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“Lost In The IRS Scandal”: The Need To Know Facts About The Big Picture And Big Donors Of Dark Money

In the furious fallout from the revelation that the IRS flagged applications from conservative non-profits for extra review because of their political activity, some points about the big picture – and big donors — have fallen through the cracks.

Consider this our Top 6 list of need-to-know facts on social welfare non-profits, also known as “dark money” groups because they don’t have to disclose their donors. The groups poured more than $256 million into the 2012 federal elections.

1. Social welfare non-profits are supposed to have social welfare, and not politics, as their “primary” purpose.

A century ago, Congress created a tax exemption for social welfare non-profits. The statute defining the groups says they are supposed to be “operated exclusively for the promotion of social welfare.” But in 1959, the regulators interpreted the “exclusively” part of the statute to mean groups had to be “primarily” engaged in enhancing social welfare. This later opened the door to political spending.

So what does “primarily” mean?  It’s not clear. The IRS has said it uses a “facts and circumstances” test to say whether a group mostly works to benefit the community or not. In short: If a group walks and talks like a social welfare non-profit, then it’s a social welfare non-profit.

This deliberate vagueness has led some groups to say that “primarily” simply means they must spend 51 percent of their money on a social welfare idea — say, on something as vague as “education,” which could also include issue ads criticizing certain politicians. And then, the reasoning goes, a group can spend as much as 49 percent of its expenditures on ads directly advocating the election or defeat of a candidate for office.

Nowhere in tax regulations or rulings does it mention 49 percent, though. Some non-profit lawyers have argued that the IRS should set hard limits for social welfare non-profits — setting out, for instance, that they cannot spend more than 20 percent of their money on election ads or even limiting spending to a fixed amount, like no more than $250,000.

So far, the IRS has avoided clarifying any limits.

2. Donors to social welfare non-profits are anonymous for a reason.

Unlike donors who give directly to politicians or even to Super PACs, donors who give to social welfare non-profits can stay secret. In large part, this is because of an attempt by Alabama to force the NAACP, then a social welfare non-profit, to disclose its donors in the 1950s. In 1958, the Supreme Court sided with the NAACP, saying that public identification of its members put them at risk of reprisal and threats.

The ACLU, which is itself a social welfare non-profit, has long made similar arguments. So has Karl Rove, the GOP strategist and brains behind Crossroads GPS, which has spent more money on elections than any other social welfare non-profit. In early April 2012, Rove invoked the NAACP in defending his organization against attempts to reveal donors.

The Federal Election Commission could in theory push for some disclosure from social welfare non-profits — for their election ads, at least. But the FEC has been paralyzed by a 3-3 partisan split, and its interpretations of older court decisions have given non-profits wiggle room to avoid saying who donated money, as long as a donation wasn’t specifically made for a political ad.

New rulings indicate that higher courts, including the Supreme Court, favor disclosure for political ads, and states are also stepping into the fray. During the 2012 elections, courts in two states – Montana and Idaho – ruled that two non-profits engaged in state campaigns needed to disclose donors.

But sometimes, when non-profits funnel donations, the answers raise more questions. It’s the Russian nesting doll phenomenon. Last election, for instance, California’s election agency pushed for an Arizona social welfare non-profit to disclose donors for $11 million spent on two California ballot initiatives. The answer? Another social welfare non-profit, which in turn got the money from a trade association, which also doesn’t have to reveal its donors.

3. The Supreme Court’s Citizens United decision meant that corporations could pay for political ads, anonymously, using social welfare non-profits.

In January 2010, the Supreme Court ruled that corporations and unions could spend money directly on election ads. A later court decision made possible SuperPACs, the political committees that can raise and spend unlimited amounts of money from donors, as long as they don’t coordinate with candidates and as long as they report their donors and spending.

Initially, campaign finance watchdogs believed corporations would give directly to SuperPACs. And in some cases, that happened. But not as much as anyone thought, and maybe for a reason: Disclosure isn’t necessarily good for business. Target famously faced a consumer and shareholder backlash after it gave money in 2010 to a group backing a Minnesota candidate who opposed gay rights.

Many watchdogs now believe that large public corporations are giving money to support candidates through social welfare non-profits and trade associations, partly to avoid disclosure. Although the tax-exempt groups were allowed to spend money on election ads before Citizens United, their spending skyrocketed in 2010 and again in 2012.

A New York Times article based on rare cases in which donors have been disclosed, sometimes accidentally, explored the issue of corporations giving to these groups last year. Insurance giant Aetna, for example, accidentally revealed it gave $3 million in 2011 to the American Action Network, a social welfare group founded by former Sen. Norm Coleman, a Republican, that runs election ads.

Groups that favor more disclosure have so far failed to force action by the FEC, the IRS, or Congress, although some corporations have voluntarily reported their political spending. Advocates have now turned to the Securities and Exchange Commission, which is studying a proposal to require public companies to disclose political contributions.

The idea is already facing strong opposition from House Republicans.

4. Social welfare non-profits do not actually have to apply to the IRS for recognition as tax-exempt organizations.

With all the furor over applications being flagged from conservative groups — particularly groups with “Tea Party,” “Patriot” or “9/12″ in their names — it’s worth remembering that a social welfare non-profit doesn’t even have to apply to the IRS in the first place.

Unlike charities, which are supposed to apply for recognition, social welfare non-profits can simply incorporate and start raising and spending money, without ever applying to the IRS.

The agency’s non-profit wing is mainly concerned about ferreting out bad charities, which are the biggest chunk of non-profits and the biggest source of potential revenue. After all, the IRS’s main job is to collect revenue. Charities allow donors to deduct donations, while social welfare non-profits don’t.

Most major social welfare non-profits do apply, because being recognized is seen as insurance against later determination by the IRS that the group should have registered as a political committee and may face back taxes and disclosure of donors. A recognition letter is also essential to raise money from certain donors — like, say, corporations.

But some of the new groups haven’t applied.

The first time the IRS hears about these social welfare non-profits is often when they file their first annual tax return, not due until sometimes more than a year after they’ve formed.

In many cases, the first time the IRS hears about these groups is a full year after an election.

5. Most of the money spent on elections by social welfare non-profits supports Republicans.

Of the more than $256 million spent by social welfare non-profits on ads in the 2012 elections, at least 80 percent came from conservative groups, according to FEC figures tallied by the Center for Responsive Politics.

None came from the Tea Party groups with applications flagged by the IRS. Instead, a few big conservative groups were largely responsible.

Crossroads GPS, which this week said it believes it is among the conservative groups “targeted” by the IRS, spent more than $70 million in federal races in 2012. Americans for Prosperity, the social welfare non-profit launched by the conservative billionaire brothers Charles and David Koch, spent more than $36 million. American Future Fund spent more than $25 million. Americans for Tax Reform spent almost $16 million. American Action Network spent almost $12 million.

Besides Crossroads GPS, each of those groups has applied to the IRS and been recognized as tax-exempt. (You can look at their applications here.)

All of those groups spent more than the largest liberal social welfare non-profit, the League of Conservation Voters, which spent about $11 million on 2012 federal races. The next biggest group, Patriot Majority USA, spent more than $7 million. Planned Parenthood spent $6.5 million. VoteVets.org spent more than $3 million.

None of those figures include the tens of millions of dollars spent by groups on certain ads that run months before an election that are not reported to the FEC.

6. Some social welfare groups promised in their applications, under penalty of perjury, that they wouldn’t get involved in elections. Then they did just that.

Much of the attention when it comes to Tea Party nonprofits has focused on their applications and how the IRS determines whether a group qualifies for social welfare status.

As part of our reporting on dark money in 2012, ProPublica looked at more than 100 applications for IRS recognition. One thing we noted again and again: Groups sometimes tell the IRS that they are not going to spend money on elections, receive IRS recognition, and then turn around and spend money on elections

The application to be recognized as a social welfare non-profit, known as a 1024 Form, explicitly asks a group whether it has spent or plans to spend “any money attempting to influence the selection, nomination, election, or appointment of any person to any Federal, state, or local public office or to an office in a political organization.”

The American Future Fund, a conservative non-profit that would go on to spend millions of dollars on campaign ads, checked “No”in answer to that question in 2008. The very same day the group submitted its application, it uploaded this ad to its YouTube account: http://youtu.be/2oEz3lzgDsI

Even before mailing its application to the IRS saying it would not spend money on elections in 2010, the Alliance for America’s Future was running TV ads supporting Republican candidates for governor in Nevada and Florida. It also had given $133,000 to two political committees directed by Mary Cheney, the daughter of the former vice president.

Another example of this is the Government Integrity Fund, a conservative non-profit that ran ads in last year’s U.S. Senate race in Ohio. Its application was approved after it told the IRS that it would not spend money on politics. The group went on to do just that.

 

By: Kim Barker and Justin Elliott, ProPublica; Published in The National Memo, May 22, 2013

May 23, 2013 Posted by | Internal Revenue Service | , , , , , , , , | Leave a comment

“Can The President Create A ‘Culture’?”: What Matters Isn’t About Culture, It’s People And Politics

As you may have noticed, the biggest problem with the IRS scandal (from the perspective of Republicans) is that it remains stubbornly removed from the President himself. It’s all well and good to get a couple of scalps from mid-level managers, but for it to be a real presidential scandal you need to implicate the guy in the Oval Office in the wrongdoing. Confronted with Obama’s non-involvement, conservatives have turned to vague and airy accusations about the “culture” Obama has created. Mitch McConnell, for instance, is warning darkly that Obama may be not too far removed from Tony Soprano: “I think what we know for sure is that there is a culture of intimidation across this administration—the president demonizing his enemies, attempting to shut people up. There is certainly a culture of intimidation.”

The idea that Barack Obama—whom Republicans regularly accuse of being a foreign-born anti-American socialist communist marxist who is slowly carrying out a plan to destroy America—is the one “demonizing” his opponents is pretty laughable. But the nice thing about the “culture” argument is that to make it, you don’t have to point to any particular thing any particular person has done. It’s just a culture, out there in the ether.

Conservatives are also alleging that the IRS employees who gave extra scrutiny to 501(c)(4) applications of Tea Party groups were in fact acting on Obama’s instructions. It was just that the instructions came in the form of him going out on the campaign trail and lamenting the Citizens United decision and the way it opened the door for all kinds of “dark money” to be injected into campaigns. Once again, it’s a way of ascribing guilt without having any evidence of guilt, but the problem is, it fails from both ends. Lots of people, even many Republicans, joined Obama in lamenting the rise of the new super PACs and 501(c)(4)s. It was an issue when Republicans were using them against each other in the 2012 presidential primaries. And if the IRS employees were trying to help Obama, they were going about it all wrong. As Ed Kilgore says, “The ultimate howler here is that we are supposed to believe that IRS bureaucrats, in obedience to the “dog whistle” of the president’s demonization of conservative groups’ involvement in the 2012 presidential campaign, chose to ignore the groups that were involved in the campaign in a significant way, and instead go after small fry Tea Party organizations.”

But can a president create a “culture” within the government that has consequences for the behavior of bureaucrats down the line, even to the point of sanctioning wrongdoing? The easy answer is, well, sure. Every boss creates an atmosphere that can affect the behavior of the people who work for her. But when you get beyond the people who work in the president’s immediate orbit, what matters isn’t culture, it’s people and policies. For instance, the Bush administration didn’t torture prisoners because Dick Cheney went on Meet the Press and said that to fight terrorism we’d have to go to “the dark side, if you will,” and then folks just got the message and started waterboarding prisoners. It happened because the administration made torture its official policy, and had in place the personnel who were eager to do it.

The United States government is a gigantic entity; even excluding uniformed military, there are 2.7 million federal employees spread around the country. No one, not even the president, can with a few words on the campaign trail create a “culture” that allows misbehavior to happen. I realize that many conservatives believe that Obama and anyone who would ever consider working for him are so corrupt that their immorality must naturally spread through the government like the hantavirus. But that’s not how it works.

 

By: Paul Waldman, Contributing Editor, The American Prospect, May 22, 2013

May 23, 2013 Posted by | Politics | , , , , , , , | 1 Comment

“The GOP Has Learned Nothing”: A Party Letting Its Base Lead Where The Rest Of America Dares Not To Follow

You’d think the conservative base would have learned its lesson in 2010, when, in a fever pitch of epic magnitude, it nominated Christine O’Donnell, Ken Buck, Sharron Angle and Joe Miller to run for the U.S. Senate. Suddenly, what looked like a prime opportunity for Republicans to flip the upper chamber and send Democratic Majority Leader Harry Reid, D-Nev., packing turned into an example of a party letting its base lead where the rest of America dared not follow. Or perhaps in 2012, when Indiana Senate nominee Richard Mourdock was sunk by an extremely ill-advised and incorrect rape comment.

However, one look at the gubernatorial ticket in Virginia shows that the tea party’s dream is alive and kicking. Not only has the party nominated Ken Cuccinelli for governor – who believes that the entire social safety net is “despicable, dishonest, and worthy of condemnation“– but it has added Rev. E.W. Jackson to run for Lieutenant Governor.

Amongst Jackson’s greatest hits are calling gay and lesbian Americans “sick people psychologically, mentally and emotionally”; claiming that the infamous 3/5ths clause of the Constitution was “anti-slavery”; saying that Planned Parenthood is akin to the Ku Klux Klan; and claiming that the agenda of the Democratic party is “worthy of the Antichrist.”

This was not supposed to be the plan. Though Cuccinelli is an avowed culture warrior and tea party darling, he has been staying away from those issues on the campaign trail, instead focusing on jobs and the economy. But as Jamelle Bouie explains at the American Prospect, Jackson’s inclusion on the ticket is going to make that strategy a lot harder to pull off:

Ken Cuccinelli’s plan for winning the Virginia gubernatorial race is straightforward. Avoid outspoken statements on social issues—the same ones that alienate most Virginians but excite his rightwing base—and focus the campaign on jobs and growth.

So far, he’s done exactly that. Of his three television advertisements, for example none mention abortion or same-sex marriage … E.W. Jackson, the newly-minted GOP nominee for lieutenant governor, throws a huge wrench in this strategy.

As Tim Murphy detailed at Mother Jones, Jackson was able to grab the nomination because Virginia’s GOP eschews a traditional primary in favor of “a one-day nominating convention packed with grassroots activists.” And those activists, as they have across the country, clearly have little regard for such parochial concerns as electability in a state that voted for President Barack Obama twice and is represented in the Senate by two Democrats. “These kinds of comments are simply not appropriate, especially not from someone who wants to be a standard bearer for our party and hold the second highest elected office in our state,” said the current Republican Lt. Gov., Bill Bolling, when asked about Jackson. “They feed the image of extremism, and that’s not where the Republican Party needs to be.”

Of course, Cuccinelli and Jackson may very well win. (They are running against Terry McAuliffe, after all, who doesn’t inspire much in the way of excitement.) Stranger things have certainly happened.

But in the long run, consistently nominating extreme social warriors, when the country is shown to be consistently going the other way on social issues, is only going to hurt the GOP’s actual policy goals. For proof of that, go say hello to Majority Leader Reid or google how the repeal of Obamacare is going.

By: Pat Garofalo, U. S. News and World Report, May 22, 2013

May 23, 2013 Posted by | Politics | , , , , , , , , | Leave a comment

“Sorry, Republicans, Nobody’s Getting Impeached”: GOP Can’t Resist Elaborately Feigned Theater That Blows Up In Their Face

Return with us now to those thrilling days of yesteryear, when every jackleg news organization in Washington — that is, virtually all of them — was feeding out of Kenneth Starr’s soft little hand like a Shetland pony.

Having recently left the country for a few weeks of media deprivation therapy, I returned to find excited pundits comparing President Obama to Richard M. Nixon on the basis of three transparently bogus White House “scandals” that make Starr’s fabled “Whitewater” investigation look like the crime of the century.

Once again, the word “impeachment” is in the air, as excited GOP congressmen dream of driving a Democratic president from office. Once again, the nation appears to be headed for a fun-filled summer of televised hearings, elaborately feigned indignation, and predictions of dramatic revelations that either never materialize or blow up in their sponsor’s faces.

With luck we might even see something as funny as the day in 1995 when a partisan S&L regulator who’d planned to market Hillary Clinton-themed “Presidential BITCH” t-shirts from her government office fainted dead away under cross-examination. The witness had to be carried from a Senate hearing room, never to be heard from again.

Deeply committed to Whitewater humbug, the New York Times, Washington Post and TV networks contrived not to notice.

The good news is that couldn’t happen again. Today, the ill-fated L. Jean Lewis’s swoon would be all over YouTube, Facebook and Twitter. Sure, she’d get her own Fox News talk show, but rationally consequent citizens wouldn’t have to watch. The Internet has lessened the ability of scandal entrepreneurs in the Washington media to control the flow of information to the rabble.

Sure, the Internet empowers crackpots. But it also enables in-house bloggers like Paul Krugman and Ezra Klein to bring facts and arguments into the online pages of the high-dollar press that could be censored out of the “mainstream” as recently as the Clinton administration.

So nobody’s getting impeached on this tripartite nonsense, OK?

Anyway, let’s take them one at a time:

One: Regarding IRS “targeting” of right-wingers, I’m planning to rename my little one-man cattle operation “Tea Party Patriot Farm.” With that on my Schedule C, the IRS won’t dare to audit my tax returns. I’ll be free to deduct not only feed bills and veterinary expenses, but pizzas, movie tickets, six-packs, whatever. My recent train ride across France? Studying French cattle husbandry techniques at 180 mph.

But see that’s the thing. Contrary to a thousand indignant screeds and editorial cartoons, no aggrieved Tea Partiers got audited, fined, or jailed. Instead, they saw their applications to turn their political hobbies into tax-free scams — oops, charities — delayed for a few months, on the quite reasonable assumption (from an IRS functionary’s point of view) that an organization named for a political party might actually be one. Boo hoo hoo.

The IRS was politically idiotic, no doubt. But until somebody tracks this to the White House, it’s a big nothingburger.

Meanwhile, my man Charles Pierce quotes the Nixon White House tapes to remind us how a real crook uses the IRS: “Now here’s the point, Bob: please get me the names of the Jews, you know, the big Jewish contributors of the Democrats,” Nixon said. “Could we please investigate some of the [unprintables]?”

Two: Then there’s The Great Benghazi Cover-Up. As this column pointed out last December, it’s largely a matter of selective quotation. Nobody at the CIA or State Department who had a hand in preparing Susan Rice’s “talking points” on the Sunday shows knew with any certainty who organized the attack.

And it’s worthwhile pointing out that they still don’t know.

However, if “extremist elements with heavy weapons” doesn’t say “terrorist” to you, Rice got more specific on CBS’s Face the Nation: “Whether they were al Qaeda affiliates, whether they were Libyan-based extremists or al Qaeda itself,” she said, “…is one of the things we’ll have to determine.”

In the interest of keeping this phony scandal alive, everybody’s pretended for months that Rice never said that. Meanwhile, CBS News’ Major Garrett has reported that partial CIA emails leaked to him by Republican sources turned out — after the originals were released — to have been doctored to cast suspicion upon the State Department and Hillary Clinton. He didn’t identify the leakers.

But when people resort to faking documents it’s a good clue that no real evidence of wrongdoing exists. The end.

Three: As for the Associated Press flap, the Los Angeles Times reports that its “disclosure of a counter-terrorism operation in Yemen last year compromised…an informant who had earned the trust of hardened terrorists.”

If true, that’s perilously close to treason. In which case the Justice Department had every reason to subpoena AP phone records after other means of finding the leaker’s identity failed. Sorry, but journalists have no rights that trump those of ordinary citizens in a serious criminal investigation.

 

By: Gene Lyons, The National Memo, May 22, 2013

May 23, 2013 Posted by | GOP, Republicans | , , , , , , , | Leave a comment

“Counting On Public Confusion”: Sen Jeff Flake Hopes Dissembling Will Solve His Gun Problem

A month after Sen. Jeff Flake (R-Ariz.) joined his GOP colleagues in killing a bipartisan background-check bill, the rookie senator is still struggling with the political fallout. This ad from Mayors Against Illegal Guns is the latest to put Flake on the defensive. Watch on YouTube

Flake’s strategy, at least for now, is built entirely on dissembling.

Sen. Jeff Flake (R-Ariz.) is pushing back against attack ads that say he broke his promise to support passing new gun laws.

“If you are anywhere close to a television set in Arizona in the coming days, you’ll likely see an ad about gun control financed by NYC Mayor Bloomberg,” Flake wrote Friday on his Facebook page. “Contrary to the ad, I did vote to strengthen background checks.”

I can appreciate why the ads have gotten Flake’s attention, but this “vote to strengthen background checks” rhetoric is exactly the sort of thing that rankles. Flake must realize how misleading this is, but is counting on public confusion to make his political troubles go away. It’s cynical, and the public deserves better.

Indeed, it’s apparently become the standard strategy for every Republican senator facing pushback from his his/her constituents — Sen. Kelly Ayotte (R-N.H.) is pulling exact same stunt.

Let’s set the record straight once more.

Flake’s pitch — “Contrary to the ad, I did vote to strengthen background checks” — is technically true. It’s also true that Flake filibustered the Manchin/Toomey compromise on background checks that enjoyed broad public support. So, Flake is relying on semantics games as a defense for doing the wrong thing? Yes, that’s exactly what he’s doing.

As we’ve discussed before, conservatives are relying on specific definitions of words and phrases that don’t quite line up with what everyone else is talking about. As Sahil Kapur explained recently:

There’s a critical distinction to be made between universal background checks, a robust policy that would require criminal checks for virtually all gun purchases — and a more milquetoast proposal to beef up mental health information in existing databases. The former is championed by gun control advocates and experts who say it would have a significant impact. The latter is supported by the NRA and does nothing to make it harder for criminals to buy firearms at private sales or gun shows, where background checks are not required by law.

It’s obviously an important clarification. The right is generally comfortable with improving the National Instant Criminal Background Check System, by integrating mental health records, for example. When Flake endorses stronger “background checks,” this is what he’s talking about, not closing the gun-show loophole.

Flake is counting on voters losing sight of the distinction.

Just as important, though, is the unstated concession: Flake is feeling defensive, which gives away much of the game. Under the NRA’s worldview, which Flake supports and defends, there’s nothing for conservative senators to be embarrassed about — by crushing expanded background checks, Republicans are taking a stand against tyranny. Voters love freedom and need not fear electoral consequences for voting the way the NRA demands.

Or so the argument goes.

But Flake’s cynical defense suggests that below the surface, he knows the NRA’s boasts about the political landscape aren’t true.

 

By: Steve Benen, The Maddow Blog, May 20, 2013

May 23, 2013 Posted by | Background Checks, Gun Control | , , , , , , , | Leave a comment

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