The 'smoking gun' in the targeting of conservative groups has been hiding in plain sight.
Feb. 26, 2014 7:47 p.m. ET
The mainstream press has justified its lack
of coverage over the Internal Revenue Service targeting of conservative
groups because there's been no "smoking gun" tying President
Obama
to the scandal. This betrays a remarkable, if not willful,
failure to understand abuse of power. The political pressure on the IRS
to delay or deny tax-exempt status for conservative groups has been
obvious to anyone who cares to open his eyes. It did not come from a
direct order from the White House, but it didn't have to.
First, some background: On Jan. 21, 2010, the Supreme Court issued its ruling in Citizens United v. FEC
upholding the right of corporations and unions to make independent
expenditures in political races. Then, on March 26, relying on Citizens United,
the D.C. Circuit Court of Appeals upheld the rights of persons
(including corporations) to pool resources for political purposes. This
allowed the creation of "super PACs" as well as corporate contributions
to groups organized under Section 501(c)(4) of the Internal Revenue Code
that spend in political races.
The reaction to Citizens United
was no secret. Various news outlets such as CNN noted that "Democrats
fear the decision has given the traditionally pro-business GOP a
powerful new advantage."
The 501(c)(4) groups in question are
officially known as "social-welfare organizations." They have for
decades been permitted to engage in political activity under IRS rules,
so long as their primary purpose (generally understood to be more than
50% of their activity) wasn't political. They are permitted to lobby
without limitation and are not required to disclose their donors. The
groups span the political spectrum, from the National Rifle Association
to Common Cause to the Planned Parenthood Action Fund. If forced out of
501(c)(4) status, these nonprofit advocacy groups would have to
reorganize as for-profit corporations and pay taxes on donations
received, or reorganize as "political committees" under Section 527 of
the IRS Code and be forced to disclose their donors.
Now
consider the following events, all of which were either widely
reported, publicly released by officeholders or revealed later in
testimony to Congress. These are the dots the media refuse to connect:
• Jan. 27, 2010: President Obama criticizes Citizens United in his State of the Union address and asks Congress to "correct" the decision.
•
Feb. 11, 2010: Sen. Chuck Schumer (D., N.Y.) says he will introduce
legislation known as the Disclose Act to place new restrictions on some
political activity by corporations and force more public disclosure of
contributions to 501(c)(4) organizations.
Mr. Schumer
says the bill is intended to "embarrass companies" out of
exercising the rights recognized in Citizens United. "The deterrent effect should not be underestimated," he said.
•
Soon after, in March 2010, Mr. Obama publicly criticizes conservative
501(c)(4) organizations engaging in politics. In his Aug. 21 radio
address, he warns Americans about "shadowy groups with harmless sounding
names" and a "corporate takeover of our democracy."
•
Sept. 28, 2010: Mr. Obama publicly accuses conservative 501(c)(4)
organizations of "posing as not-for-profit, social welfare and trade
groups." Max Baucus, then chairman of the Senate Finance Committee, asks
the IRS to investigate 501(c)(4)s, specifically citing Americans for
Job Security, an advocacy group that says its role is to "put forth a
pro-growth, pro-jobs message to the American people."
•
Oct. 11, 2010: Sen. Dick Durbin (D., Ill.) asks the IRS to investigate
the conservative 501(c)(4) Crossroads GPS and "other organizations."
•
April 2011: White House officials confirm that Mr. Obama is considering
an executive order that would require all government contractors to
disclose their donations to politically active organizations as part of
their bids for government work. The proposal is later dropped amid
opposition across the political spectrum.
• Feb. 16, 2012: Seven Democratic senators—
Michael Bennet
(Colo.),
Al Franken
(Minn.),
Jeff Merkley
(Ore.), Mr. Schumer,
Jeanne Shaheen
(N.H.),
Tom Udall
(N.M.) and
Sheldon Whitehouse
(R.I.)—write to the IRS asking for an investigation of conservative 501(c)(4) organizations.
•
March 12, 2012: The same seven Democrats write another letter asking
for further investigation of conservative 501(c)(4)s, claiming abuse of
their tax status.
• July 27, 2012: Sen.
Carl Levin
(D., Mich.) writes one of several letters to then-IRS
Commissioner
Douglas Shulman
seeking a probe of nine conservative groups, plus two liberal and
one centrist organization. In 2013 testimony to the HouseOversight and
Government Reform Committee, former IRS Acting Commissioner Steven
Miller describes Sen. Levin as complaining "bitterly" to the IRS and
demanding investigations.
• Aug. 31,
2012: In another letter to the IRS, Sen. Levin calls its failure to
investigate and prosecute targeted organizations "unacceptable."
•
Dec. 14, 2012: The liberal media outlet ProPublica receives Crossroads
GPS's 2010 application for tax-exempt status from the IRS. Because the
group's tax-exempt status had not been recognized, the application was
confidential. ProPublica publishes the full application. It later
reports that it received nine confidential pending applications from IRS
agents, six of which it published. None of the applications was from a
left-leaning organization.
• April 9,
2013: Sen. Whitehouse convenes the Judiciary Subcommittee on Crime and
Terrorism to examine nonprofits. He alleges that nonprofits are
violating federal law by making false statements about their political
activities and donors and using shell companies to donate to super PACs
to hide donors' identities. He berates
Patricia Haynes,
then-deputy chief of Criminal Investigation at the IRS, for not
prosecuting conservative nonprofits.
•
May 10, 2013: Sen. Levin announces that the Permanent Subcommittee on
Investigations will hold hearings on "the IRS's failure to enforce the
law requiring that tax-exempt 501(c)(4)s be engaged exclusively in
social welfare activities, not partisan politics." Three days later he
postpones the hearings when
Lois Lerner
(then-director of the IRS Exempt Organizations Division) reveals
that the IRS had been targeting and delaying the applications of
conservative groups applying for tax-exempt status.
•
Nov. 29, 2013: The IRS proposes new rules redefining "political
activity" to include activities such as voter-registration drives and
the production of nonpartisan legislative scorecards to restrict what
the agency deems as excessive spending on campaigns by tax-exempt
501(c)(4) groups. Even many liberal nonprofits argue that the rule goes
too far in limiting their political activity—but the main target appears
to be the conservative 501(c)(4)s that have so irritated Democrats.
•
Feb. 13, 2014: The Hill newspaper reports that "Senate Democrats facing
tough elections this year want the Internal Revenue Service to play a
more aggressive role in regulating outside groups expected to spend
millions of dollars on their races."
In
1170,
King Henry II
is said to have cried out, on hearing of the latest actions of
the Archbishop of Canterbury, "Will no one rid me of this turbulent
priest?" Four knights then murdered the archbishop. Many in the U.S.
media still willfully refuse to see anything connecting the murder of
the archbishop to any actions or abuse of power by the king.
Mr. Smith,
a former chairman of the Federal Election Commission, is chairman of the Center for Competitive Politics.
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