Former U.S. policy analysts backed by ex-Obama administration lawyers are invoking an obscure federal law to try to correct what they call “misleading and unreliable” statements by Treasury Secretary Steven Mnuchin and senior department officials in support of the GOP’s tax cut proposal.
The maneuver is one of several actions aimed at using the administration’s public statements to launch legal challenges to policy changes and executive orders.
Since its enactment in 2000, the little-known and rarely litigated lnformation Quality Act has mandated that information issued to the public or sponsored by federal agencies be “accurate, reliable and unbiased.”
The law, sometimes called the Data Quality Act, arose out of fears federal regulations could be warped or manipulated by flawed or “junk” science.
In a 10-page letter dated Monday, a liberal advocacy organization formally requested the Treasury Department retract its claims about the benefits to working Americans of the tax plan. The letter is an initial step required under the data quality law before a federal lawsuit can be filed making the same demand.
The challenge comes after the Treasury Department earlier this year removed from its website a peer-reviewed, 2012 tax cut analysis by career department economists that contradicted the department's current claims.
A Treasury spokeswoman declined immediate comment on the challenge.
The law has been embraced by industries and conservative groups as a way to challenge government regulators, and criticized by progressive organizations who say it can be abused to bog down or block new health, safety and environmental rules. Under Trump, however, some liberal groups have explored it as a way to combat proposed administration shifts on matters including climate science and business deregulation.
At issue in the letter are statements by Mnuchin and department spokesman Tony Sayegh that claim changing the corporate tax code would help U.S. workers.
Slashing corporate tax rates would benefit the average American household by “$4,000-9,000 once the tax plan is fully operational,” Sayegh said in an October 18 interview on the Fox News Channel, one of the claims the letter contends has “no support” in Treasury Department research.
The lawyers pursuing the claim are not asking for monetary or other damages, but are demanding the department comply with information act rules governing the accuracy of agencies’ public statements. If the department rebuffs their request, the group could ask a federal court to probe the matter or enforce compliance.
Treasury guidelines require its statements be objective and supported by "full, accurate [and] transparent documentation," and that statistical data meet a higher degree of transparency, according to the letter.
While political analysts have noted Trump's use of factually inaccurate claims over matters ranging from the size of his Inauguration Day crowds to allegations of widespread voter fraud as a tool for political disruption — the suit marks another instance where the president's truthfulness in a debate dominating Congress could be tested in court.
“Important policy decisions — like tax reform — that affect every American should be based on facts, not fancy,” said Anne Harkavy, a top Energy Department attorney from 2013 to 2016 and executive director of Democracy Forward, a nonpartisan, liberal-leaning litigation and policy shop formed this year to challenge executive branch actions.
In the Oct. 18 interview, Sayegh said the average American household would benefit by "$4,000-9,000" once the plan is fully implemented, a claim that has "no support" from economic literature and is nonsensical since it averages out to two to five times the total proposed amount of corporate tax cut, Democracy Forward's letter alleged.
Among the other examples cited in the letter was an op-ed article from Mnuchin that cited economists’ findings, including work by Trump Council of Economic Advisers Chairman Kevin Hassett, that more than 70 percent of the corporate tax burden is passed on to U.S. workers.
According to the letter to the department’s Chief Information Office, Democracy Forward sought retractions within 60 days of the “$4,000” and “70 percent” claims.
The group cited among other evidence a statement by Obama chief economist and former CEA chair Jason Furman, saying the nation's 125 million households would need to benefit by $550 billion to $1.1 trillion from a corporate tax cut estimated at $200 billion.
The action marks the latest twist over the use of the law, which requires agencies to issue guidelines to ensure the “quality, objectivity, utility, and integrity” of their public pronouncements.
Courts have issued mixed rulings on the reach of the law. The U.S. Court of Appeals for the 4th Circuit in 2006 denied an effort by salt producers to challenge new federal low-sodium health guidelines, for example, saying the law established no right to sue.
However, in more recent years, the U.S. Court of Appeals for the 9th Circuit found that while the law could not be used by a drug marketer convicted of fraud to retract a Justice Department news release, it did not prohibit him from going to court. Similarly, the U.S. Court of Appeals for the D.C. Circuit did not bar a tobacco company from suing, although it denied its attempt to overturn an Agriculture Department fee ruling.
An architect of the law, James J. Tozzi, a former OMB official and founder of the Center for Regulatory Effectiveness, said the appeals court in Washington — where Democracy Forward is based — in particular has left the door open for a challenge to hold the Treasury Department accountable for tax cut claims.
The Wall Street Journal first reported in September that the department deleted conflicting data and analysis by career experts in Treasury's in-house tax economics think tank, the Office of Tax Analysis, which found that "82 percent of the corporate income tax burden is borne by […] capital income and 18 percent is borne by labor [income]."