“Doing More With Less”: Outgoing IRS Chief Blames Underfunding For ‘Foolish’ Mistakes
Testifying in front of the House Ways and Means Committee, acting IRS commissioner Steve Miller apologized for his agency Friday.
“I want to apologize on behalf of the Internal Revenue Service for the mistakes that we made and the poor service that we provided,” Miller said. “The affected organizations and the American public deserve better.”
Agents at the IRS decided to take a shortcut in 2010 that has created an uproar, “centralizing” a number of factors that could raise suspicions that these fledgling non-profits might not be focused primarily on ”social welfare.” One of those factors — and here’s where they made their biggest mistake — was focusing on groups with “Tea Party” or “Patriot” in their names. Later they revised this policy to focus on “political action-type organizations involved in limiting/expanding government, educating on the Constitution and Bill of Rights, social economic reform movement,” according to the IRS Inspector General’s report.
The result? Some 300 groups were identified for extra scrutiny — among them, 70 were Tea Party groups. It’s not clear how many groups were turned down, yet it’s clear at least one Democratic group was.
Miller — who is stepping down from his position at the request of the administration — insisted that the actions were not intended to target conservatives.
“I think that what happened here was that foolish mistakes were made by people trying to be more efficient in their workload selection,” he said. “The listing described in the report, while intolerable, was a mistake, and not an act of partisanship.”
Under questioning by Rep. Paul Ryan (R-WI), Miller pointed out that though progressive groups were not identified by name, the IRS actually collected more information on left-leaning groups than Tea Party groups. The lifelong bureaucrat even rejected the notion that his agency was “targeting” anyone, insisting that was a pejorative term to describe the “listing” the agents were doing.
Republicans continually tied the scandal to attacks on the IRS in general, often citing audits by their supporters as proof of the agency’s overreach.
“The reality is this is not a personnel problem. This is a problem of the IRS being too large, too powerful, too intrusive and too abusive of honest, hardworking taxpayers,” said Rep. Dave Camp (R-MI).
But Miller had another explanation for why his agents pursued such questionable practices — funding. The commissioner asked the committee to increase funding to his agency, citing budget constraints as a major reason why agents sought shortcuts to identify questionable applications.
“In the last 10 years, the budget of the IRS, adjusted for the size of the population and inflation, has come down 17 percent,” according to tax expert David Cay Johnston.
Committee members offered several examples of groups being denied 401(c)(4) status or delayed endlessly. However, there’s no evidence that suggests Republican spending was hindered by this IRS’s shortcut.
“Of the 21 organizations that received rulings from the IRS after January 1, 2010, and filed FEC reports in 2010 or 2012, 13 were conservative,” writes OpenSecretsblog‘ Robert Maguire. ”They outspent the liberal groups in that category by a factor of nearly 34-to-1, the Center for Responsive Politics analysis shows.”
By: Jason Sattler, The National Memo, May 17, 2013
“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 Real IRS Problem”: The Post Citizens United Explosion Of Undisclosed Political Campaign Spending
Americans of all political stripes should be outraged at the recent revelation that the Tea Party was unfairly targeted by the IRS before last year’s election. The IRS should never base its decisions on political preferences or ideological code words, regardless of what bureaucratic challenges it may face. But the lesson that the right is drawing from the IRS’s misdeeds — the lesson that threatens to dominate the public conversation about the news — is wrong.
We’re seeing a knee-jerk reaction, particularly from the Tea Party and their allies in Congress, that is threatening to turn the IRS’s mistakes into an indictment of “big government” writ large. Some are already trying to tie the scandal to the Right’s favorite target, Obamacare, and to the Benghazi conspiracy theory.
The danger of this frame is that it will discourage the IRS from fully investigating all nonprofit groups spending money to influence elections. And it will distract from the core problem behind the IRS’s mess: the post-Citizens United explosion of undisclosed electoral spending.
Before the Supreme Court’s decision in Citizens United, only a limited number of nonprofit 501c(4) groups could spend money to influence elections — those who did not take contributions from corporations or unions. But Citizens United lifted restrictions on corporate spending in elections, setting the stage for individuals and companies to funnel unlimited money through all corporations, including c(4)s and super PACs in an effort to help elect the candidates of their choice. Spending by c(4)s has exploded since Citizens United, since the decision allowed any c(4) nonprofit corporation that didn’t spend the majority of its money on electoral work to run ads and campaign for and against candidates. And c(4)s, as long as they follow this rule, don’t have to disclose their donors under the laws currently in place.
The IRS, then, was forced to play a new and critical role in policing this onslaught of electoral spending. IRS officials clearly made poor choices in how to confront this sudden sea change and those mistakes should be investigated and properly addressed. But strong oversight of this new wave of spending remains critically important and clearlywithin the IRS’s purview.
If we let understandable concerns about bad decisions by the IRS lead to weakening of campaign finance oversight, our democracy will be the worse off for it. Instead, we should insist that the government strengthen its oversight of electoral spending — equally across the political spectrum. We should pass strong disclosure laws that cover all political spenders, including c(4)s. And we should redouble our efforts to overturn Citizens United by constitutional amendment and reel back the flood of corporate money that led the IRS to be in this business in the first place.
By: Michael B. Keegan, The Blog, The Huffington Post, May 15, 2013
“Stalag America”: John Boehner Wants Someone Jailed Despite No Evidence Of An Actual Crime
Given the recent trifecta of what has,to date, added up to mostly false but politically effective allegations of scandal involving Benghazi, the IRS and the Department of Justice, transparency within the walls of the Obama White House has very much come into question.
But when it comes to the GOP leadership in Congress, there can be no such question of transparency as their behavior could not be any more open or obvious.
Indeed, the Congressional Republicans have been crystal clear in revealing that they could not care less about getting to the real truth of any of the upsetting issues now before the American public, just as they have no interest in focusing on these events for the purpose of making government better for the American people. Their concern is clearly, openly and unabashedly focused on the political opportunities they perceive to be available to them now that they’ve been able to successfully focus the public’s attention on these alleged scandals and away from critical issues of substance.
The problem is that the all too transparent political goals of these people have the unfortunate byproduct of shining a light on the stunning degree of hypocrisy being practiced by these so called leaders. Should you require quantifiable proof of this, I offer up Speaker John Boehner’s comments of this morning as Exhibit A.
While speaking to the press about the IRS matter, Mr. Boehner bellowed, “My question isn’t about who is going to resign. My question is whose going to jail over this scandal?” The Speaker then bounded from the stage leaving his words to hang in the air.
Ah…the drama….the intrigue…the utter and complete disregard for the American justice system spat from the lips of the most powerful man in the United States Congress.
While the Speaker demands to know who is going to jail over the IRS fiasco, the rest of us are, apparently, falling behind as we are still trying to find out what—if any—criminal laws have been violated. You see, Mr. Speaker, in this country one is supposedly required to be convicted of actually violating a criminal law before prison time is to be handed out as punishment—even when this rather fundamental rule of law proves to be an inconvenient impediment to your fundraising activities.
If Boehner has the answer to the somewhat relevant question of whether or not the behavior at the IRS jumped the line between really bad judgment and highly inappropriate behavior into the sphere of criminality, he elected not to share the specifics with us during this morning’s press conference. That was an unfortunate choice as the federal government is about to spend a whole bunch of taxpayer money to ascertain if there was any actionable criminal activity.
If Speaker Boehner has already conducted the investigation and concluded that somebody (we don’t know who) needs to get put in prison, he might consider sharing his findings with the FBI. And if Mr. Boehner has not conducted such an investigation, maybe he could see the benefit of at least pretending to honor the American justice system and keep his lust for incarceration to himself until we know if there is actually a crime.
Most of us will agree that there was clearly wrongdoing in the ranks of the IRS in how they improperly targeted applicants seeking 501(c)(4) tax-exempt status. For anyone who may be struggling to accept this, I would suggest reading the Inspector General’s report of what occurred which is now available for your full review.
While the IG account points to serious managerial errors and confused employees over at the IRS, nowhere in the report do we find any allegation of criminal behavior —just as we see that the IG could find no evidence that anyone from outside the agency (translation: the White House) was involved.
This is not to say that there was no criminal behavior.
It is to say that, at this point, while the Inspector General was able to uncover the instances of improper behavior that clearly reveals a serious problem, no criminal activity has yet to be alleged.
Still, given the gravity of the infractions, the Attorney General has ordered the FBI to investigate the Internal Revenue Service to determine whether there was, in fact, a criminal violation of the law. But as this investigation has likely not yet even begun (it was just announced this morning), one struggles to work out how Speaker Boehner has managed to conclude that someone needs to go to jail.
I suppose that I shouldn’t be surprised that Boehner has no real grasp of one of the most fundamental principles of American law—that would be the one that requires that those suspected of criminal activity must be charged with a specific violation, tried and proven guilty before we begin clamoring for jail time.
I say I shouldn’t be surprised because this is a Speaker very well versed in blocking the passage of laws but not particularly knowledgeable in the procedures involved in actually making law—a process that would require him to actually understand the law.
This is a Speaker who cares deeply about making dramatic pronouncements—such as what he shared with the nation this morning—in the hope that his declarations will inspire his political base to make large contributions. If clamoring for someone to go to jail—despite any evidence of criminal activity—is what it takes to bring in the big bucks, the notion that we might hope for a more measured and informed tone from so powerful an elected official is a detail that is, apparently, to be ignored and discarded.
At this moment, I am reminded of something disgraced Congressman Bob Ney wrote in his book, “Sideswiped—Lessons Learned Courtesy Of The Hit Men Of Capital Hill.” For anyone who may not recall, Mr. Ney was one of the Members of Congress swept up in the Jack Abramoff scandal and convicted on corruption charges. Given Ney’s history as a convicted felon, I will leave it to the reader to determine how much credibility to give him when reading what he had to say about Speaker Boehner.
What Ney tells us in his book is that Boehner has always been far more concerned with fundraising and having fun than he was with doing the business of the people.
“Many felt his money-raising focus would make up for his lack of concern about legislation — he was considered a man who was all about winning and money…He was a chain-smoking, relentless wine drinker who was more interested in the high life — golf, women, cigarettes, fun, and alcohol.”
As The Washington Posts further reports:
“Ney goes on to say that Boehner was lazy, took thousands of dollars in booze, food and golf games from lobbyists, and repeatedly slid around ethics rules: “John got away with more than any other member on the Hill” because he was well-liked and well-protected by his staff.”
While it is fair to consider Mr. Ney’s own criminal history when weighing the value of this information, it all sounds about right to me.
Still, what Mr. Ney does not address is Speaker Boehner’s obvious disregard for avoiding the transparency of his own disturbing brand of hypocrisy.
In 2004, Julian Bond—then President of the NAACP—gave a speech that, according to the IRS letter received by Mr. Bond in October of that year, included “statements in opposition of George W. Bush for the office of presidency.” The letter also stated that Bond had “condemned the administration politics of George W. Bush in education, the economy and the war in Iraq.”
Because of Mr. Bond’s speech, the IRS informed him that they were reviewing the 501(c)(4) tax-exempt status awarded to the NAACP.
Note that Mr. Bond never told his audience who to vote for in the presidential election nor, for that matter, did he support or oppose any candidate running in any election. Indeed, his statements were quite tame by any comparison to the pronouncements emanating from Karl Rove’s Crossroads USA 501(c)(3) and (c)(4) organizations not only on a regular basis but more specifically during the 2012 presidential election cycle.
Bond had this to say at the time his organization was targeted by the IRS:
“It’s Orwellian to believe that criticism of the president is not allowed or that the president is somehow immune from criticism.”
And yet, the IRS proceeded to run the NAACP through the mill, claiming at every turn that it’s investigation was, in no way, politically motivated.
In the end, the NAACP retained their tax-exempt status.
In light of Speaker Boehner’s indignation aimed at the current IRS issue, how does one avoid asking how we missed Mr. Boehner’s demands for jail time when the NAACP was the target of an improper IRS investigation during the Bush term of office?
I would agree completely with the Speaker that any criminal activity discovered in the investigation that is soon to get underway should be resolved with charges and, if appropriate, the punishment Mr. Boehner so fervently seeks. But how does Boehner have the nerve to call for jail time based on his assumption that somebody somewhere must have done something criminal when he didn’t offer so much as a peep when workers at the IRS engaged in similar—if not identical—behavior in 2004 when a Republican sat in the White House?
I would remind Speaker Boehner that Americans are not stupid. If someone has engaged in a criminal act, we will demand justice. But we do not go around clamoring for jail time for a crime that even you, Speaker Boehner, have yet to determine has taken place.
I would also remind the Speaker that the copy of the Constitution he pretends to carry with him at all times is really quite clear on this point.
You should actually try reading that copy of the Constitution, Mr. Speaker, rather than simply pledging your fealty to the Founder’s expression when it suits you only to reject it when it becomes inconvenient. I think we’d all be considerably better off if you actually understood just how incredibly inappropriate it is to demand jail time where no criminality has been revealed before storming off the stage to create the maximum dramatic effect.
Of course, I do recognize that it is difficult for you to find the time for this what with the volumes of fundraising letters you will be signing in order to fully capitalize on your highly offensive and irresponsible behavior.
By: Rick Ungar, Op-Ed Contributor, Forbes, May 15, 2013
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