The Falsehoods Surrounding the IRS Scandal

Tired of being told that the IRS scandal is a "fake" one? So is Bradley Smith, who takes apart false claims surrounding the issue:

The Internal Revenue Service's scandalous targeting of tea party and conservative groups refuses to die, as one by one the administration's explanations prove untrue.

We were told that the White House, like the rest of the country, learned about the program on May 10 through a planted question asked of then IRS official Lois Lerner at an American Bar Association conference. Turns out the White House knew earlier. We were told the targeting was the work of a few rogue IRS employees in Cincinnati. Then those employees insisted that they were being managed from Washington.

We were told that no political appointees were involved, but now we know the scandal goes at least to the office of Obama appointee and IRS Chief Counsel William Wilkins. We were told that liberal groups were targeted, too. But then the IRS's inspector general, whose report exposed the harassment, clarified that only conservative groups were targeted.

Now the administration line is that the scandal is nonetheless "phony." That assertion is part of a Democratic counteroffensive contending that the tea party and conservative groups applying for "charitable" tax status never should have sought such IRS approval.

Rep. Xavier Becerra (D., Calif.), chairman of the House Democratic Caucus, argued on "Meet the Press" on May 19 that conservative groups were, "under the guise of a charity, [using] undisclosed millions of dollars to do political campaigns." At a May hearing, Sen. Bill Nelson (D., Fla.) claimed that the groups were supposed to spend their money on "charitable activities," and demanded of the IRS, "How could you all in the IRS allow the tax breaks funded basically by the taxpayer [to be spent] on these political campaign expenditures?"

Liberal columnist Jeffrey Toobin has also taken up the theme that the groups were seeking improper tax advantages. Writing in the May 14 issue of the New Yorker, Mr. Toobin argued that if approved by the IRS, the tea party groups would not pay taxes on contributions received. "In return for the tax advantage," he wrote, these groups "must refrain from traditional partisan political activity, like endorsing candidates."

This attack is wrong on the law, and cynical as politics. As these IRS apologists well know, liberal groups, such as Moveon.org, have long had the same tax status as that requested by the tea party and conservative groups—and that status is not of a "charity."

Why Democrats Have Turned Away from President Obama

Chris Cillizza and Sean Sullivan discuss.  One reason they cite is the fact that the presidential election is over, and Democrats no longer feel as much of a need to rally around the president. But here are the other reasons:

2. No big second term accomplishments. President Obama devoted the most powerful moments of his 2013 State of the Union address to the necessity of Congress passing gun control legislation. That push became a touchstone for Democrats across the country. It failed. While immigration reform remains in process, there’s not much he can point to that excites his base at the moment.

3. The whiff of scandal. The Internal Revenue Service’s targeting of conservatives and the revelations regarding the widespread surveillance of data and phone records by the National Security Agency left Obama playing defense. While neither story turned Democrats away from Obama, they may well have cut at the enthusiasm that members of his party expressed for him.

Hope and Change have pretty much gone by the wayside, haven't they?

The Latest IRS Scandal

It's just as ugly as the last one: 

The Internal Revenue Service got some more unwanted attention Tuesday, but not for targeting political groups. This time, a congressional investigation has revealed a technology contractor won questionable bids worth up to $500 million.

Braulio Castillo began winning hundreds of millions of dollars worth of contracts with the IRS within months of founding his technology company Strong Castle in early 2012.

"We've found the kind of wrongdoing that should have caused this contract to be cancelled," said Republican Darrell Issa, who chairs the House Oversight Committee, which investigated Castillo's rapid rise.

They found that just before opening Strong Castle, Castillo filed for a "disability rating" with the Veterans Administration, citing a "foot injury he suffered in 1984" -- 27 years ago -- while playing sports at a military prep school.

That rating enabled Castillo to register Strong Castle as a "service-disabled, veteran-owned small business," eligible for preferential treatment in bidding competitions.

"Understand -- never served a day on active duty, went to a school at taxpayers' expense and had a minor injury that didn't keep him from going on to play college ball," Issa said.

Castillo, who lives in Virginia, also chose carefully where to locate Strong Castle: "In the heart of Chinatown," says his company website.

It's a formerly blighted area now bursting with shops and restaurants, but Chinatown is still designated a government "hubzone," which meant Castillo's company qualified for even more priority in bidding.

I am sure that there are IRS employees who are honest and who do their jobs well. Too bad that so many of their colleagues ensure that these honest and competent employees do not receive publicity. 

Scandal Watch (More IRS Follies)

Sigh . . .​

• ​The IRS has problems with you if you are a conservative group that wants to apply for tax-exempt 501(c)(4) status. By contrast, the IRS has no problems whatsoever with itself when it wants to spend money like it is going out of style.
• 88 IRS employees have documents related to the investigation of the IRS's targeting of conservative groups.​ Remember that this story is allegedly only a "so-called scandal," and remember as well--as the CNN story points out--that the initial explanation given for the targeting of conservative groups is that a select few "low-level employees" in one local office decided to go rogue.
• Does this​ read like just a "so-called scandal" to you?

A group of anti-abortion activists in Iowa had to promise the Internal Revenue Service it wouldn’t picket in front of Planned Parenthood.

Catherine Engelbrecht’s family and business in Texas were audited by the government after her voting-rights group sought tax-exempt status from the IRS.

Retired military veteran Mark Drabik of Nebraska became active in and donated to conservative causes, then found the IRS challenging his church donations.

While the developing scandal over the targeting of conservatives by the tax agency has largely focused to date on its scrutiny of groups with words such as “tea party” or “patriot” in their names, these examples suggest the government was looking at a broader array of conservative groups and perhaps individuals. Their collective experiences at a minimum could spread skepticism about the fairness of a powerful agency that should be above reproach and at worst could point to a secret political vendetta within the government against conservatives.

The emerging stories from real people raise questions about whether the IRS scrutiny extended beyond applicants for tax-exempt status and whether individuals who donated to these tax-exempt organizations or to conservative causes also were targeted.

Scandal Watch (The Saga that Won't End)

The latest:​

• ​The IRS targeting of conservative groups is only a "so-called scandal" in the eyes of some, who coincidentally, probably don't like conservatives all that much. Equally coincidental, I am sure, those calling the IRS scandal a "so-called scandal" are members of the media, which we are repeatedly assured is never ideologically biased and treats both sides of the partisan divide fairly and honorably.
• ​Rich Lowry points out that the IRS scandal--which really is much more than a "so-called scandal"--"is a scandal of administrators and bureaucrats, of otherwise faceless people endowed with immense power over their fellow citizens and running free of serious oversight from elected officials." Which makes you feel good about all of the legislation passed that puts more power in these people's hands, right?
• Eric Holder​ is in trouble, as he is facing possible perjury allegations regarding his comments on the Justice Department's investigation of Fox News reporter James Rosen. He has responded to the allegations by inviting media outlets to a discussion with him on how the issue could have been better handled, and what can be done in the future to conduct leak investigations without shredding the First Amendment. Here's the catch: the discussion with the media outlets was supposed to be off the record. So presumably, Holder would discuss better ways to conduct leak investigations and media outlets could not tell the public--the same public that may actually be concerned about the shredding of the First Amendment--anything about his comments. To their credit, a host of media outlets refused to meet with Holder under these conditions. Oh, and the attorney general is “also beginning to feel a creeping sense of personal remorse” over how the leak investigation was handled, which is nice to know. Too bad he refuses to let the public find out how his "creeping sense of personal remorse" will translate into a change in policy at the Justice Department.

The IRS Scandal Continues to Unfold

If "senior White House officials were focused on shielding" the president, then that necessarily means that they were not focused on serving the American people by getting to the bottom of this scandal. Right?​

As soon as White House counsel Kathryn Ruemmler heard about an upcoming inspector general’s report on the Internal Revenue Service, she knew she had a problem.

The notice Ruemmler saw on April 24 gave her a thumbnail sketch of a disturbing finding: that the IRS had improperly targeted tea party and other conservative groups. She shared the news with White House Chief of Staff Denis McDonough and other senior White House aides, who all recognized the danger of the findings.

But they agreed that it would be best not to share it with President Obama until the independent audit was completed and made public, in part to protect him from even the appearance of trying to influence an investigation.

This account of how the White House tried to deal with the IRS inquiry — based on documents, public statements and interviews with multiple senior officials, including one directly involved in the discussions — shows how carefully Obama’s top aides were trying to shield him from any second-term scandal that might swamp his agenda or, worse, jeopardize his presidency.

The episode also offers a glimpse into the workings of Obama’s insular West Wing, which has struggled to cope in recent weeks with the IRS scandal, the continued fallout from last year’s deadly attack in Benghazi, Libya, and the Justice Department’s tracking of journalists as part of leak investigations.

But Ruemmler and McDonough’s careful plan for the IRS was upended on May 10, when Lois Lerner, a senior official at the agency, broke the news by admitting that the IRS had given extra scrutiny to conservative groups seeking tax-exempt status.

Senior White House officials were stunned to see the IRS trying to get ahead of its own story — and in doing so, creating a monstrous communications disaster for an administration that appeared not to know what its agencies were up to.

I'll refer back to Stephen Bainbridge​ on the issue of whether the president can be made aware of what is going on in his government without seeming to influence an investigation (short version: yes, he can--to coin a phrase). More from the good Professor Bainbridge here. Meanwhile, it is nice to see that the members of the Wall Street Journal's editorial board have eaten their Wheaties:

Every day brings new revelations about who knew what about the IRS targeting conservative groups during President Obama's re-election campaign, but the overall impression is of a vast federal bureaucracy run amok. While the White House continues to peddle the story of a driverless train wreck, taxpayers are being treated to a demonstration of the dangers of an unwieldy and unaccountable administrative state. Look, Ma, no hands!

In his press events, Mr. Obama has said that while he learned about the Cincinnati rogues on the news, he plans to "hold accountable those who have taken these outrageous actions." But the White House began its response by pushing the line that the IRS is an "independent agency," and Mr. Obama has since given the impression that he sits atop a federal government which he does not, and could not possibly, control.

White House senior adviser Dan Pfieffer encouraged that fable on this Sunday's news shows, implying that the Treasury's internal process for handling the unfair treatment of political targets trumped the President's right to know. When CNN political correspondent Candy Crowley asked Mr. Pfieffer why the White House and top Treasury officials weren't notified, he explained that Treasury's investigation was ongoing and "Here's the cardinal rule: You do not interfere in an independent investigation."

Now there's a false choice. The Treasury Inspector General's report, for starters, was an audit, not an inviolable independent investigation. He lacked subpoena power and could bring no criminal charges. Having the President know of the IRS's mistakes so that he could act to correct the problem was not a bridge too far or even clouding the purity of the process. Those things could have been done simultaneously without compromising Treasury's investigation.

Some adult supervision at the White House would be very useful right now. Too bad we don't seem to have it.​

Good Question

As Stephen Bainbridge notes,​ any general counsel of a publicly held corporation would tell the CEO of that corporation about the presence and activities of misbehaving employees.

So why on Earth weren't Barack Obama and/or Treasury Secretary Jack Lew ​informed earlier about misconduct at the IRS? It's one thing to want to make sure that there isn't interference in the process from inappropriate quarters. But it is quite another to be left completely ignorant. Quoth Bainbridge:

. . . First, telling the POTUS about an investigation governmental misconduct in now way suggests that the President interfered with said investigation. Second, the President is not the only one who can interfere with an investigation. To the contrary, if you buy the logic of the "administration officials," it appears that they interfered with the process.

If Ken Lay had told Congress that his Enron subordinates had kept him out of the loop so that it wouldn't appear as though he had interfered with an investigation of the fraud, the Congressmen who adopted Sarbanes-Oxley--an act Obama has often praised--would have howled in derision. And rightly so. Obama should be held to no less a standard.

In short, the guy at whose desk the buck stops should not want to be kept out of the loop.

The number of questions that need to get answered just keeps increasing, now doesn't it?

Metastasis of the IRS Scandal

​When Lois Lerner goes before the House to testify regarding the IRS's targeting of conservative groups, she is not going to offer much actual testimony at all:

A top IRS official in the division that reviews nonprofit groups will invoke the 5th Amendment and refuse to answer questions before a House committee investigating the agency’s improper screening of conservative nonprofit groups. 

Lois Lerner, the head of the exempt organizations division of the IRS, won’t answer questions about what she knew about the improper screening — or why she didn’t disclose it to Congress, according to a letter from her defense lawyer, William W. Taylor III. Lerner was scheduled to appear before the House Oversight Committee on Wednesday.

“She has not committed any crime or made any misrepresentation but under the circumstances she has no choice but to take this course,” said a letter by Taylor to committee Chairman Darrell Issa (R-Vista). The letter, sent Monday, was obtained Tuesday by the Los Angeles Times.

It would be wrong to conclude from Lerner's decision to plead the Fifth alone that she has ​committed any crime. She has the right to remain silent and negative inferences cannot be drawn from that right. Still, as anyone with a brain will tell you, it doesn't look good politically that Lerner is taking the Fifth.

​It also doesn't look good that a Houston-based non-profit dedicated to fighting voter fraud has had its application for tax-exempt status on hold for the past three years. You know, just saying.

And while we're talking about this, it also doesn't look good that the IRS was aware of the facts underlying this scandal back in 2012.​ I trust that there is no longer any real argument over whether this story qualifies as a scandal, though I am sure that there are some outlying pundits who continue to try to deny the reality of the situation.