“Focusing On The Wrong People”: The Real IRS Scandal Is Secret Money Influencing US Elections
The IRS is under siege for investigating conservative political groups applying for tax-exempt status. But the real problem wasn’t that the IRS was too aggressive. It was that the agency focused on the wrong people—“none of those groups were big spenders on political advertising; most were local Tea Party organizations with shoestring budgets,” writes The New York Times—and wasn’t aggressive enough. The outrage that Washington should be talking about—what my colleague Chris Hayes calls “the scandal behind the scandal”—is how the Citizens United decision has unleashed a flood of secret spending in US elections that the IRS and other regulatory agencies in Washington, like the Federal Election Commission, have been unwilling or unable to stem.
501c4 “social welfare” groups like Karl Rove’s Crossroads GPS, the Koch brothers’ Americans for Prosperity and Grover Norquist’s Americans for Tax Reform—which don’t have to disclose their donors—spent more than $250 million during the last election. “Of outside spending reported to the FEC, 31 percent was ‘secret spending,’ coming from organizations that are not required to disclose the original sources of their funds,” writes Demos. “Further analysis shows that dark money groups accounted for 58 percent of funds spent by outside groups on presidential television ads [$328 million in total].”
IRS guidelines for 501c4 groups state that “the promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office…a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity.” It’s ludicrous for groups like Crossroads GPS—which spent at least $70 million during the last election—to claim that its primary purpose is not political activity. Only the likes of Karl Rove would believe that running attack ads against President Obama qualifies as social welfare.
So what did the IRS do about this blatant abuse of the tax code by some of the country’s top corporations and richest individuals? Virtually nothing. “When it comes to political spending, the IRS is more like a toothless tiger,” wrote Ken Vogel and Tarini Parti last year in a story headlined, “The IRS’s ‘feeble’ grip on big political cash.”
It’s obvious that our Wild West campaign-finance system needs more, not less, scrutiny and much tighter, not looser, regulation. Yet conservative groups are exploiting the IRS scandal to further dilute regulatory agencies that are already on life support. Writes Andy Kroll of Mother Jones:
The IRS’s tea party scandal, however, could hinder the agency’s willingness to ensure politically active nonprofits obey the law. The IRS will likely operate on this front with even more caution, taking pains not to appear biased or too aggressive. That in turn could cause the agency to shy away from uncovering 501(c)(4) organizations that do in fact abuse their tax-exempt status by focusing primarily on politics.
The Rove’s of the world would like nothing more than for the public to believe that conservative groups had too few opportunities to influence the 2012 election and were wrongly persecuted by evil Washington bureaucrats. Yet the 2012 election should have taught us precisely the opposite lesson—that our patchwork regulatory system is far from equipped to deal with the new Gilded Age unleashed by Citizens United. As Rep. Keith Ellison told Hayes last night: “We need to redouble our efforts to bring real campaign-finance reform forward.”
By: Ari Berman, The Nation, May 14, 2013
“Scamming The Taxpayers”: The IRS Controversy And The Tax-Exempt Charade
As we’re learning more about the IRS giving heightened scrutiny to conservative groups filing for tax-exempt status, we should make one thing clear: If what we’ve heard so far holds up, the people involved should probably get fired, and new safeguards should be put in place to make sure nothing like it happens again. And let it be noted that liberal publications, at least the ones I’ve seen, have all taken that position and have been discussing this story at length.
Now, let’s see if we can understand the context in which this happened. There’s an irony at work here, which is that it may well be that the IRS employees involved were trying to obey the spirit of the law but ended up violating the letter of the law, while for the organizations in question it was the opposite: they were trying to violate the spirit of the law, but probably didn’t violate the letter of the law.
Let’s take the first part, the IRS employees. When a group files for tax-exempt status, the IRS investigates it, asks it some questions, and determines whether it qualifies under section 501(c)(3) or 501(c)(4). The difference between them is that a 501(c)(3) is supposed to be a genuine charity, like your local food bank or Institute for the Study of Foot Fungus, while a 501(c)(4) is still primarily devoted to “social welfare” but is allowed more leeway to engage in some political activities like lobbying and participation in elections, so long as the political activities make up a minority of its time. The biggest practical difference is that donations to (c)(3) groups are tax-deductible, while donations to (c)(4) groups are not.
Once the Supreme Court said in the 2010 Citizens United decision that (c)(4) groups could engage in “express advocacy” (i.e. explicitly saying “Vote for Smith!”), the IRS got flooded with new applications for (c)(4) groups, and its job was to determine if these groups were actually “social-welfare” organizations that also did some politicking on the side, or if they were groups whose main purpose was actually political, in which case, according to the law, they should be denied (c)(4) status. We know very little at this point about what the IRS employees in Cincinnati did and why, but the generous interpretation is that since so many of the applications they were getting in 2010 and 2011 were from Tea Party groups that looked a lot like their sole purpose was to elect Republicans, they looked for some way to handle them all together, so they searched for applications with words like “Tea Party” and “Patriot” in their names and subjected them to extra scrutiny.
Even if their motivations were innocent and they were just struggling to find ways to wade through all these applications and do their jobs properly—in other words, if there was no violation of the spirit of the law—it was still improper for them to sort the applications this way, because it could mean in practice that an ideological test was being applied to which groups got heightened scrutiny. But now let’s look at the other half of the story, the groups applying for tax-exempt status.
The truth is that a great many of the groups that request 501(c)(3) and 501(c)(4) status, of all ideological stripes, are basically pulling a scam on the taxpayers. Maybe that’s a bit harsh, but at the very least they’re engaged in a charade in which they pretend to be “nonpartisan” when in fact they are very, very partisan. For instance, nobody actually believes that groups like the Center for American Progress on the left or the Heritage Foundation on the right aren’t partisan. When there’s an election coming, they mobilize substantial resources to influence it. They blog about how the other side’s candidate is a jerk, they issue reports on how his plans will destroy America, and they do all sorts of things whose unambiguous intent is to make the election come out the way they want it to. CAP and Heritage, along with many other organizations like them, are 501(c)(3) charities, meaning as long as they never issue a formal endorsement and are careful to avoid any express advocacy, they can maintain the fiction that they’re nonpartisan (keep getting tax-deductible contributions, which are easier to obtain than those that aren’t tax-deductible).
And that fiction is even more exaggerated when you get to the (c)(4) groups, particularly the new ones. For instance, when Karl Rove’s Crossroads GPS applied for 501(c)(4) status, it explained to the IRS that it was a social-welfare organization for whom influencing elections wouldn’t be its primary purpose. Instead, the group said “Through issue research, public communications, events with policymakers, and outreach to interested citizens, Crossroads GPS seeks to elevate understanding of consequential national policy issues, and to build grassroots support for legislative and policy changes that promote private sector economic growth, reduce needless government regulations, impose stronger financial discipline, and accountability in government, and strengthen America’s national security.” It claimed that 50 percent of its activities would be “public education,” 20 percent would be “research,” and the remaining 30 percent would be “activity to influence legislation and policymaking.” On the section of the form where the group has to state whether it plans to spend any money to influence elections, it wrote that it “may, in the future” do so, but “Any such activity will be limited in amount, and will not constitute the organization’s primary purpose.”
As everyone knows, this is a joke. Crossroads GPS was created for one purpose and one purpose only: to get Republicans elected. Maybe they found a way to stay within the letter of the law, but there’s no question they were violating its spirit. And the same is true of Priorities USA, the pro-Obama group created in advance of the 2012 election by a couple of former White House staffers. Both are actually twin groups, a (c)(4) and a super PAC, which allows the people running them to keep within the letter of the law by moving spending around between the two. (Stephen Colbert and Trevor Potter memorably explained how all this can be done.)
Without knowing anything about the particular Tea Party groups that were subjected to heightened scrutiny (we’ve only heard about a few so far), the broader context is that you have a lot of groups of all political persuasions that are essentially trying to pull a fast one on the IRS, and through them, the American taxpayer. Keep in mind that tax-exempt status is a gift that we give to groups that can demonstrate they deserve it. Perhaps this part of the tax code should be made stricter, or perhaps it should be made looser so all these charades can stop. But either way, this wouldn’t be a bad time to start that discussion.
By: Paul Waldman, Contributing Editor, The American Prospect, May 13, 2013
“Let’s Enjoy The Spectacle”: Karl Rove’s Republican Defeat Project Hits The Road
The long simmering war between the GOP establishment and the Tea Party has finally come to a boil. Last week Karl Rove, the “brains” behind the Republican super PAC American Crossroads announced the creation of a new super group, the Conservative Victory Project.
I’m a Democrat who believes in the axiom that the best thing to do when Republicans are lined up in a circular firing squad is to stay out of the way, watch, and enjoy the spectacle. Rove’s brainchild is wrong on so many levels that I don’t know where to start.
But I’ll start with visibility. Up to this point, the war between the Republican Party has been confined to party confabs like state conventions and cocktail hour at the Heritage Foundation. The creation of the Conservative Victory Project means that the battle will be a lot more visible taking place on television in front of the faces of millions of voters.
What is worse, two feet of snow in the Northeast or Karl Rove’s two feet of clay? Then there’s the question of effectiveness. American Crossroads was a miserable failure in 2012. Rove’s super PAC spent close to $200 million, almost all of it in races where the Republican candidate lost. If the Conservative Victory Project performs as poorly against the Tea Party as it did the Democratic Party, then there will be even more hapless Tea Party candidates like Christine O’Donnell and Todd Akin who win primaries and lose to Democratic candidates. If Rove wants to spend millions of dollars to defeat Tea Party candidates instead of Democrats, I’m all for it. Democrats are licking their chops at the prospect.
If Rove and his moneyed minions were serious about taking on the Tea Party, they should have done it before the Tea Party took over the Republican Party in 2009. If Rove and his acolytes were really serious about crushing the extremists in the GOP, they would step up to the plate and take on Rush Limbaugh and Sean Hannity who rile up the crazies in the GOP daily. Hannity may rhyme with sanity but the two words are not synonyms.
A Tea Party official suggested the name: Conservative Victory Project group was “Orwellian” because the real goal of the group was to defeat conservative candidates. I don’t get a vote but in my opinion, a more appropriate name would be the Republican Defeat Project.
By: Brad Bannon, U. S. News and World Report, February 8, 2013
“Rove Vs. King”: Don’t Be Fooled, Republican’s Have Every Reason To Exaggerate Their Differences
Yesterday Kathleen Geier noted the most interesting political story of the weekend: the rapidly escalating war of words on the Right between so-called “Establishment” Republicans led by Karl Rove and Tea Party “Conservatives” as represented by past and future Senate candidates deemed “undisciplined.” The immediate flash-point is a gratuitous slap at U.S. Rep. Steve King (R-IA), a potential candidate for Tom Harkin’s open Senate seat next year, by American Crossroads president Steven Law by way of explaining to the New York Times‘ Jeff Zeleny the purpose of a new Conservative Victory Project the group is unveiling:
The group’s plans, which were outlined for the first time last week in an interview with Mr. Law, call for hard-edge campaign tactics, including television advertising, against candidates whom party leaders see as unelectable and a drag on the efforts to win the Senate. Mr. Law cited Iowa as an example and said Republicans could no longer be squeamish about intervening in primary fights.
“We’re concerned about Steve King’s Todd Akin problem,” Mr. Law said. “This is an example of candidate discipline and how it would play in a general election. All of the things he’s said are going to be hung around his neck.”
I am mystified by this gambit from Rove’s hireling. Yes, Steve King is crazy as a sack of rats. But the man is an excellent retail politician back home with an intensely loyal following. If the idea of Law’s macho posturing was to intimidate King from a Senate race, it is very likely to backfire. The Iowa Republican‘s Kevin Hall explains:
Steve King is beloved by Iowa conservatives and if you go to war with him, we will go to war with you …
Telling Steve King he can’t do something is also a surefire way to get him to prove you wrong. I’m sure people like me saying he can’t win a statewide general election was enough to rile up the good Congressman. But having a so-called “conservative” group spending big bucks to attack him is likely to spur King to fight back … And he’ll have a few hundred thousand Iowa Republicans fighting alongside him …
And this is from a guy who has all but endorsed Tom Latham–the presumed Rove favorite to represent the GOP in the Iowa Senate race.
More generally, I will issue an early warning about how the MSM will once again turn this kind of intra-GOP battle over strategy and tactics–and power–into some sort of ideological struggle, with the Rovians treated as “moderates” and the Steve Kings of the world as plain old average-white-guy conservatives–you know, sort of the conservative equivalents of Barack Obama.
My own ultimate test for “extremism” is whether the person in question would be perfectly happy with a one-party dictatorship for his or her “team,” with the “other team” being silenced or perhaps hauled off to prison. Every single thing about Karl Rove’s history tells me that he would cheerfully, giddily endorse that scenario. He may consider Steve King a poor instrument for achieving that happy destination, but I doubt a country ruled by either would feel a bit differently.
So while we can all enjoy a power battle between these two men on King’s own turf, let’s don’t get fooled into calling it a “struggle for the soul of the GOP” or any such thing. That struggle ended with the final conquest of the Republican Party by the conservative movement in 2009, and won’t reemerge until they lose at least one more national election. But you will never hear that from folks on the Right, who have every reason, internal and external, to exaggerate their differences as they jockey for position.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, February 4, 2013
“What Could Have Been”: The Most Important Bills Blocked By Republicans In 2012
1. A minimum wage increase
House Democrats proposed legislation in June that would have raised the national minimum wage to $10 an hour, but Republicans blocked it. The minimum wage is currently $7.25 an hour, even though it would need to be raised to $9.92 to match the borrowing power it had in 1968. If it was indexed to inflation, it would be $10.40 today.
2. Campaign finance transparency
The DISCLOSE Act of 2012, repeatedly blocked by Congressional Republicans, would have allowed voters to know who was funding the attack ads that flooded the airways from secretive groups like Karl Rove’s Crossroads GPS.
3. The Buffett Rule
Senate Republicans in April filibustered the Buffet Rule, which would have set a minimum tax on millionaires. Huge majorities of Americans consistently support the rule, which would raise tens of billions of dollars per year from Americans who have seen their incomes explode while their tax rates plummeted.
4. The Employment Non-Discrimination Act
ENDA, which would prohibit discrimination in hiring and employment on the basis of sexual orientation or gender identity, has languished in Congress for decades, and Speaker John Boehner (R-OH) “hasn’t thought much” about bringing it to a vote.
5. U.N. treaty to protect the equal rights of the disabled
Republicans blocked ratification of the United Nations treaty to protect the rights of disabled people around the world, falsely claiming it would undermine parents of disabled children. In fact, the treaty would require other nations to revise their laws to resemble the Americans With Disabilities Act and had overwhelming support from veterans and disabilities groups. It failed by 5 votes.
6. The Paycheck Fairness Act
It’s about to be 2013, and women are still getting paid less than men for the same job. This year the Paycheck Fairness Act came up for a vote again (previous efforts to pass the law have been unsuccessful), but the Senate GOP still couldn’t get it together to pass the legislation. Republicans oppose the measure, saying it helps trial lawyers instead of women. But the country’s female doctors, lawyers, and CEOs might be inclined to disagree.
By: Think Progress, December 28, 2012
