kamala Harris, I can tell you 100 percent was infuriated after that interview.

[09:25:08]

SMERCONISH: So the response from Team Biden, I'm paraphrasing, is essentially to say, yeah, he's old. We all knew that. So what? Give us one instance where this impaired his ability to do his job. He did a great job. He has a record. And you can't identify something where his quote, unquote, you know, feeble condition got in the way. You say what?

THOMPON: I say that many senior members of the Democratic Party and his own administration feel otherwise. I mean, we're not alleging any of this. This is based on over 200 interviews of almost all Democrats grappling after the election with what happened.

So I would say a few things. Members of the cabinet believe that because of Biden's age that senior people in the administration, people like Ron Klain, were able to steal the year the Biden administration. More to the left of where Biden had been for most of his career.

We have Senator Mark Warner in the book Democrat of Virginia saying that he, during a foreign policy national security conversation, they believe that Biden was not really up to snuff on all the issues. We also have Senator Michael Bennet of Colorado, a Democrat, also probably running for governor, believing that Biden's age made him unable to handle the immigration portfolio and all the factions of the Democratic Party which led to such incoherence with the border and immigration policies of this country.

Now, the Biden people can disagree, but these are senior Democrats in the administration and in the Senate where Joe Biden served for 36 years that just disagree.

SMERCONISH: But no 2:00 a.m. phone call came that he couldn't respond to use that example.

THOMPON: Well, we talked to two cabinet members that believed that he wasn't up to that. If the 2:00 a.m. crisis phone call, they said like maybe he could have done it, but they did not have confidence that he was at every single day capable of responding to a national security crisis at 2:00 a.m. And just because that 2:00 a.m. crisis did not happen doesn't mean that it was not irresponsible in the views of these senior members of his own administration.

SMERCONISH: Alex, you're the co-author of what is unquestionably the hottest book in the country, the most buzzed about book in the country. It's gotten the formal reviews. You've been everywhere. Jake's been everywhere. I'm the end of the road. By the way, in terms of this interview.

Here's the question that I want to ask. Is there something in the book that you are saying or Jake is saying, I'm kind of surprised more people aren't focused on that. You know, the Clooney recognition or lack of recognition. Those elements are getting a lot of attention when -- what is in this book that when you wrote it you said that's going to be big, but nobody's talking about it.

THOMPON: You know, one thing that I've been surprised, hasn't gotten as much attention is we had access to months of his internal calendars, and it became clear that by the end of 2023 and you know, begin and throughout 2024, that his schedule was internal schedule was so limited. There were days where he would have just, you know, where he would go up to the residence and have dinner at 4:30 and be down the rest of the day now maybe take phone calls up there.

But there were, and there were weeks of this, like when he was on, you know, doing international trips, the schedule was packed. But when he was in D.C. That the lack of like a rigorous internal schedule, I thought was really telling about how much they actually knew.

SMERCONISH: Alex, thank you for being here.

THOMPON: Thanks so much for having me.

SMERCONISH: Social media reaction from the world of X. What do we have. Hugh coverup, I guess that's huge. Cover up, Thomas. By democratic oligarchy, biased media, and Oval Office cabal all meant to preserve their power. Democracy lost enablers. Well, you heard the answer to the question that Alex just gave to me and similar to what Jake gave to me on Sirius XM Radio, which is if you want to go through the democratic A listers and say what were they saying publicly and what were they seeing publicly and privately, there's a big difference. Now how interested people will be in that in the next cycle.

I also agree with Alex. I think it depends on what the outcome might be of the Trump administration. But those vignettes are not going away, and they seem to touch everybody.

It's hard to identify someone, having read the book, who distinguished himself or herself by saying directly to the President, hey, it's, you know, you got to know when to hold them and when to fold them, and your time is up. Nobody seems to be that person.

I want to remind you, go to my website@smerconish.com. Answer today's poll question. This is not a hypothetical. This is played out at NYU. This is played out at GW in this very commencement cycle, you've got a student, they've distinguished themselves, they get access to the podium during commencement, and they go rogue and they make a political statement. And now the universities are scrambling.

Well, the person's already graduated. Do we ban them from campus? Do we take back their sheepskin?

That's why I'm asking, should universities punish students who make political statements during commencement addresses? George Washington University voted yes after graduate student commencement speaker Cecilia Culver said this.

(BEGIN VIDEO CLIP)

CECILIA CULVER, GEORGE WASHINGTON UNIVERSITY GRADUATE STUDENT: I am ashamed to know my tuition is being used to fund this genocide.

(END VIDEO CLIP)

SMERCONISH: OK. I mean, there's an example of it. A little snippet. Go vote at Smerconish.com. Your social media reaction coming up to my commentary.

And for two years, police reportedly secretly monitored New Orleans with facial recognition cameras. Now, they're saying the same tech is helping them catch some of the inmates. We've all seen that footage, that massive jailbreak. So, what's the line between public safety and privacy? We'll discuss all angles.

When you're voting on the poll question, sign up for the free and worthy daily newsletter. You'll get the work of exclusive editorial cartoonists like Steve Breen.

(COMMERCIAL BREAK)

[09:35:34]

SMERCONISH: You can find me on all the usual social media platforms, including X. Follow me on X and comment during the course of the program. I always enjoy responding in real time.

Everybody's thoughts, media knew, and are accessories to treason. Nathan Hale, funny name for that comment. OK. Largest cover up in American history. None will be punished for it.

But, Nathan, my point in interviewing Alex Thompson, who's one of the co-authors of the book, when you say no one will be punished -- the book has been picked over. I'm trying to be forward looking. And what occurs to me, this is a scary thought, but before you know it, it will be the 2028 cycle.

And I think there's going to be some comeuppance, some accountability given now what this public record consists of, where candidates will have their comments, maybe it will be video, maybe it will be a written comment that was quoted in a newspaper or a Web site on one side of the screen, and on the other side of the screen is going to be some of the footage that gets shown on a loop in some quarters of former President Biden. I think it's a fair question to say, why were you saying X if you knew the truth to be Y? As for accountability for the rest, including the media, I think that that ought to take place too. My hands are clean. I talked about both of their deficiencies during the course of the campaign, Biden and Trump.

More social media reaction. What else has come in during the course of today's program?

The obvious questions, Michael. Who was actually making the decisions? And did Joe or Jill or decide massive list of 10 plus pardons?

I don't -- I need to say this as well, because at this stage it just seems like piling on. I was very careful to ask both Jake and Alex the question of -- and they had an answer, but I didn't hear that the 2 a.m. phone call came and he couldn't respond to the challenge.

Joe Biden has got a record. Democrats like the record. I think many Americans like the record. The historians will do an analysis of it.

But what the book doesn't include and the Biden people say this is, OK, you know, he's an old guy. We all know that. Where is the instance where he couldn't do his job? That's not in the book. To my reading, that's not in the book.

Make sure you're voting on today's poll question at Smerconish.com. I'm asking, should universities punish students who make political statements during commencement addresses?

It's not a hypothetical. It's happening. It happens every year. What's a school to do in that case?

Still to come, for two years New Orleans, their police have relied on facial recognition technology to scan city streets in search of suspects, an unprecedented program for an American city. Where is the line between privacy and public safety?

When you're voting on the poll question at Smerconish.com, sign up for the newsletter. You'll get editorial cartoons like this from the likes of Jack Ohman.

(COMMERCIAL BREAK)

[09:42:49]

SMERCONISH: Last weekend, we saw a real-life "Shawshank Redemption" jailbreak. Ten inmates escaped from the Orleans Justice Center after slipping through a hole behind a metal toilet. The escape set off a major manhunt, four staffers to flee the district attorney's office, even prompted the sheriff to suspend her reelection campaign.

Now, a private facial recognition network is playing a crucial role in the search. The system run by a nonprofit called Project NOLA, spotted at least two escapees in real time. One, just minutes after the breakout. Another only a block away from where cameras last saw him. Project NOLA's cameras, they can scan over 300 faces per second. They're mounted on private homes and businesses and compare passing faces to a database of known fugitives.

But here's the larger part of the story. According to "The Washington Post," the same network has been running silently for two years. And it's a system that's unprecedented in any American city.

The report reveals New Orleans police used more than 200 facial recognition cameras to scan streets and automatically alert officers without telling the public, the city council or documenting those alerts in required reports. A 2022 ordinance there clearly banned general surveillance technology. It said, quote, it has "limited police to using facial recognition only for searches of specific suspects in their investigations of violent crimes and never as a more generalized surveillance tool for tracking people in public places."

And yet, Project NOLA's cameras stayed online. The nonprofit claims its system has been involved in at least 34 arrests since early 2023. And even after police ordered the alerts paused last month, "The Post" reports that Project NOLA is still texting and calling officers with live tips.

My next guest called this tech, quote, a "nightmare scenario." Nathan Freed Wessler, the Deputy Director of the ACLU's Speech, Privacy, and Technology Project. By the way, in 2017, he argued a case called Carpenter versus the United States in the Supreme Court of the United States. That's a case that established that the Fourth Amendment requires law enforcement to get a search warrant before requesting cell phone location data from a person's cellular service provider.

[09:45:00]

I remember talking about it on radio. Nathan, good to see you. Isn't it a good thing that this technology is being used for the prison break scenario?

NATHAN FREED WESSLER, DEPUTY DIRECTOR, ACLU SPEECH, PRIVACY, AND TECH PROJECT: Good morning, Michael. It's good to be on with you. What we have to remember here is that New Orleans police have been relying on this system secretly for two years. Now, that it became public after that "Washington Post" report, they are desperate. The operators of this system are desperate to justify it retroactively. And of course, they're casting around for the most sympathetic use case they can.

But here's what the system does. It scans the face of every New Orleans resident and visitor who walks past any one of more than 200 A.I. face recognition cameras, tries to match them against a secretly compiled watchlist, and then was sending automated alerts directly to police officers' phones.

Now, as you said, this violates -- very clearly violates New Orleans' law, which prohibits use of face recognition technology as a surveillance tool. And it's dangerous because of the risk of misidentifications. And there are a number of cases around the country of people wrongfully arrested after this technology got it wrong. And it's dangerous because no American city has ever been willing to do what New Orleans is doing, which is to deploy this kind of real time biometric surveillance of people in this country.

SMERCONISH: But, Nathan, the cameras are not in anybody's bedroom. And you and I have no expectation of privacy if we're in the French Quarter.

WESSLER: Well, of course, courts have recognized that if were walking around in public, other people might see us. We might be captured on a security camera. But what we have never had to contend with in this country is the government deploying an automated set of face recognition cameras that automatically identify us and track us as we go about our lives, and then create potentially an indelible record.

You know who does that? The Russian government does that, including to track dissidents. The Chinese government does that, including as part of its massive repression campaign against ethnic Uighurs.

In the United States, there's been a thick red line, a real taboo against engaging in this kind of mass surveillance, scanning every person, making every one of us a suspect, basically, and then trying to match us against, in this case, a completely secretly compiled watch list. We don't do that here --

SMERCONISH: If I'm in law --

WESSLER: and New Orleans needs to stop.

SMERCONISH: If I'm in law enforcement and I'm standing in the town square and someone walks by that I believe to be wanted by law enforcement, I'm free to take action, right? Why shouldn't we rely on technology that could do that tenfold?

WESSLER: Yes. Of course, police have lots of tools to do their job. What the courts, including the U.S. Supreme Court in that case that I argued several years ago, have made clear is that when it comes to these kinds of modern technologies, we're not talking about just an increase in degree of efficiency. We're talking about a categorically new power in the hands of government to track us, to surveil us, to create digital dossiers of our every movement and activity and association. And that becomes extraordinarily dangerous without very strict checks and balances.

None of those checks and balances were observed here. We had the police outsourcing this to a private individual with no city oversight, assembling a secret watch list, hiding use of this from courts, from people accused of crimes and their attorneys, hiding it from city council in violation of city law. Every piece of this program is really dangerous and shameful. And New Orleans never should have stepped in this direction and they need to shut it down now.

SMERCONISH: It sounds to me -- I wish we had more time. It sounds to me like you may have another ticket to the Supreme Court of the United States on this case. Thank you, Nathan.

WESSLER: The constitutional issues are very serious. Thank you. SMERCONISH: Let's check in on some social media reaction to this story. It's a fascinating story.

From Cher. Facial recognition software is inherently flawed, has diminishing returns as the skin tones get darker. Yes, I've read that criticism. This has been the case for decades, since the invention of the tech, and people have been wrongly arrested in the United States.

To which I think I would respond, read that "Washington Post" story. It was very well researched, very well written. And among the points, I'm doing this from memory, but what stands out -- you know, London is said to be like the most surveilled city in the western world, not putting it in a category with Beijing. They say -- they say they've never had a false arrest based on the use of that technology.

And when something hits the fan, like the Boston bombing, and we're looking for the Tsarnaev brothers, we're all like, well, don't you have cameras? Or if there's an amber alert, right, don't you want plate technology used so that cars can be identified and we can find the, you know, the bad person immediately?

[09:50:00]

It's how do we balance the Shawshank prison break that I showed you at the outset, tongue-in-cheek, with the every day. And I think it's a hard call.

You still have time to vote on today's poll question at Smerconish.com. It's the season, commencement season. What should universities do when a speaker goes rogue? One of their students who makes a political statement during a commencement address, should they be punished? Go to vote at Smerconish.com. Yay or nay on that.

While you're there, will you subscribe to the free and worthy daily newsletter? Because I offer you, among other things, the work of editorial cartoonists like Rob Rogers. Check that out.

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SMERCONISH: OK, there's the result so far of the poll question, 33,000 and change have voted. Should universities punish students who make political statements during the commencement?

[09:55:03]

Oh, I like this. Sixty-nine percent say, no. I'm in the majority. That's a rarity. I'm in the majority, right.

I don't like a lot of what I hear at these commencements that we've been discussing. But the idea that the university is now going to somehow get involved and try and take back the sheepskin, no, that does not make sense to me.

OK. Social media reaction. What do we have? One, because it has got to be a goodie. I'm limited on time. Political statements cannot include threats, terrorism or vandalism. I agree, totally agree. A protest should not prevent others from enjoying the reward of a graduation ceremony.

I totally get it. I'm of the same mindset. If they engage in hate speech, I'd give them the hook, you know, and take them right out of that scenario. But if it's the conventional political speech and they choose to use their time in such fashion, I'm going to sit there and I'm going to squirm in my seat and wish that they hadn't done so.

But should the university then try and do something about it? No. No, is the answer to that. Remember, if you missed any of today's program, you can always listen anywhere you get your podcasts.

Finally, very important. I want to wish everybody a very thoughtful, that was the word that Admiral Stavridis suggested to me, a very thoughtful Memorial Day weekend. Thank you for watching. See you next week.

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