I may have swung a bit too hard, putting Barack Obama’s Administration in the same league as Franklin Roosevelt’s and Richard Nixon’s when it comes to the Internal Revenue Service. The situation remains a major embarrassment, though.
The most important difference is that the Roosevelt and Nixon IRS depredations came from the White House. This mess seems to have percolated from the middle–the IRS’s Cincinnati office (a major facility, by the way)–up to the upper-middle. It was an overreaction, to be sure–but, as Ezra Klein explains, it was a response to a very real problem: how do you draw the line between political advocacy, which is a taxable activity, and policy advocacy, which is not, if the advocate organizes itself as a 501(c)4? Here’s Ezra:
Let’s try to keep two things in mind simultaneously: The IRS does need some kind of test that helps them weed out political organizations attempting to register as tax-exempt 501(c)4 social welfare groups. But that test has to be studiously, unquestionably neutral.
The story thus far seems both chilling and cheering. Employees at the agency’s Cincinnati branch did employ a test that, in effect, targeted tea party groups. Whether they meant it to be discriminatory or they simply created one that was discriminatory is in contention, but ultimately immaterial. The IRS, more so than almost any other agency, must act in ways above reproach.
But when the Cincinnati group explained their test to IRS exempt organizations division chief Lois G. Lerner, she objected to it and it was changed. A few months later, the IRS would release new guidance that suggested scrutinizing “political action type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform movement,” and after that, “organizations with indicators of significant amounts of political campaign intervention (raising questions as to exempt purpose and/or excess private benefit.)”
The context for all this is that after Citizens United and some related decisions, the number of groups registering as 501(c)4s doubled. Because the timing of that doubling coincided with a rise in political activism on the right rather than the left, a lot of the politicized groups attempting to register as 501(c)4s were describing their purpose in tea party terms. A popular conceit, for instance, was that they existed to educate on the Constitution — even if the particular pedagogical method meant participating in Republican Party primaries and pressuring incumbent politicians.
In looking for that kind of language in 2010, the Cincinnati employees were attempting to create a usable shortcut. Like Willie Sutton robbing banks, they were going where the action was. But they needed a clearer test that also identified the language of the left, even if left-leaning groups weren’t exhibiting the same surge in activism. And, frankly, it shouldn’t have been left to career employees in Cincinnati. The IRS needed clearer rules coming from the top. But the top didn’t know what to do with these 501(c)4s, in part because it feared a situation precisely like this one.
It is worth remembering an important fact here: The IRS is supposed to reject groups that are primarily political from registering as 501(c)4s. If they’re going to do that, then they need some kind of test that helps them flag problematic applicants. And that test will have to be a bit impressionistic. It will mean taking the political rhetoric of the moment and watching for it in applications. It will require digging into the finances and activities of groups on the left and the right that seem to be political even as they’re promising their activities are primarily non-political.
If we’re not comfortable with that, then we need to either loosen the definition of 501(c)4s or create a new designation that gives explicitly political groups the benefits of the 501(c)4s (namely, they don’t have to pay taxes and they can keep their donors anonymous). But either way, as I wrote on Friday, the only way to make sure this doesn’t keep happening is for the IRS — or the Congress and White House that control it — to make some tough decisions about 501(c)4s.
Fair enough. But this isn’t over. I suspect the Republicans will take this the same route as Benghazi–why wasn’t the screwup made public when it became known internally in 2011? There will be a search for tell-tale emails. There will be hearings with the insufferable Darrell Issa of California leading the charge. There will be, yet again, a Republican attempt to turn a sin that seems venial into a mortal one for the Obama Administration. And the real question will be camouflaged in a blast of smoke and puffy: What is more dangerous to our democracy, the Obama Administration’s massaging of its mistakes or the Republicans’ constant campaign to paralyze our government through diversions like these?