“The Real IRS Scandal”: Lawmakers Who Pushed The Agency To Rely On Bone-Headed Tactics By Refusing To Fund It To Do Its Job
David Simon, of “The Wire” fame, once responded to the idea of “doing more with less” by saying, “That’s the bullshit of bean counters who care only about the bottom line. You do less with less.” For the Internal Revenue Service, the line should perhaps be updated to “you do less with less, and also cause a scandal.”
The IRS, of course, was recently caught singling out conservative groups seeking tax-exempt status for extra scrutiny. IRS employees in a Cincinnati office used search terms such as “tea party” and “patriot” to find organizations they deemed worthy of more attention in their request to be exempted from paying federal taxes. (The irony of tea party groups complaining about not getting effectively subsidized by the government in a timely enough fashion will be left for another time.)
The “scandal” has already caused the acting commissioner of the IRS to lose his job and prompted a hearing on Capitol Hill Friday during which lawmakers expressed their outrage that the tax agency could act in such a manner. But Congress deserves its own share of blame for the debacle.
Now, the IRS employees who were searching for “tea party” surely should have known better. But the fact of the matter is that the agency has been dealing with a deluge of applications for tax-exempt status at a time when its budget is shrinking. The size of the IRS workforce has dropped 9 percent from its 2010 level, and the agency has seen its budget cut in each of the last two fiscal years. This fiscal year, the amount the IRS spends per capita (meaning per citizen) will be 20 percent lower than it was in 2002, according to an analysis by tax expert David Cay Johnston.
Meanwhile, as Reuters reported, “The IRS has seen the number of groups applying for 501(c)4 status double in the wake of a January 2010 Supreme Court decision that loosened campaign-finance rules.” The Obama administration has requested budget increases for the IRS, but Republicans in Congress refuse to approve them. So it’s perhaps not surprising that already overworked employees at the agency looked for a few shortcuts.
And things are likely not going to get any better this summer when the IRS shuts down entirely for five days due to budget cuts under the so-called “sequester.” These cuts don’t just inconvenience people who need tax assistance; they cost the Treasury money. The IRS estimates that every dollar spent on enforcement brings in $4 to $5 in additional revenue, so cutting the IRS budget is akin to the government cutting off its nose to spite its face.
My colleague Robert Schlesinger noted today that the real scandal surrounding the attack at the U.S. diplomatic outpost in Benghazi, Libya, is not who edited which talking point when, but that the State Department was denied funds to beef up consular security. Much the same can be said for the IRS. The scandal is not about the agency’s shortcuts, but the lawmakers who pushed it towards relying on bone-headed tactics by refusing to give it the money it needs to do its job.
By: Pat Garofalo, U. S. News and World Report, May 17, 2013
“Tea Party Is An Election Category”: The IRS, Non-Profits, And The Challenge Of Electoral Exceptionalism
What the IRS scandal really shows us is that it’s getting harder and harder to draw a line between electioneering and political speech.
As the report of the IRS Inspector General shows, the agency’s scrutiny of conservative groups applying for non-profit status was, more than anything, a clumsy response to a task the IRS is ill-equipped to carry out – monitoring an accidental corner of campaign finance law, a corner that was relatively quiet until about 2010.
That corner is the 501(c)(4) tax-exempt organization, belonging to what are sometimes called “social welfare” groups, which enjoy the triple privilege of tax exemption (though not for their donors), freedom to engage in some limited election activity, and, unlike other political committees (PACs, SuperPACs, parties, etc.), freedom from any requirement to disclose information about donors or spending. The use of (c)(4)s as campaign vehicles didn’t originate with the Citizens United decision in 2010 (Citizens United, the organization that brought the case, was already a (c)(4)), but the decision seems to have created a sense that the rules had changed, and even small groups – especially, apparently, local Tea Party organizations — rushed to create (c)(4)s.
501(c)(4)s are not prohibited from engaging in political speech of most kinds. They are free to be “biased” without jeopardizing their tax exemption. They can advocate for or against legislation, they can lobby the government or criticize it. They don’t have to make any effort to be “non-partisan” – for example, they can support a proposal that is only supported by members of one party, or directly advise only members of one party. And they can engage in some activity directly intended to influence the outcome of an election, as long as that doesn’t constitute the organization’s primary purpose.
There’s some confusion about the definition of “primary purpose,” discussed in great depth elsewhere, but what the IRS was trying to do was to identify organizations that seemed more likely to be heavily involved in electoral activity. Since the organizations were new, there was no way to look at their actual activities to see whether they were mostly electoral. So the agency had to rely on clues in the applications, like names and telltale phrases. If organizations had words like “Democrat” or “Republican” in their titles, for example, it would be reasonable to look more closely at their election activities, or possible future activities, than an organization that called, for example, “Save the Turtles.” I’m told that organizations with the names of political parties do receive extra scrutiny, even if in some cases, like “Students for a Democratic Society,” the word might mean something unrelated to the name of the party. That’s what the closer scrutiny would find out.
“Tea Party” in 2009 and 2010 was unquestionably an election category – there were “Tea Party” candidates and there was a “Tea Party Caucus” in Congress. It was not unreasonable for the IRS to use that phrase as an indicator that an organization using that phrase might be more inclined to engage in elections. There are comparable phrases on the left – for example, the term “Netroots” might suggest election involvement, as there were groups that identified and endorsed “Netroots” Democratic candidates in 2006 and later. Perhaps there were simply fewer organizations applying for (c)(4) status with that word, or they came in before the 2010 flood, or perhaps the IRS did screen on that word – we don’t know.
While there’s a perfectly plausible case for the IRS to use flag-words that indicate an election-focused movement, the actual questions asked of the groups do raise some concerns. If accurate, they did seem to go beyond evidence that these organizations were primarily engaged in elections, such as questions about lobbying and the role of family members.
But the reason these questions are complicated for the IRS, or for any agency assigned to police these complicated distinctions, is this: The line between robust political speech and influencing elections has become frightfully difficult to draw. Finding the right line around what is an “election” is really the fundamental problem in campaign finance. Almost everyone accepts the premise of “electoral exceptionalism” – elections are structured and require some particular rules, different from the rules that apply generally to political speech. The rule in most states that keeps campaigners 75 or 100 feet from the voting booths is the most obvious uncontroversial restriction on political speech, and there is broad acceptance of the idea that direct contributions to candidates and campaigns should be limited to prevent corruption and dependence. But what happens after that? What about outside spending that looks just like campaign spending? We used to think there was a clear distinction between “issue ads” that were expressing a view on an issue and “electioneering communications” that were the equivalent of campaign contributions. That distinction is actually what the Citizens United case was about — the provision of the 2002 Bipartisan Campaign Reform Act that defined broadcast communications that mentioned a candidate within 30 days before a primary or 60 days before a general election as electioneering, which had to be financed with regulated funds.
That was an improvised line then, and it’s gotten even blurrier since. Part of the problem is partisanship – it used to be, for example, that there were environmentalists in both parties, supporters of social spending in both parties. A political ad about the environment was just that. But what’s an ad or brochure attacking “Obamacare” during the election year? Every Republican opposes it, and they’ve given it the name of the president. The Tea Party was based on issues, yes, but above all else, it was based on unflagging, total opposition to Obama and congressional Democrats.
To figure out where election advocacy begins and regular political speech ends in these cases was certainly more than mid-level IRS bureaucrats in Cincinnati could handle. But it’s not an easy challenge for anyone. All the noise about IRS “targeting” and about free speech and corporate speech is a distraction from a real challenge of money in elections: finding an agreement on the line around an “election,” and establishing some clear rules for what happens within that line in order to ensure that elections are fair and open and don’t lead to corruption.
By: Mark Schmitt, The National Memo, May 16, 2013
“The Republican Wrongdoing’s”: There Were Meaningful Benghazi Lies After All
Whether or not an issue is a “scandal” tends to be a subjective question — one voter’s world-changing controversy may be another voter’s meaningless distraction. Indeed, the Beltway has spent a week telling the nation that the White House is engulfed in three ongoing scandals, though many of us suspect this analysis is deeply flawed.
But if we’re going to talk about real political scandals, can we at least have a conversation about Republicans lying to reporters about Benghazi?
For those who can’t watch clips online, CBS’s Major Garrett told viewers last night something news consumers don’t usually see or hear: House Republicans gave journalists bogus information, apparently on purpose, in the hopes of advancing the right’s version of the Benghazi story.
As Josh Marshall explained, “Generally, once partisan, tendentious sources leak information that turns out to be wrong, nothing’s ever done about it. That’s for many reasons, some good or somewhat understandable, mostly bad. But on CBS Evening News tonight, Major Garrett did something I don’t feel like I’ve seen in a really long time or maybe ever on a network news cast. He basically said straight out: Republicans told us these were the quotes; that wasn’t true.”
Given what we now know, congressional Republicans saw all of these materials in March, couldn’t find anything controversial, and moved on. But last week, desperate to manufacture a scandal, unnamed Republicans on Capitol Hill started giving “quotes” from the materials to reporters, making it seem as if the White House made politically motivated edits of Benghazi talking points.
As Major Garrett reported last night, the “quotes” Republicans passed along to the media were bogus. The GOP seems to have made them up. ABC’s Jonathan Karl didn’t know that, and presented them as fact, touching off a media firestorm.
Why would Republicans do this, knowing that there was evidence that would prove them wrong?
Probably because Republicans assumed the White House wouldn’t disclose all of the internal deliberations that went into writing the Benghazi talking points. When the White House did the opposite on Wednesday, giving news organizations everything, the GOP had been caught in its lie.
And yesterday, Major Garrett was willing to say so.
Maybe this was just an innocent mistake, rather than a deliberate attempt at deception? Nope: “On Monday, Mother Jones noted that the Republicans’ interim report included the correct version of the emails, signaling that more malice and less incompetence may have been at play with the alleged alterations.”
So, it appears there’s a Benghazi scandal after all. It’s not the wrongdoing Republicans alleged; it’s the wrongdoing Republicans committed.
The question for Darrell Issa is pretty straightforward: when does the investigation begin as to which Republicans lied to journalists and when?
By: Steve Benen, The Maddow Blog, May 17, 2013
“The IRS And The Real Scandal”: Enabling America’s Financial Elite To Further Entrench Their Wealth And Power
“This systematic abuse cannot be fixed with just one resignation, or two,” said David Camp, the Republican chairman of the House tax-writing committee, at an oversight hearing Friday morning dealing with the IRS. “This is not a personnel problem. This is a problem of the IRS being too large, too intrusive, too abusive.”
David Camp has it wrong. There has been a “systematic” abuse of power, but it’s not what Camp has in mind. The real scandal is that:
The IRS has interpreted our tax laws to allow big corporations and wealthy individuals to make unlimited secret campaign donations through sham political fronts called “social welfare organizations,” like Karl Rove’s “Crossroads,” the U.S. Chamber of Commerce, and “Priorites USA.”
This campaign money has been used to bribe Congress to keep in place tax loopholes like the “carried interest” rule that allows the managers of hedge funds and private equity funds to treat their income as capital gains, subject only to low capital gains taxes rather than ordinary income taxes, and other loopholes that allow CEOs to get special tax treatment on giant compensation packages that now average $10 million a year.
Despite a growing number of billionaires and multi-millionaires using every tax dodge imaginable – laundering their money through phantom corporations and tax havens — the IRS’s budget has been cut by 17 percent since 2002, adjusted for inflation. To manage the $594.5 million in additional cuts required by the sequester, the agency will furlough each of its more than 89,000 employees for at least five days this year.
Finally, all of this, coming at a time when the Supreme Court has deemed corporations “people” under the First Amendment and when income and wealth are more concentrated at the top than they’ve been in over a hundred years, has enabled America’s financial elite to further entrench their wealth and power and thereby take over much of American democracy.
This is the real scandal and the real abuse, Congressman Camp. Your indignation over the IRS’s alleged “targeting” of conservative groups is a distraction from the main event.
By: Robert Reich, The Robert Reich Blog, May 17, 2013
“Why Scandal Politics Don’t Work”: Perhaps Republicans Should Focus On A More Effective Use Of Their Time
A president’s critics can’t help themselves when the whiff of scandal is in the air. Yet more often than not, the obsessive pursuit of scandal fails to lift the political prospects of the opposition party.
Republicans might want to pause and ask themselves: Is flogging Benghazi, the IRS, and the Associated Press really the best way to get the majority back?
Every party on the outside of the White House envisions replicating Watergate — forcing a president out of office and riding the aftermath to an Election Day triumph. But the post-Watergate scandal-mongering record falls far short of that holy political grail.
The Iran-Contra affair may be a blot on the Reagan record, but it didn’t propel Democratic Gov. Michael Dukakis into the White House. During his convention speech, he tried to tar then-Vice-President George H. W. Bush for “sit[ting] silently by when somebody at the National Security Council comes up with the cockamamie idea that we should trade arms to the Ayatollah for hostages.” A few days later, Dukakis also tried to make hay with a less-remembered scandal involving fraudulent procurement in the Pentagon. “A fish rots from the head first,” said Dukakis, in some of his harshest words of the campaign. His emphasis on ethics were soon drowned out with a barrage of attacks regarding his views on national security and crime.
Ten years later, with Bill Clinton in the Oval Office, Republicans took scandal-mongering to new heights. Charging the president with perjury and obstruction of justice to cover up his extramarital affair, the House Judiciary Committee advanced articles of impeachment one month before the 1998 congressional midterm elections. The opposition party historically gains seats at the “six-year itch” point of a president’s tenure. But the backlash from the impeachment obsession allowed Democrats to pick up five House seats. Speaker Newt Gingrich was compelled to quit Congress. House Republicans barreled ahead and formally impeached Clinton anyway. Clinton’s approval rating then spiked above 70 percent.
During George W. Bush’s first term, Democrats sought to drive outrage surrounding the Abu Gharib torture scandal and, to a lesser extent, the outing of undercover CIA agent Valerie Plame. Michael Moore sought to spark a scandal with his documentary Fahrenheit 9/11, which characterized Bush’s foreign policy and energy policy as flowing from a scandalous relationship with Saudi Arabia. John Kerry’s acceptance speech, delivered one month after the movie was released, called for “an America that relies on its ingenuity and innovation, not the Saudi royal family.” A well-financed independent group, The Media Fund, aired a series of ads criticizing Bush’s Saudi ties. Bush ended up winning the popular vote (unlike 2000).
As for President Obama — the conservative cries of “Solyndra” and “Fast and Furious” failed to interrupt his march to a second term.
Why do scandal politics usually fail? Of course, some scandals fizzle out because the charges lack merit or import. But as you see above, even more significant scandals can lack political punch. Perhaps that is because by attempting to quickly topple the president and short-cut a path the White House, the attackers end up distracting themselves from their own primary mission: discrediting the president’s ideology and substantive agenda in the eyes of the public, and elevating their own.
A more plausible objective, short of impeachment or electoral gains, would be to consume a White House with scandal management and distract the administration from executing the president’s agenda. But for today’s Republicans, that objective doesn’t make much sense. Obama’s main legislative goal this year is shared by leading Republicans: immigration reform.
In fact, pro-immigration Republicans may be stoking the fires about Benghazi, the IRS and the AP not to distract the president, but to distract fellow conservatives who otherwise would rally the Tea Party base to pressure Congress and undermine the bipartisan Senate bill. As the Daily Caller’s Mickey Kaus told BuzzFeed: “I think these distracting scandals actually help its chances of passing. Every time [the bill] is at center stage, its chances of passing go down.”
And note that some of Obama’s chief antagonists on Benghazi — Sens. John McCain and Lindsey Graham — are also Obama’s key shepherds of immigration reform.
For those conservatives more deeply opposed to President Obama’s agenda, they should ask themselves: Do we really think any of these “scandals” seriously threaten President Obama’s hold on the Oval Office? And if they don’t, might there be a better use of our time?
By: Bill Scher, The Week, May 16, 2013
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