The Obama administration: Death and taxes, round two?

By J Brooks Spector 15 May 2013

Nobody, except the accountants, themselves a frequently reviled class, ever has much love for the Internal Revenue Service in the US. The IRS is America’s tax collection agency – the sworn enemy of all true-blue, pure-white, red-blooded Americans. As a result, Washington’s newest scandal involving the IRS comes as a veritable gift on that proverbial silver platter for the Republican Party. And this is on top of the GOP’s ongoing hunt for the scalp of a certain culpable secretary of state over Benghazi. In this latest imbroglio, the IRS has been outed for carrying out a very fine-toothed, politically-tinged effort to cull right-wing policy advocacy groups in the vetting of their claims for tax exempt status. By J BROOKS SPECTOR.

And if that was not enough of a headache for the Obama administration, right in the midst of all of this, the Department of Justice has been discovered looking at the telephone records of AP reporters over their story about a recent al-Qaeda bomb plot. This has also made some particularly vivid news, what with the little matter of the First Amendment to the Constitution and the protections of a free press. The Obama administration is thus besieged by some very uncomfortable questions that seem to be uncannily echoing Benjamin Franklin’s pithy observation back at the inception of the American republic: “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”
Now if Benghazi is a snit fight over some political positioning for the government’s talking points for public comments over what had happened and why, when the American ambassador to Libya and three staffers were killed in an assault on the US Consulate in Benghazi (this took place in the run-up to the presidential election last year), this congressional brouhaha represents some pre-emptive positioning by Republicans bent on knocking Hillary Clinton out of contention for the 2016 nomination, even before she decides to run – and giving Barack Obama a pummelling in the process.

But as Washington Post columnist Richard Cohen, an old-style, no-nonsense, former police/night court reporter, argued the other day, this Republican pursuit of some sort of administration crime in Benghazi “is a grave malady of the noggin, the symptoms of which are a compulsion to grossly exaggerate matters and to compare almost anything to Watergate…. Patient Zero in this regard is Sen. Lindsey Graham, a usually affable Republican from South Carolina who has suggested that the Benghazi episode warrants an investigation by a special congressional committee, just like Iran-contra and ― drum roll, please ― Watergate. Others have gone even further. Sen. James Inhofe, a Republican from Oklahoma and a man who once suggested the Environmental Protective Agency has something in common with the Gestapo, called the Benghazi whatchamacallit the ‘most egregious cover-up in American history’ and possibly an impeachable offense. These charges are so serious we can only conclude that l’affaire Benghazi has the potential to bring down the Obama administration ― the proverbial thread that, if pulled, could unravel the entire garment. Such drama!”
Cohen went on to argue, that Benghazi “is the place in Libya where the United States maintained two installations ― a consulate and a much larger CIA outpost. Both of these were attacked on Sept. 11, 2012, a date of some significance. The assaults, we all now know, were conducted by a jihadist group and were not ― as the Obama administration initially maintained ― a spur-of-the-moment thing precipitated by the airing of an anti-Muslim video. We also know that the administration either was unsure of the facts or simply didn’t like them. So it knitted together the infamous talking points that U.N. Ambassador Susan Rice repeated on all the Sunday talk shows.”

Effectively, in the case of those shifting talking points, what we’re really talking about was some political fancy footwork and the back-and-forth between competing bureaucracies (State, the CIA, the White House) during a presidential political campaign after a tragedy. The result of all this was, predictably, some serious bureaucratic sloppiness, but not a grave constitutional crisis over constitutional “high crimes and misdemeanours”. In this, the Benghazi talking points mess is distinctly unlike the Watergate and Iran Contra scandals.

These two scandals – during the Nixon and Reagan administrations respectively – were, by contrast, actual criminal conspiracies stretching across several bureaucracies, with violations of various laws and the serious warping and perverting of any number of other laws and procedures. In both cases, senior officials lost their government jobs, while others actually went on to the “big house” for their roles. By contrast, after an exhaustive study commissioned by the State Department on Benghazi, and not contradicted by any other real evidence at this point, it has been determined that, yes, mistakes and snafus occurred – but not crimes. Regardless, by virtue of the seriousness of those mistakes, some people have lost their jobs – precisely because they weren’t doing them properly.
But this new IRS case seems to be something rather different. And it is more awkward, embarrassing and difficult for the Obama administration precisely because the efforts of the IRS were almost certainly outside the presidential chain of command. The IRS is an independent agency and has been expressly designed to operate outside of politics. Moreover, for much of the time in question the agency was actually headed by a Bush appointee (the president gets to appoint the agency’s director and its general counsel as terms expire but no other officers in the IRS and a new appointee to the position has yet to be placed there). Nevertheless, the IRS is so much the very sharp point of the stick as far as government intrusion is concerned for most people, people really tend to notice when it goes off the reservation.

In a nutshell, what appears to have happened is that IRS line officials in several cities decided to look carefully – very carefully and very closely – at a number of conservative-oriented, public policy advocacy groups to see if they had jeopardised their applications for tax exempt status by their carrying out any overt political activity on behalf of specific Republican politicians and, in some cases, apparently, when the activity included the term “tea party”.

In tax law terms, advocating specific candidates would be a definite no-no, and would certainly be grounds for revoking (or not granting) the tax exempt status of any organisation previously given that special status. Being tax exempt is particularly valuable because it makes their revenue exempt from federal corporate income taxes and also makes donations to those groups tax deductible on the donators’ own income tax bill as well. But certainly by only checking on the right wingers – regardless of any perceived outrageousness on the topics they may have advocated – this would smack of the kind of political interference by the IRS that must set the hairs on the back of the neck of any civil libertarian, left or right, to tingling.

Days after the uproar first took off over this politically unsubtle effort, and despite being caught way, way off guard initially, the US Attorney General (the head of the Department of Justice), Eric Holder, announced on Tuesday that he had ordered an investigation into whether any criminal activity (instead of just truly, pathetically poor political judgement) took place at the Internal Revenue Service. Holder told reporters, “I have ordered an investigation to be done,” and then added, “The FBI is coordinating with the Justice Department to see if any laws were broken in connection with those matters. We are examining the facts to see if there were criminal violations.” At this point, at least, the Obama administration does not seem culpable in the behaviour of the IRS, despite some audacious finger pointing, but there is no way of escaping the added quanta of annoyance towards government this will evoke and the enhanced suspicion of Obama’s administration that this affair will inevitably engender.

Following complaints by some of these organisations that they were being questioned over their activities, an IRS official announced last Friday that, yes, some conservative groups seeking tax exempt status had been targeted for extra scrutiny. Officials in Washington and at least two other offices were involved, according to The Washington Post. In response, Holder went on to say that whether or not they were criminal, those actions were “outrageous and unacceptable”. Earlier, Barack Obama had had to respond to reporters during his joint press event with British Prime Minister David Cameron to assail the behaviour of the IRS as well.

By now, if it were possible for the IRS to have fewer friends than it had two weeks ago, it has actually managed to get into that very unhappy place. As the Economist intoned, “What bigger gaffe could the Internal Revenue Service commit than to single out groups that criticised the government for greater scrutiny? Republicans, naturally enough, are outraged by the revelation that America’s taxmen consciously and explicitly did so, picking on the applications for charitable status from tea-party chapters and other right-leaning campaign outfits. Had the Obama administration desired to sow doubts about the impartiality of the federal bureaucracy and undermine confidence in America’s institutions, it would have struggled to come up with a better method.”

The Economist, however, pointed out a larger and less obvious scandal that is related to what the IRS has just been called out over having done. As the magazine noted, “In all the huffing and puffing, however, two bigger scandals are being ignored. The first is the frequent abuse of America’s system of regulation of political campaigns, which the IRS, for all its incompetence, was rightly seeking to investigate. Very roughly speaking, if an organisation weighs in on a federal election campaign, it is subject to a certain set of rules, including revealing where it gets its money. (If it campaigns in coordination with a particular candidate or party, it is subject to a second, more stringent set of rules, including limits on how much it can spend.) The applications the IRS handled so ill-advisedly were for a particular tax status – 501(c)(4), in the jargon – that has become a common means to avoid these restrictions.” But a further, second issue is the ongoing neglect of that agency by both parties. Specifically, the IRS has 10% fewer employees than it did three years ago, its administrative budget has been cut three years running, and it has not had a director since November 2012.

Regardless of any responsibility in Congress due to its reluctance to fund the IRS sufficiently (or to provide effective oversight to it along the way), this uproar over the tax agency’s apparently unwarranted intrusion into the politics of policy advocacy groups is going to be a gift that just keeps on giving – and every congressional committee worth its salt is going to try to get a piece of the action to attack a prying, abusive tax agency and use the IRS as a stalking horse for government generally.

But then a third mess has just emerged as well. It seems the Justice Department secretly obtained two months’ worth of telephone records of Associated Press reporters and editors so as to look into the background of a story about an al-Qaeda-connected bomb plot. Not surprisingly, the AP’s top dog called this a “massive and unprecedented intrusion” into how journalists gather the news. AP president and chief executive officer Gary Pruitt said the government has gone after “information far beyond anything that could be justified by any specific investigation” and he demanded the return of the phone records and destruction of all copies.

Pruitt added, “There can be no possible justification for such an overbroad collection of the telephone communications of The Associated Press and its reporters. These records potentially reveal communications with confidential sources across all of the newsgathering activities undertaken by the AP during a two-month period, provide a road map to AP’s newsgathering operations and disclose information about AP’s activities and operations that the government has no conceivable right to know.”

The AP says that the records the Justice Department got hold of “listed outgoing calls for the work and personal phone numbers of individual reporters, for general AP office numbers in New York, Washington and Hartford, Connecticut and for the main number for the AP in the House of Representatives press gallery, according to attorneys for the AP. It was not clear if the records also included incoming calls or the duration of the calls. In all, the government seized the records for more than 20 separate telephone lines assigned to AP and its journalists in April and May of 2012. The exact number of journalists who used the phone lines during that period is unknown, but more than a hundred journalists work in the offices where phone records were targeted, on a wide array of stories about government and other matters.” In fact, prosecutors have sought phone records from reporters before, but the seizure of records on this scale, including those of the general AP switchboard numbers and an office-wide shared fax line, is highly unusual.

While the government has declined to say why it went after the records, officials have previously said in open testimony that a US attorney (a prosecutor) in Washington is carrying out a criminal investigation into who may have provided the AP with information that was in its 7 May 2012 story about a foiled terror plot. That story revealed detailed information about a CIA operation in Yemen that had stopped an al-Qaeda plot in 2012 to detonate a bomb on an airplane bound for the United States.

Not surprisingly, the uproar over this assertion of government authority has been assailed by press freedom and human rights bodies – as well as politicians across the ideological continuum. The White House had said on Monday that other than press reports it had no knowledge of Justice Department attempts to seek AP phone records, with spokesman Jay Carney saying, “We are not involved in decisions made in connection with criminal investigations, as those matters are handled independently by the Justice Department.”

Despite the outcry over this latest problem, as opposed to Benghazi and the IRS issue, the circumstances of this third issue – presumably protecting the country against terrorism ­– may make it just that one bit harder for hardliners on security to criticise an effort to prevent further terrorist activity, or to criticise government efforts to protect its own confidential sources, or track down leaks of sensitive information. Regardless, the possibility now exists that, together, these three issues can cast a significant shadow on the Obama administration – both for its behaviour and its competence in managing the federal government. And it may also give lots of grandstanding politicians in Congress (or would-be presidential candidates) a virtually unending reservoir of things to point to in scoring points against the president. Watch for a growing number of high-profile foreign visits by Obama to draw attention to the positives that accrue to the commander in chief in foreign climes – and away from all those annoying negatives that keep cropping up in Washington. DM

Read more:

  • Symptoms of Benghazi Syndrome at the Washington Post (a column by Richard Cohen)
  • Jim Imhofe mulls i-word after Benghazi at Politico
  • The Next Scapegoat at the New York Times (a column by David Brooks)
  • Republicans and taxes – The IRS errs at the Economist
  • Uneven I.R.S. Scrutiny Seen in Political Spending by Big Tax-Exempt Groups at the New York Times
  • Top IRS official didn’t reveal tea party targeting at the AP
  • Obama Dismisses Benghazi Furor but Assails I.R.S. at the New York Times
  • Gov’t probe obtains wide swath of AP phone records at the AP
  • Phone Records of Journalists Seized by U.S. at the New York Times

Photo: U.S. President Barack Obama departs for travel to New York City from the White House in Washington, May 13, 2013. REUTERS/Jonathan Ernst



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