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| IRS targeting overlooked biggest players in outside political spending - CBS News Posted: 18 May 2013 07:49 AM PDT WASHINGTON There's an irony in the Internal Revenue Service's crackdown on conservative groups. The nation's tax agency has admitted to inappropriately scrutinizing smaller tea party organizations that applied for tax-exempt status. But the IRS largely maintained a hands-off policy with the much larger, big-budget organizations on the left and right that were most influential in the 2012 elections and are organized under a section of the tax code that allows them to hide their donors. "The IRS goes AWOL when wealthy and powerful forces want to break the law in order to hide their wrongful efforts and secret political influence," said Rhode Island Sen. Sheldon Whitehouse, a Democrat who is among a small Senate group pushing campaign finance reform measures that would force these big outside groups to disclose their donors. "Picking on the little guy is a pretty lousy thing to do." Karl Rove's Crossroads GPS and the Koch brothers' Americans for Prosperity were among those that spent tens of millions of dollars on TV ads and get-out-the-vote efforts to help Republicans. Democrats were aided in similar fashion by Priorities USA, made up of former Barack Obama campaign aides, and American Bridge 21st Century Foundation, an opposition research group led by a former adviser to Senate Majority Leader Harry Reid. And yet those groups so far have escaped investigations into whether they have crossed the blurry line under the law between what constitutes a tax-exempt "social welfare" organization that is free from donor reporting requirements and a political committee subject to taxes and disclosures. Watchdog groups and lawmakers who have sought more disclosure and restrictions on such groups claim an injustice. They say the IRS saga over the targeting of smaller groups shines a bright light onto the agency's failure to guard against the flood of secret money into the political system through the creation of the deep-pocketed groups. Yet other advocates of reform worry that, in light of the IRS disclosure of targeting small groups, government regulators will be less likely to scrutinize the tax-exempt status of the bigger, more powerful groups out of fear that they will appear to be targeting groups for political reasons. "We expect that opponents of disclosure will try to use the recent developments to allow the groups that are misusing the tax laws to hide donors to continue misusing them. But that's a battle that we will engage in," said Fred Wertheimer, founder and president of watchdog group Democracy 21. Since a series of court decisions including the Supreme Court's ruling in the 2010 Citizens United case, the IRS has seen an influx of applications - from 1,735 in 2010 to 3,357 in 2012 - by so-called social welfare groups wanting to form under section 501(c)(4) of the federal tax code. That section grants tax-exempt status as long as the primary mission of these organizations is not politics and influencing elections. The IRS makes that determination. Such nonprofits can keep secret the names of their donors, which are not subject to traditional campaign finance limits. The rules are fuzzy. The law says that these groups can only be involved in social welfare activity and not politics. But IRS regulations give the groups leeway to conduct political activities - as long as that is not its "primary activity." That conflict opens the door to potential abuses and different interpretations of what is allowed and what is prohibited. An IRS inspector general's report released this week recommended developing for the first time specific guidelines to measure the primary activity of social welfare organizations, and some in Congress have shown a willingness to review big groups like the nonprofit Crossroads GPS and its sister super PAC, American Crossroads. They spent a combined $176 million in the last election cycle, much of it on television advertisements to benefit Republican candidates. A Senate investigative panel led by Democrat Carl Levin of Michigan and Republican John McCain of Arizona has been reviewing the use of social welfare groups for political causes for the past year and now is examining the agency's handling of the tax-exempt reviews. And in a letter to congressional investigators Thursday, Rep. Chris Van Hollen, D-Md., urged the House Ways and Means Committee not to ignore the influx of groups that may be abusing the tax code as part of its upcoming IRS probe, saying: "I hope we can remove the incentive for any group, regardless of its political orientation, to seek 501(c)(4) tax-exempt status to engage in significant political campaign activities while hiding their donors." Despite the bipartisan outcry over the IRS scandal, there's little incentive for lawmakers on either side of the aisle to push for reforms because Republicans and Democrats alike benefit from these big outside groups. In fact, just the opposite may be happening. Some congressional Democrats, fearful of being tied to the scandal, are backing the push for more aggressive enforcement of these groups. And some conservative leaders and Republican donors are using the IRS scandal to help protect the status quo while preparing to pump hundreds of millions of dollars - raised anonymously in many cases with no contribution limits - into the next election cycle, just as they did last fall. "I would hope that this new information about the politicization of the IRS should put the brakes on any sort of disclosure of donors who wish to remain anonymous," said Charlie Spies, who helps raise money for several conservative organizations and previously led the super political action committee that raised more than $140 million to benefit Mitt Romney's presidential bid. "We're now seeing exactly what the risk is for donors to be disclosed." At least some tea party groups are unwilling to trust the agency with more enforcement power in the wake of such damaging revelations. "The IRS' integrity is shattered," said Jenny Beth Martin, chairman of the Tea Party Patriots, which was among the largest nonprofit conservative groups the IRS targeted. She said that now, more than ever, donors need freedom to give money anonymously "without fear of retribution" from a politicized IRS. In the meantime, she says her organization's influence is growing, fueled by anonymous unlimited donations. Wertheimer, of Democracy 21, said the "laundering of secret money into elections" will become a greater scandal than IRS misconduct unless something is done. "There will be efforts to sweep this under the rug," he said. "They may succeed on a temporary basis for a relatively short period, but they are not going to succeed in the long term." |
| For GOP, scandals could be an electoral plus - or minus - CBS News Posted: 18 May 2013 03:05 AM PDT As the Obama administration grapples with a series of recent controversies within its ranks, political observers in Washington have begun to calculate their potential political impacts. But while many Republicans believe the scandals could prove a boon to the party's prospects in the 2014 midterm elections, they it's equally important not to "overreach" on the issue -- and risk having their efforts blow up in their face. Within the last week, President Obama has been dogged by ongoing questions about last year's terrorist attack in Benghazi; the revelation that the IRS was targeting conservative groups applying for tax-exempt status; and the news that the Justice Department seized two months of phone records from the Associated Press. Unless this confluence of controversies fades away quickly, strategists say, their impact may be felt in elections across the country in 2014. "The more these scandals hurt the president, the more they historically hurt the party," said Trey Hardin, a Republican strategist, in an interview with CBSNews.com. "It's a natural drag on the party." Republicans will be doing their best to make sure that's the case. With a shot at taking back the Senate, and a decent chance of keeping the House in Republican control, the GOP would benefit by associating statewide candidates with a president who's perceived as unpopular or untrustworthy. "The main victim of this White House's mistakes will be the people in his political party that are up for election the next time," said Terry Holt, a Republican strategist and former campaign strategist for former President George W. Bush. "The Senate is more in play in 2014, and the Republicans sort of fumbled the ball with regard to the Senate races last time. This may make it marginally easier for them." Republicans face a risk, however, when it comes to treading the thin line between taking advantage of an opportunity and acting with crass political calculation, as evidenced by the 1998 midterm elections, when Democrats made gains despite a scandal-ridden Clinton administration. "Republicans have to be very careful about overreaching and overplaying this," Hardin said. "I lived through impeachment and it was a dicey time... I think there are many in this country who identify the Republican Party as the party that went after impeachment which, at the end of the day, is not the most popular thing to do." Particularly coming off the last election, during which the GOP was branded as "the party that's against people," Hardin says, it's important to step carefully. "They've got to be careful about going too far," he said. "I don't think it is effective to be asking people to resign, because I think that when you do that you're preempting the strategy of exposing more wrongs. The old saying is, if your opponent's shooting himself in the foot, don't take the gun away." Instead, he said, the party needs to push a specific agenda while keeping up the investigations. "The Republican Party has to still be very actively promoting their initiatives and messaging... There can't be a vacuum on their normal responsibilities for succeeding as a political party. But if they can effectively do that, then I think both pushing their agenda as well as investigating these very real scandals can coexist." "Fix it and let the politics take care of itself," Holt added. "Because the president and its people have already demonstrated where they're coming from; they're already committing the sin." The longer the scandals are in the news, the greater the possibility they'll make an impression on voters, potentially casting a pall over the Obama administration that might lead to political ramifications down the road. According to Democratic strategist Chris Lehane, a former Clinton administration official and crisis management expert, that's why the administration should lay all its cards on the table immediately, promise tough consequences for wrongdoing, and let the public move on. "On two out of three of these issues they did the right thing," he said. Even if Republicans attempt to keep the scandals in the news by holding congressional hearings, he said, "hearings need oxygen - new oxygen, fresh oxygen - to generate any type of real estate with the free press." That's where the administration went wrong on Benghazi, he said. "The administration should have put out all those emails [abut the CIA talking points] right from the very beginning," he said. "They would have put them out under their terms, they would have gotten the benefit of the doubt, and dealt with it all in one fell swoop... But now that they're all out here and presumably most if not all of the information is now public, there's a predictable waning level of interest unless there's actually real new news out there." According Lehane, the challenge for the Obama administration is proving that Republicans are using the controversies as an excuse to score political points. "The whole battle here is, are the Republicans able to brand this as a legitimate inquiry? Or is Obama able to brand what the Republicans are up to as overtly partisan?" Lehane said. Holt argues Republicans have more leeway to sound partisan on something like the IRS controversy, because the agency's targeting was based on political keywords. "The IRS is a very tangible bogeyman for most people, and to think that the political opposition to the party in power could be targeted by the government is very scary," he said. "If there were a war analogy, it'd be that they started shooting first with the weapons they are privileged to have as the administration of the American government. They started it." |
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