Left Tries to Redefine IRS Scandal

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By: Roger Aronoff
Accuracy in Media

The liberal media, liberal non-profits, and Congressional Democrats are urging the public to look the other way from the IRS targeting scandal. The problem, they argue, is the presence of 501(c)(4)s that engage in political activity—instead of being “exclusively” social welfare organizations. What, exactly, do they mean by social welfare? These liberals assert that a regulation by the IRS, active since 1959, which contradicts a U.S. statute, is to blame.

Such was the argument recently promoted on the MSNBC show, “The Last Word with Lawrence O’Donnell.” “The original statute passed by Congress requires [that] 501(c)(4) organizations engage exclusively in social welfare activities,” said Rep. Elijah Cummings (D-MD) on the May 22 show. “But in 1959, [the] Treasury Department issued a regulation that requires these entities only to be primarily engaged in social welfare activities. As a result, many groups now believe they can spend up to 49 percent of their funds on campaign-related activities,” he asserted.

O’Donnell, who bragged and gloated that “you heard it here first,” uses quotes from eight liberal Democratic Congressmen and Congresswomen to make his point. “And so, the real scandal here is not that the applications were delayed but that they were ever approved,” he said (emphasis added). He further said, “But by either standard, the standard of the law written by Congress or standard of the regulation as misinterpreted by the IRS, any organization with the name of a political party in its title of any size from the Democratic Party to the Tea Party to local Tea Parties to Socialist Workers Party to the Green Party—every single such application should have been rejected for 501(c)(4) status as a matter of law.” O’Donnell made similar assertions on his show throughout the week.

Others have made similar points. ProPublica, a liberal non-profit organization that does investigative journalism, at least offered a more substantive argument than O’Donnell. They recently outlined six facts they believe are being left out of the IRS scandal story. Among them are that social welfare non-profits are supposed to be engaged “primarily” in social welfare activities, not politics, and that “Most of the money spent on elections by social welfare nonprofits supports Republicans.” They said that “Of the more than $256 million spent by social welfare nonprofits on ads in the 2012 elections, at least 80 percent came from conservative groups, according to FEC figures tallied by the Center for Responsive Politics.” Is this supposed to be a fact they object to, or do they believe that the mere fact that conservatives are more successful at using these groups means prima facie that conservative 501(c)(4)s deserve further scrutiny?

Senators John McCain (R-AZ) and Carl Levin (D-MI) authored a letter, dated May 23rd, to the new IRS Commissioner asking about this same regulation. “The Subcommittee asked the IRS why it was not enforcing the 501(c)(4) statute which states that social welfare organizations should be used ‘exclusively for the promotion of social welfare’ and instead enforcing the more lenient IRS regulation which states that a social welfare organization may be used ‘primarily’ for social welfare,” stated the letter.

MSNBC’s O’Donnell—and its entire primetime lineup of liberal activists—typically operates as a defense team and apologist—as well as a mouthpiece—for President Obama’s narratives. In fact, part of the original justification for the IRS “mishandling” of conservative groups’ applications for tax-exempt status was the ambiguity in the law, which has been mirrored in the President’s statements. “The vagueness of the law may have contributed to the problems, President Obama said Thursday in his response to the controversy, reported the Los Angeles Times on May 16 (emphasis added). “Congress and his administration need to ‘look at some of the laws that create a bunch of ambiguity in which the IRS may not have enough guidance,’ he said.”

We really don’t have to look very hard to see who considers the actions of the IRS to be inappropriate, or worse. While O’Donnell and the others are trying to justify or downplay the actions of the IRS, others are not so forgiving. “As acting commissioner I want to apologize on behalf of the IRS for the mistakes that we made and the poor service that we provided,” said former IRS commissioner Steven Miller about the scandal. President Barack Obama called these actions “outrageous” and “unacceptable.” “White House spokesman Jay Carney…called the IRS action ‘inappropriate’ and said the Obama administration supports a full investigation, suggesting the Treasury Inspector General for Tax Administration would have jurisdiction,” reported USA Today. IRS official Lois Lerner also apologized. “That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate,” said Lerner. Former IRS Commissioner Doug Shulman said he regretted that the IRS actions happened on his watch and was “deeply saddened” by them, but refused to apologize at a hearing, reported The Washington Post on May 21.

So while these people acknowledge that what occurred was wrong and inappropriate, they argue it wasn’t politically motivated. They would have been much better off trying O’Donnell’s line of defense. Their defiance might have paid off, and the media most likely would have backed off. But they’ve already admitted doing the deed. They just claim that it was incompetence and lack of clear guidance that caused it.

Not enough guidance? As Accuracy in Media has outlined in a number of stories, the IRS deliberately targeted conservative groups while approving applications by liberal groups for tax-exempt status. Not only did USA Today describe this as a 27-month “Tea Party moratorium,” but at the same time, according to The Daily Caller, the Barack H. Obama Foundation was approved in a single month. (The ProPublica piece completely ignores the selective targeting of conservative groups, instead focusing on what it sees as the bigger picture.)

Now we learn that the decision to target these groups may have come from a single manager. “Because all six of our IRS workers have different individual and territory managers, Cindy Thomas is one manager they all have common,” reported Fox19.com. “The independent journalism group ProPublica says in November of 2012 they had requested information on conservative groups that had received non-profit status.”

“Along with that information, the IRS released private information on nine conservative groups that had not yet been approved and personal information had not been redacted,” reported Ben Swann for Fox19. “The person who signed off on that release, Cindy Thomas.”

With abuses like these, it becomes cold comfort to rely on the IRS to further regulate political speech. In addition, don’t social welfare organizations actually have something to say about politics without endorsing candidates? John Podhoretz, writing for Commentary magazine, said that the IRS’s policing power means that it should revoke a 501(c)(4) status following misconduct, not that it should presume guilt of organizations who are applying for tax-exempt status.

“Talking heads like MSNBC’s Lawrence O’Donnell bloviate that many Tea Party groups (and similar groups on the left like the President’s Organizing for America) are not social welfare organizations,” wrote Steve Klein of the Wyoming Liberty Group for Canada Free Press. “However, these critics provide no definition of ‘social welfare.’” In fact, any government attempt to devise what constitutes social welfare activity is prone to problems. “Money contributed to politicians should be regulated and large amounts disclosed,” he argued, while “money spent on messages that criticize or praise a candidate for his or her position on a certain issue should not.”

As Senator Orrin Hatch, R, Utah, pointed out, Democrats “calling for a ban on political activity by 501(c)(4) groups have not supported a similar ban on political activity by labor unions,” according to an article by Alana Goodman of The Washington Free Beacon.

If the IRS did change the word “exclusively” to “primarily” in its regulations back in 1959, this is little different from what presidents, especially President Barack Obama, do today. The Administration has selectively enforced the Defense of Marriage Act, and issued its Dream-Act mirroring executive order. Its 20,000-plus pages of regulations added to Obamacare have certainly altered the meaning of this law. And now the Administration has provided 37 states and the District of Columbia with waivers to get around No Child Left Behind’s provisions.

The President has also continued the practice of signing statements, which then-candidate Obama criticized the Bush Administration for. “Candidate Barack Obama criticized President Bush for using ‘signing statements’ to ignore the will of Congress,” reported The Daily Beast in January 2012. “But as the president now seeking reelection in 2012, on at least 20 occasions Obama has embraced the same tactic he criticized George W. Bush for using, raising allegations of double-dealing in Congress and questions of constitutionality from the American Bar Association.”

There is also the issue of the cover-up. Often the cover-up is worse than the scandal itself. But at this point it’s hard to say which is worse. The story has changed almost daily about what key White House people knew, when they knew it and what they did with the information.

Clearly, more needs to be solved at the IRS than a single regulation which has been in effect since 1959, liberal assertions aside.

Roger Aronoff is the Editor of Accuracy in Media, and can be contacted at [email protected].

2 thoughts on “Left Tries to Redefine IRS Scandal

  1. The creation of the dark-money group Organizing for Action is a sign President Barack Obama has no intention of repudiating the role of corporate money in political life during his second term, campaign finance experts suggest.

    Advocates for reform, which Obama has previously claimed to support, are disappointed by his reversal.

    “Organizing for Action marks a complete retreat for President Obama from his pledge to try to change the way we finance elections,” said Craig Holman, a government-affairs lobbyist at Public Citizen, a nonprofit organization opposed to corporate money in politics. “It makes a total mockery of any effort to try to limit corporate money.”

    Organizing for Action, which will replace Obama’s Organizing for America campaign apparatus, will attempt to channel the grassroots energy from the 2012 election into support for the administration’s policy agenda. OFA already has started wooing corporate donors, according to Politico, and will not be required to disclose its funding sources as a 501(c)4.

    Politico reported that corporate representatives were asked for contributions at OFA’s unveiling event in January. A spokesperson for Walmart stressed that the company was invited to the event by a group called Business Forward, not Organizing for America.

    “That was part of actually a Business Forward event that our executives, vice president, participated in,” said a spokesperson for Walmart. “It was a request from Business Forward, not necessarily this OFA organization.”

    The spokesperson declined to comment on whether Walmart would consider contributing to OFA. Asked whether Walmart executives would have still attended the event if they had known it was for OFA, the spokesperson said, “That’s a hypothetical at this point.”

    While Obama has said he opposes unlimited and secret corporate campaign funding, he endorsed a Super PAC founded by his former staffers during the election.

    “I had been counting on, after the elections, Obama would finally start stepping up to the plate and start getting tough on campaign financing,” said reform advocate Holman. “I did not accept the fact that he needed to run a Super PAC to get elected in 2012 … I didn’t buy the argument—but at least it’s an argument.”

    “Now that he’s gone through the election, he’s reversed himself on taking corporate money for the inauguration,” Holman said. “He’s now reversed himself on taking corporate money for nonprofits.”

    Supporters of campaign deregulation see OFA’s embrace of corporate cash as a vindication of their arguments.

    Bradley A. Smith, chair of the Center for Competitive Politics, said OFA’s decision to reach out to companies like Walmart and Boeing was an acknowledgment from the president that undisclosed corporate money is not necessarily a corrupting influence in politics.

    “Obama shows through his actions what he really believes,” said Smith. “When he takes these contributions he [shows he] understands … this is not necessarily corrupting.”

    Smith, who says he is not concerned about politicians being corrupted by corporate donations, says he is more uneasy that corporations may feel blackmailed into giving money to OFA in order to access federal perks.

    “If [they] want to get [their] green subsidies or waivers from Obamacare, then they might feel that it would be a good idea to give to this group,” he said. “That to me is more of a worry than the idea that they might gain access to the president or change his opinion.”

    Smith also said there is something “a little bit unsettling to people about the idea of the sitting president having sort of a populist organization separate from his party. … [It] sounds third-world, Chavez-like to some people.”

    Both Smith and Holman said OFA’s promise to not accept money from lobbyists was meaningless if it was going to accept corporate donations.

    “[President Obama] may not take money from lobbyists, but that becomes quite insignificant when all the corporations that hire the lobbyists can make unlimited contributions to this entity,” said Holman.

    The White House and Organizing for Action did not return requests for comment.

    OFA plans to use its corporate donations to finance a massive health care campaign. Politico reported the group plans to run radio and TV ads and team up with Enroll America, another pro-Obama organization that is hiring up to 100 new staffers to support the effort.

    However, OFA leadership downplayed big-money contributors on a conference call with grassroots activists on Jan. 30 and told local volunteers they would be responsible for funding for their own “chapter” groups.

    “We’re not talking about fundraising in terms of going to big shiny dinners and calling up a bunch of folks with big checks,” former Obama for America senior advisor Dan Kanninen, who is now assisting the Organizing for Action transition effort, said during the call. “We’re talking about small dollar stuff, at the grassroots, from the community, that can pay for the basic infrastructure that can keep this thing running.”

    While the OFA leadership said they were not currently accepting resumes, they promised the volunteers they would be the “first to know” if paid positions opened up in the future.

    “We don’t know yet how big the organization is going to be here at headquarters,” Kanninen said on the call. “We don’t know yet what kind of opportunity there will be down the road for you. But we certainly encourage you to stay in touch and involved because they will eventually present themselves.”

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