Saturday, March 15, 2014

Auditing the IRS Controversy: There Is No More "Scandal," Folks

A conservative friend reminded the other day, as they often do, that President Obama used the IRS to target Tea Party-friendly political groups. On the one hand, my inclination is to dismiss the suggestion as quite ridiculous. And not just because I don't think President Obama would try to use the IRS to attack political enemies. One thing that conservatives just refuse to understand: liberals LIKE the Tea Party people because they hurt the Republican party far more than they help it. The Tea Party helps nominate extremist candidates, which, among other things, caused the GOP to lose five Senate races  between 2010 and 2012 that it otherwise would likely have won. Leading Republicans admit this, with even Senate Minority Leader Mitch McConnell boasting that when Tea Party candidates attempt to defeat the Republican establishment, he will help, "crush them everywhere." And when it comes campaign contributions, Tea Party leaders are also, quite frankly, a bunch of thieves. Consider Sarah Palin's political action committee, created to solicit money for Tea Party Republican candidates. In one quarter of 2012, Palin's PAC raised $388,000 and gave exactly zero dollars to candidates while compensating PAC staff members with lavish salaries.

On the other hand, if I'm going to argue the reality of the "2013 IRS Scandal," I have to have the facts at my command. And man oh man has it been hard to understand what really happened here, given the widespread misinformation campaign Republicans have conducted on the subject. So I'll take up the facts first, and the lying later.

Part I: What Happened

Section 501(c)(4) of the Internal Revenue Code  exempts civic organizations "operated exclusively for the promotion of social welfare" from having to pay federal income tax. The IRS has traditionally permitted organizations described in IRC 501(c)(4) to engage in lobbying and political campaign activities if those activities are not the organization's primary activity. In May, 2013 Acting Commissioner of the IRS Steven Miller revealed that applications for tax-exempt status by Tea Party groups had been inappropriately singled out for extra scrutiny and Director of the IRS Exempt Organizations division Lois Lerner stated that the IRS was "apologetic" for what she termed "absolutely inappropriate" actions. That same month, the Treasury Inspector General for Tax Administration released an audit report confirming that the IRS used inappropriate criteria to identify potential political cases in applications for tax-exempt status, including organizations with "Tea Party" in their names. It would subsequently be revealed that this audit was flawed and inaccurate, as it falsely stated that, "the IRS did not use inappropriate criteria to scrutinize groups with "progressives" in their name seeking tax-exempt status." Further investigation revealed that certain terms and themes in the applications of liberal-leaning groups and the Occupy movement had also triggered additional scrutiny. When this additional information came to light, Democratic Congressman Sandy Levin of Michigan noted that, "the Inspector General’s report left out critical information that skewed the audit’s findings." In July, Treasury Inspector General for Tax Administration J. Russell George attempted to explain the discrepancy by claiming that the fact that progressive groups were also targeted had been unknown to him when he had written his report in May. (It turns out there was a very good reason George was unaware that progressive groups had also been targeted. More on that later.)

By September, 2013 Miller, Lerner and Joseph Grant, commissioner of the agency's tax-exempt and government entities division, had all resigned from the IRS. In January 2014, the FBI announced that it had found no evidence warranting the filing of federal criminal charges in connection with the scandal. The FBI also stated it found no evidence of "enemy hunting." In other words, IRS employees did not maliciously manipulate the process.

And that, essentially, is the whole story in term of the IRS actions. Did the IRS really do anything wrong? Actually it didn't, as far as I can tell. As blogger Jed Lewison of put it,

"the IRS didn't target conservative groups exclusively. Liberal groups were targeted as well. And the reason they were targeted was understandable: They were applying for a special tax-exemption. In other words, this wasn't a case of the IRS going after political opponents; it was a case of groups seeking special privileges and being upset when the IRS asked them to provide evidence proving they qualified for those privileges."

And let's not kid ourselves here. If anyone's doing something wrong, it's the political action committees claiming to be "social welfare" organizations not primarily engaged in political campaigns. Political campaigns are not just their primary engagement, they are their ONLY engagement. Some folks are showing concern over this contradiction. In August, 2013 Democratic Congressmen Chris Van Hollen filed suit against the IRS seeking to overturn the rule that allows 501(c)(4) social welfare groups to engage in political activity. Noting that the law requires such groups to be "operated exclusively for the promotion of social welfare," Van Hollen said, "The law is clear. What do you want us to do, put an exclamation point after exclusively?"

Part II: What Didn't Happen

As I said before: there's really nothing more to this story in terms of what the IRS did or didn't do. Unless of course, you're California Republican Congressman Darrell Issa, Chairman of the House Oversight and Government Reform Committee. For the past year, Congressman Issa has used his position to channel the ghost of Senator Joe McCarthy, launching baseless attacks against political enemies, conducting highly partisan faux-investigations, lying about those investigations and what they found and in general attempting to bully and/or silence those who have attempted to gainsay his preconceived conclusions.

In June of last year, while investigation of the IRS actions was still going on, Congressman Issa began making some explosive allegations: that officials in the Obama administration were aware that Tea Party groups had been inappropriately singled-out for scrutiny before the matter became public. "My gut tells me that too many people knew that this wrongdoing was going on before the election," Issa said, "and at least by some sort of convenient, benign neglect allowed it to go on through the election." It was particularly bold for Issa to claim that, "the indication is (IRS agents in field offices) were directly being ordered from Washington," to conduction the inappropriate investigations, given that in the limited excerpts of interviews of IRS agents provided by Issa's office, the agents made it clear they had no idea whether instructions to scrutinize Tea Party groups came from Washington or not.

Within days of making these accusations, it became clear that the Treasury inspector general's report was flawed and inaccurate, and that there was an easy explanation as to why this was so. As mentioned earlier, J. Russell George's audit of the IRS actions in May, 2013 falsely claimed that the IRS did not use inappropriate criteria to scrutinize groups with "progressives" in their name seeking tax-exempt status. George would later say this was because the documents that showed IRS workers also were told to look for liberal-themed labels, "were not provided during our audit."

And why was George not provided with those documents? From Bernie Becker of the Hill

"The Treasury inspector general (IG) whose report helped drive the IRS targeting controversy says it limited its examination to conservative groups because of a request from House Republicans.

A spokesman for Russell George, Treasury’s inspector general for tax administration, said they were asked by House Oversight Chairman Darrell Issa (R-Calif.) "to narrowly focus on Tea Party organizations.""

 In other words, here's what happened. The IRS had originally revealed the inappropriate targeting of certain groups. Instead of asking for a comprehensive investigation, Congressman Issa asked the IG to focus his examination exclusively on the 501(c)(4) applications of Tea Party and conservative groups. Having received the expected response that yes, it's been confirmed that Tea Party groups were targeted, and no, there's no indication that progressive groups were targeted, Issa was then able to argue convincingly, at least to some people, that persons high up in the Obama administration had either ordered the targeting or had at least been aware of it and used it to their advantage.

Furthermore, it subsequently became known, when the full transcripts of the interviews with IRS agents were eventually released, that IRS agents had made it very clear in those interviews that they were not, as Issa had suggested, acting on orders from Washington. According to Greg Sargent of the Washington Post, the interview transcript with a key IRS manger provides,

"a detailed first-hand account of how these practices first originated, and it debunks conspiracy theories about how the IRS first started reviewing these cases.  Answering questions from Committee staff for more than five hours, this official — who identified himself as a “conservative Republican” — denied that he or anyone on his team was directed by the White House to take these actions or that they were politically motivated. Instead, the Screening Group Manager explained that the very first case at issue in this investigation was initially flagged by one of his own screeners in February 2010."

Sargent also notes that,

"This comes after (Democratic Congressman Elijah) Cummings had previously insisted Issa release the full transcript himself, arguing it would show that the Republican chairman’s claims of White House involvement are false, and that Issa’s own selective release of testimony was misleading the public. Issa refused, insisting that releasing full transcripts would damage the investigation. Cummings then asked Issa to detail what specifically in the transcript would do this, and demanded an answer by yesterday. According to Cummings’ letter, Issa has yet to reply — hence the decision to go forward with the release today."

So, to summarize Congressman Issa's actions so far. In May, 2013 the Inspector General released the results of its skewed investigation. Issa then used the results of that investigation, along with excerpts from interviews with IRS agents that he refused to release publicly, to make demonstrably false statements about what the IRS was and was not doing, then made additional false accusations against the White House based on those false statements.

And how has Issa responded to being caught in his own tangled web of lies and deceit? Has he resigned in disgrace? Or at least apologized to those he's lied to, manipulated and/or falsely accused? Not hardly. Months later, Issa is still conducting his "investigation" as if nothing is wrong with what he's doing.

After June of 2013, when the Washington Post article cited above appeared, there wasn't really anything left to say about the IRS actions. Yet in September, Issa's Committee managed to publish a report on its further investigation into the matter. According to this report, the IRS singled-out Tea Peaty groups for inappropriate scrutiny because President Obama and congressional leaders had severely criticized the growth of 501(c)(4) groups and "soft-money" in politics. I'm going to let the hyper-conservative quasi-newspaper the Washington Times speak for the report for the moment. I wouldn't quote the Times, except it's literally the only source I could find that chose to report on the subject:

"As prominent politicians publicly urged the IRS to take action on tax-exempt groups engaged in legal campaign intervention activities, the IRS treated tea party applications differently," the staff report concludes. "Applications filed by tea party groups were identified and grouped due to media attention surrounding the existence of the tea party in general."

In other words, according to this report, President Obama and other Democrats are to blame for the IRS actions, because, (again, in the words of the Times) "IRS employees were "acutely" aware in 2010 that President Obama wanted to crack down on conservative organizations and were egged into targeting tea party groups by press reports mocking the emerging movement." Is there any truth to this? It depends on your point of view I suppose. IRS officials have gone on record as stating that they were concerned enough about media attention regarding political groups applying for 501(c)(4) status that they gave those applications extra scrutiny. But we knew that already. And the report  makes no mention of the fact that progressive groups were also given extra scrutiny. That information undermines the report's claim that conservatives groups specifically, and not just political groups in general, were given extra, inappropriate attention. And given that progressive groups were also targeted, it's just as easy to suggest that media attention spurred by criticism of progressive groups by leading Republicans was the catalyst for that extra scrutiny as it is to suggest that Tea Party groups were given extra scrutiny based on the public statements of leading Democrats.

It's been most of a year since anything of substance was revealed about the IRS actions, yet Congressman Issa's witch hunt rolls on. Last year, former IRS official Lois Lerner invoked her 5th Amendment rights against self-incrimination when testifying before Issa's Committee. Last week, Issa forced Lerner back in the witness chair, claiming that she hadn't actually waived her 5th Amendment rights. Why did Issa do this? The suggestion among conservatives of course, is that Lerner must be hiding something, and if so, there's still a reason for Issa's farcical investigation to continue.

At that March 5th hearing, Lerner again refused to testify. Democratic Committee member Elijah Cummings then pointed out, quite astutely I thought, that (quoting Eric Loch of Talking Points Memo),

"the committee has obtained hundreds of thousands of pages of documents and interviewed dozens of witnesses, that the IRS had spent millions of dollars, and that "we have found no evidence to support allegations of a political conspiracy against conservative groups.""

Chairman Issa responded to this outburst by cutting off Congressman Cummings' microphone. Is there any chance someone will cut off Congressman Issa's endless investigation? I'm afraid not. 2014 is an election year, and Republicans intend to squeeze this scandal for everything it's worth no matter how much of the public's time and money they waste.