Wonkbook: The IRS mess gets its fall guy

May 16, 2013

Welcome to Wonkbook, Ezra Klein and Evan Soltas's morning policy news primer. To subscribe by e-mail, click here. Send comments, criticism, or ideas to Wonkbook at Gmail dot com. To read more by Ezra and his team, go to Wonkblog.

(Photo by Andrew Harrer/Bloomberg)
(Photo by Andrew Harrer/Bloomberg)

Poor Steven Miller. Yesterday, he was asked to resign his post as acting director of the Internal Revenue Service. But he's just a fall guy. He wasn't director for most of the period in question (though he was serving in the agency). And both he and his predecessor acted properly and swiftly to shut down the inappropriate criteria when it was brought to their attention.

But someone had to be fired. Otherwise President Obama wouldn't seem like he was taking action. And Obama actually didn't have many choices for whom to fire. It's hard for the president to axe ordinary employees at the IRS at will. The agency is insulated from the executive branch -- in part due to fears that a president will fire employees if they don't discriminate against groups or individuals who're fighting his agenda. In this case, that insulation is actually protecting employees who might have discriminated against  conservative groups from being fired by the White House. Now there's an unintended consequence for you.

One thing about Miller, though: he was only acting director. The White House hadn't bothered to actually nominate a full director. In fact, five years into Obama's presidency, they've never nominated their own director for the IRS. They let Bush's guy hang around for awhile and then made Miller the acting director. But nominating the director is one of the only ways the White House has to actually affect the IRS. It's time they took advantage of it.

Wonkbook's Number of the Day: 36. We know what you're wondering: "How many times has the House voted to repeal parts of the Affordable Care Act?" Why, 36, of course. Five of those have been in-full repeals. The rest are efforts to defund or strip parts. Another repeal vote is on the way.

Wonkblog's Graphs of the Day: How the IRS budget has changed since 2002.

Wonkbook's Top 5 Stories: 1) scandalmania rages on; 2) immigration reform wobbles; 3) Tavenner confirmed for Medicare; 4) your next SEC; and 5) is energy efficiency a green issue that can pass?

1) Top story: Obama administration fights many-headed Hydra of scandals

Obama struggles to get beyond a scandal trifecta. "The most corrosive political scandals are the ones that feed a pre­existing story line — which is why the White House could have difficulty putting the current ones behind it any time soon. In the view of President Obama’s adversaries, recent revelations add evidence to arguments that they have been making about the president all along: that he would do or say whatever it took to get reelected; that his is a philosophy of rampant, invasive big government; that he has not acted within the constraints of the Constitution; that he regards those who oppose him with contempt." Karen Tumulty in The Washington Post.

Lawmakers press Holder on AP, IRS. "Members of Congress expressed concern Wednesday about the Justice Department's subpoena of Associated Press phone records at a hearing where Attorney General Eric Holder had several testy confrontations with Republican lawmakers. The House Judiciary Committee was hearing testimony from Mr. Holder amid multiple controversies involving the department, including the AP issue and the Internal Revenue Service's targeting of conservative groups." Brent Kendall and Peter Landers in The Wall Street Journal.

@BobCusack: The White House PR shop was deft in releasing Benghazi emails, then having Obama hold presser on IRS. Papers will lead w/ IRS.

Rep. Issa in the spotlight. "After two years of feverishly chasing any hint or suggestion of wrongdoing by the Obama administration, Rep. Darrell Issa (R-Calif.) may finally be having his moment. Issa, the chief congressional watchdog over the White House, has the administration squarely on the defensive on two of the most politically explosive events of the moment...But the White House is banking on Issa overplaying his hand; Democrats say that is his preternatural instinct and a tendency that has undermined his credibility in the past." Paul Kane in The Washington Post.

@resnikoff: Kind of amazing (but totally predictable) that but-what-about-Benghazi-ism persists in light of genuinely troubling AP/DOJ scandal.

...Holder called him 'shameful.' "Representative Darrell Issa, a California Republican, played a telephone voice recording that he said was of Thomas E. Perez, the assistant attorney general for civil rights and President Obama’s nominee for labor secretary. Mr. Issa intimated that the recording was evidence that the nominee had covered up as a “quid pro quo” and demanded the contents of e-mails from Mr. Perez. “I’m sure there was a good reason why the content of the e-mails was not released,” Mr. Holder said. Mr. Issa scoffed and said the content was not released because Mr. Holder did not want it public. At that, Mr. Holder snapped back at what he said was an unwarranted and public ascribing of motives that was “too consistent with the way you conduct yourself as a member of Congress. It is unacceptable and it is shameful.”" Jonathan Weisman in The New York Times.

IRS:

Acting director of IRS resigns. "President Obama on Wednesday demanded and accepted the resignation of the acting commissioner of the Internal Revenue Service, Steven T. Miller, as part of a multi-pronged effort to quell controversies that threaten to dominate his second term.The action was Obama’s first substantive step to address a political uproar stemming from the IRS’s disclosure that it had targeted conservative groups seeking tax-exempt status...In a brief but fiery evening statement in the East Room of the White House, Obama labeled the IRS’s actions “inexcusable.”" Zachary A. Goldfarb and Juliet Eilperin in The Washington Post.

Read: A transcript of Obama's remarks on the IRSPolitico.

Watch: Obama's remarks on the IRSTalking Points Memo.

Obama has met with top Treasury officials on this. "President Obama [met] Wednesday afternoon with leaders from the Treasury Department to discuss the administration's response to the IRS scandal. Treasury’s Inspector General found the IRS improperly targeted conservative groups for scrutiny, subjecting groups with “Tea Party” in their name to extensive reviews as they sought tax-exempt status." Justin Sink in The Hill.

@jonathanweisman: Of note, IRS has only 2 political appointees Obama could fire: commissioner, chief counsel. Pres can't touch civil servants in an ind agency

Possibility of tougher discipline set aside for IRS. "The Senate on Tuesday set aside, if only for the meantime, a proposal to add the threat of a fine and imprisonment to current policies that require that IRS employees be fired for certain types of misconduct...IRS employees already are subject to a special set of disciplinary rules that mandate firing for various types of misconduct — the so-called “10 deadly sins.” Among those offenses are violating a taxpayer’s rights under the Constitution and harassing or retaliating against a taxpayer." Eric Yoder in The Washington Post.

Explainer: 5 takeaways from the IRS reportJuliet Eilperin in The Washington Post.

Report: IRS also targeted 3 liberal groups. "One of those groups, Emerge America, saw its tax-exempt status denied, forcing it to disclose its donors and pay some taxes. None of the Republican groups have said their applications were rejected. Progress Texas, another of the organizations, faced the same lines of questioning as the Tea Party groups from the same IRS office that issued letters to the Republican-friendly applicants. A third group, Clean Elections Texas, which supports public funding of campaigns, also received IRS inquiries." Brad Plumer in The Washington Post.

@blakehounshell: Not my lane, but isn’t the real IRS scandal that the regulations on 501c4s are a complete and utter joke?

Groups that sought tax-exempt status say IRS dealings were a nightmare. "Common Sense never reached the nonprofit stage. The organization gave up seeking tax-exempt status after two years of Internal Revenue Service demands for everything from the group’s blog posts to the names of “anyone who gave you so much as a dollar,” according to its officials. “We were spending thousands of dollars between the filing fees and attorney fees,” Riehm said. “We realized that just paying the taxes would cost a whole lot less.”" Josh Hicks and Kimberly Kindy in The Washington Post.

Interview: Fred Wertheimer, founder and president of Democracy 21, a leading campaign finance reform organization. Dylan Matthews in The Washington Post.

The scandal probably won't hurt Obamacare. "At most, the IRS is probably in for an increased amount of oversight as it moves forward on implementation of the Affordable Care Act, more questions about the data it will collect and how it will be used. Aside from that, there’s not much Congress can do to stand in the agency’s way that they have not done before." Sarah Kliff in The Washington Post.

Debate: Should the 501(c)(4) status even existThe New York Times.

Before it harassed the Tea Party, it went after gay-rights groups. "Before there was the Tea Party, there was Big Mama Rag, Inc. It was a radical feminist collective in the 1970s, and it devoted itself to lectures, seminars, a free library, and publishing a newspaper to voice its ideas, namely the Big Mama Rag. The group applied for nonprofit status from the IRS, and was initially refused for, among other reasons, “the articles, lectures, editorials, etc. promoting lesbianism.”" Neil Irwin in The Washington Post.

Benghazi:

The investigators want a public hearing. "Former U.S. Ambassador Thomas Pickering and former Chairman of the Joint Chiefs of Staff Michael Mullen said they wanted to appear before the House Government Oversight and Government Reform Committee to answer questions about their inquiry into the attack that resulted in the deaths of four U.S. citizens, including the ambassador to Libya." Corey Boles in The Wall Street Journal.

Read: The full emails, as released by the White HouseScott Wilson in The Washington Post.

WH releases Benghazi emails. "The Obama administration released 100 pages of e-mails Wednesday that reveal differences between intelligence analysts and State Department officials over how to initially describe the Sept. 11, 2012, attack on the U.S. mission in Benghazi, Libya. The internal debate did not include political interference from the White House, according to the e-mails, which were provided to congressional intelligence committees several months ago." Scott Wilson and Karen DeYoung in The Washington Post.

@blakehounshell: The truth is that the WSJ reported most of the Benghazi revelations months and months ago.

AP/DoJ:

WH pushing a new media shield law. "[T]he White House is pushing a federal media shield law that died in the Senate four years ago. Sen. Chuck Schumer (D-N.Y.) introduced the media-protecting legislation at the request of the White House, according to a White House official. The Free Flow of Information Act would protect journalists from being compelled to testify about their confidential sources, unless all other avenues are exhausted and exposure is in the public interest." Rachel Weiner and Juliet Eilperin in The Washington Post.

@BCAppelbaum: Polls show that everybody hates the media. Except Congress, apparently. They're lining up to defend AP at the Holder hearing.

...But would a media shield law have protected the AP? "Had it been law, the DOJ may well have gotten hold of the AP records anyway. But the process would have played out differently...Under the shield legislation, the DOJ could still delay notification of a covered journalist of a subpoena — but only if a judge, not the administration, decided that disclosure would pose a substantial threat." Rachel Weiner in The Washington Post.

Did the AP leak really put national security at risk? "AP balked and proceeded to publish that Monday afternoon. Its May 2012 report is now at the center of a controversial and broad seizure of phone records of AP reporters’ home, office and cellphone lines...Now, some members of Congress and media advocates are questioning why the administration viewed the leak that led to the May 7 AP story as so grave." Carol D. Leonnig and Julie Tate in The Washington Post.

Leading opinion on the scandals: 

KRUMHOLTZ AND WEINBERGER: The real IRS scandal. "With the surge of dark money into politics, we need to ensure that the I.R.S. is capable of rigorously enforcing the law in a nonpartisan, but also more effective, way. While we focus on the rickety raft of minor Tea Party groups targeted by the I.R.S., there is an entire fleet of big spenders that are operating with apparent impunity...[I]t would be a travesty if the misdeeds here undermined the important work that must now be done to foster greater transparency, and to bolster confidence that the I.R.S. is in fact scrutinizing politically active groups across the board, regardless of their ideological bent." Sheila Krumholz and Robert Weinberger in The New York Times.

@mleewelch: The REAL scandal is some arcane but important obsession I've had for a long time!

ROVE: The roots of the IRS scandal. "The abuse of power may not be confined to the IRS. It might also involve high-ranking Senate Democrats who pressured the IRS to conduct such witch hunts and threatened action if it didn't...In September 2010, Senate Finance Committee Chairman Max Baucus wrote to IRS Commissioner Douglas Shulman, requesting that the agency survey major nonprofits involved in political campaign activity for their possible "violation of tax laws." In February 2012, Sens. Charles Schumer, Michael Bennet, Al Franken, Jeff Merkley, Jeanne Shaheen, Tom Udall and Sheldon Whitehouse wrote a similar letter...In July 2012 and again in August, Sen. Carl Levin complained." Karl Rove in The Wall Street Journal.

GERSON: What you're feeling is the heavy hand of government. "If there is any thread that unites these scandals, it is government heavy-handedness. Seizing the phone records of, say, three editors and reporters would constitute a leak investigation. Seizing the phone records of perhaps 100 is a fishing expedition and a form of intimidation... As the ambitions of government in the Obama era have expanded, respect for the institution of government has reached new lows. These scandals add another layer of cynicism." Michael Gerson in The Washington Post.

IGNATIUS: ...But you're also seeing its impotence. "What should frighten the public is not the federal government’s monstrous power but its impotence. Firing officials has its place in bringing accountability. What’s really needed, as these latest episodes show, is adult supervision of the bureaucracy. This requires senior officials who are properly sensitive to political issues. But such officials have become so afraid of seeming to meddle that mistakes happen." David Ignatius in The Washington Post.

DIONNE: Narrative as false idol. "It’s a funny thing about media leaks: They are either courageous or outrageous, depending on whether they help or hurt your political party. Forgive me for feeling cynical and depressed about our nation’s political conversation. Scandalmania is distorting our discussion of three different issues, sweeping them into one big narrative — everything is a “narrative” these days — about the beleaguered second-term presidency of Barack Obama." E.J. Dionne in The Washington Post.

Music recommendations interlude: Christopher Cross, "Ride Like the Wind," 1980.

Top op-eds

HOWARD: Data transparency is a really big deal. "Now, we may see even more life-changing technologies as a result of open government data. Last week, the White House released an executive order that makes “open and machine readable” the new default for the release of government information. Although people who care about open data were generally quite excited, the news barely made an impression on the general public. But it should: This is perhaps the biggest step forward to date in making government data—that information your tax dollars pay for—accessible for citizens, entrepreneurs, politicians, and others." Alexander B. Howard in Slate.

WESSEL: When it comes to easy money, do we have too much of a good thing? "But … we know what can happen when rates are too low for too long and credit is too readily available: People and businesses borrow too much for their own good. Banks get into trouble. Investors unhappy with low yields on bank deposits or Treasury bonds look for higher returns in riskier assets, not always understanding the potential downside. Money seeps into poorly regulated crevices of the financial system like water that seeps into cracks in cliffs, then freezes, expands and causes a rock slide." David Wessel in The Wall Street Journal.

BROOKS: The GOP's Hispanic opening. "What do we know about the Hispanics who don't vote? Among other things, they are the ones most likely to call themselves "political conservatives." Again, according to the 2010 General Social Survey, non-voting Hispanics are 52% more likely than Hispanic voters to label their ideology in this way. In contrast, non-voting whites are 40% less likely than voting whites to call themselves politically conservative. Non-voting Hispanics are also more likely than the voters to express conservative attitudes, such as agreeing that "hard work" is more important than "lucky breaks or help from other people" in getting ahead." Arthur C. Brooks in The Wall Street Journal.

Adorable animals interlude: The baby Tasmanian devil.

2) Immigration reform looking fragile, especially in House

Senators work to protect fragile compromise on H1-B visas. "Senators behind a sweeping immigration reform bill managed to defend their fragile compromise on Tuesday from a seige of amendments to expand or restrict a visa program for highly skilled workers beyond what was initially proposed in the legislation...On Monday, lawmakers pitched several amendments to further expand the program, including one from Sen. Ted Cruz (R-Tex.) to increase the limit five-fold to 300,000." J.D. Harrison in The Washington Post.

House Republicans working in immigration group threaten to pull out. "Republicans in the House bipartisan immigration group are threatening to leave negotiations if they don’t come to an agreement Thursday. Reps. John Carter of Texas and Raul Labrador of Idaho both separately said the time for negotiations is over...That the House’s eight-person bipartisan group appears to be breaking down is a major development in the immigration debate. If the House does not come out with its own plan, it will make immigration reform a lot more difficult. The theory from Republican leadership was that the bipartisan group’s product would give the House GOP buy-in." Jake Sherman in Politico.

North Carolina needed 7,500 farm workers. Only 7 Americans stuck it out. "When I talked to him about the economic effects of immigration last month, Center for Global Development migration expert Michael Clemens mentioned that he was working on research on agricultural migrant workers. That research is finally out, in the form of a report released by CGD and the Partnership for a New American Economy, a pro-immigration reform group started by Michael Bloomberg and Rupert Murdoch." Dylan Matthews in The Washington Post.

Parody interlude: The House GOP's TV show mockup "Arrested Economic Development."

3) Tavenner confirmed to CMS

Medicare gets its first confirmed leader in more than a decade. "Moments ago, the Senate did something it has not done in nearly a decade: It confirmed a leader for the Center for Medicare and Medicaid Services. Obama nominee Marilyn Tavenner received a 91 to 7 vote on the Senate floor to run an agency that, since 2006, has been without a confirmed leader. Her position, overseeing a $1 trillion agency that administers health benefits to millions, has long been considered too politically volatile to fill." Sarah Kliff in The Washington Post.

HHS launching $1B healthcare innovation effort. "Health and Human Services (HHS) Secretary Kathleen Sebelius said the second round of Healthcare Innovation Awards will target new areas for improvement, including care for special needs populations. The awards are also meant to reduce costs for Medicare and Medicaid patients in outpatient hospital settings, test new care and financial models for specific provider groups, and ensure care delivery accounts for preventive and population health." Elise Viebeck in The Hill.

House readies for another Obamacare-repeal vote. "Since Republicans took over in 2011, the House has voted five times to repeal President Obama’s health-care law. It has also voted 31 other times to repeal individual pieces of the law or to strip away its funding. Still, on Thursday the House will do it all once more — voting on a new bill to repeal the law. It will pass again. Then it will die in the Senate, again." David A. Fahrenthold and Ed O'Keefe in The Washington Post.

...Though CBO still says that would increase the deficit. "The CBO refused to provide a new cost estimate for repeal, saying there is too little time before the vote. But Director Doug Elmendorf pointed to an estimate from July 2012 that abolishing healthcare reform would raise the deficit by $109 billion over 10 years." Elise Viebeck in The Hill.

Compsci interlude: Turing drawings

4) Your next SEC

New SEC chief has work cut out for her. "Her pictures are not even on her office wall yet, but Mary Jo White already is getting pulled into an arena in which she’s untested: writing regulations. Since she took over as head of the Securities and Exchange Commission a month ago, Congress has pressed the former federal prosecutor to pump out long-overdue financial regulations required by the Dodd-Frank Act and rewrite key rules that govern the capital markets. This week, lawmakers are applying more pressure to get the job done — on their terms." Dina ElBoghdady in The Washington Post.

...And the House has given her a deadline. "The House voted Wednesday to set a firm deadline by which the Securities and Exchange Commission (SEC) must write rules expanding the exemption from SEC regulation for securities offered under Regulation A. Regulation A allows companies raise up to $5 million per year by offering securities without making them register and otherwise be subject to normal SEC regulations. Under legislation passed last year, that ceiling would be increased to $50 million, but did not set a firm deadline for this change." Pete Kasperowicz in The Hill.

Inflation stays low. "The producer price index, which measures price changes before they reach the consumer, fell a seasonally adjusted 0.7 percent in April from March, the Labor Department said Wednesday. It was the second straight monthly decline and the steepest since February 2010...Over all, wholesale prices have increased just 0.6 percent over the last 12 months" The Associated Press.

Home sales expectations hit high. "The National Association of Home Builders said Wednesday that its housing-market index was 44 in May, up three points from April. All three components of the index rose, with builders' expectations of sales for the next few months hitting the highest level since February 2007." Alan Zibel and Jonathan House in The Wall Street Journal.

The Fed is working on its exit strategy. "The Fed has tried to be more open and transparent, but officials still rely on a vocabulary of code words to convey their states of mind. Philadelphia Fed President Charles Plosser gave a speech this week in Stockholm that was packed with buzzwords to describe the Fed’s plans to slow and then unwind its monetary stimulus policy — terms that are popping up in a lot of Fedspeak now as officials start to recalibrate their plans for an exit. Here are the terms to know." Ylan Q. Mui in The Washington Post.

Explainer: 315 charts on poverty and inequalityDylan Matthews in The Washington Post.

After a surge, farmland prices -- an indicator of commodity prices-- stabilize. "The Kansas City Federal Reserve Bank said in a report Wednesday that prices for nonirrigated farmland in its region rose 3.4% in the first quarter from the fourth quarter of 2012. That was much slower than the 7.7% quarter-to-quarter increase recorded for the same region a year earlier. A separate report from the St. Louis Federal Reserve Bank also released Wednesday showed that land values in parts of the Midwest and Southeast regions fell by an average of 2.3% in the first quarter compared with the previous quarter." Mark Peters in The Wall Street Journal.

You know you want to see this interlude: The view from the top of the Washington Monument.

5) Does energy efficiency have a chance to pass?

Business group backs energy efficiency bill. "The new Business Roundtable letter backing the plan arrives as Senate Energy and Natural Resources Committee Chairman Ron Wyden (D-Ore.) is urging Senate floor action in May...A spokesman for Senate Majority Leader Harry Reid (D-Nev.) said Wednesday that it’s not yet clear when the bill will reach the floor. The bill cleared Wyden’s committee in a 19-3 vote last week." Ben German in The Hill.

Media consistently fail to identify when the research they cited has been funded by interested parties. "Major news outlets often mislead readers by failing to report the fossil fuel funding of the conservative think tanks they cite and quote, according to a new study from the Union of Concerned Scientists...Based on a Nexus search, UCS’s Elliott Negin found the rate of reporting varies widely across outlets: Politico and the Los Angeles Times, and the Associated Press disclosed funding over 40 percent of the time. The two largest papers in the country, USA Today and Wall Street Journal(owned by Rupert Murdoch), disclosed this information the least." Rebecca Leber in ThinkProgress.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Europe's endless recession, in one chartBrad Plumer.

Supreme Court says you can violate a patent by planting a seedTimothy B. Lee.

Americans still move around more than anyone in the worldBrad Plumer.

North Carolina needed 6,500 farm workers. Only 7 Americans stuck it outDylan Matthews.

Interview: Fred Wertheimer, founder and president of Democracy 21, a leading campaign finance reform organization. Dylan Matthews.

Here are 315 charts on poverty and inequality. Satisfied yet? Dylan Matthews.

These are the buzzwords to watch for as the Fed plots its exit strategyYlan Q. Mui.

Before the IRS harassed the Tea Party, it harassed gay rights groupsNeil Irwin.

IRS scandal probably won’t hurt ObamacareSarah Kliff.

Medicare gets its first confirmed leader in nearly a decadeSarah Kliff.

Report: The IRS also targeted at least three liberal groupsBrad Plumer.

Most U.S. clothing chains did not sign pact on Bangladesh factory reformsBrad Plumer.

The coming political battle over BitcoinTimothy B. Lee.

Et Cetera

Obama, Biden release financial disclosure reportsRachel Weiner in The Washington Post.

More turnover at VA as Deputy Secretary Scott Gould departs. Al Kamen in The Washington Post.

Tensions are rising as no budget conference committee is formedRamsey Cox in The Hill.

VA announces overtime 'surge' to combat backlogSteve Vogel in The Washington Post.

Got tips, additions, or comments? E-mail me.

Wonkbook is produced with help from Michelle Williams.

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