Daily Media Links 6/18: How Politics Led the IRS to Target Conservative Tax-Exempt Applicants for their Political Beliefs, IRS Contempt of Congress, and more…

June 18, 2014   •  By Brennan Mancil   •  
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IRS

House of Representatives Committee on Oversight and Government Reform: How Politics Led the IRS to Target Conservative Tax-Exempt Applicants for their Political Beliefs

Staff Report

When the President speaks, people listen. The Presidential Bully Pulpit is a unique and indisputably powerful tool available to the President alone to persuade Americans and shape a national agenda. President Barack Obama – a highly celebrated speaker noted for his oratory – exerts this power with uncommon vigor. President Obama’s ability to command the rapt attention of the national news media, and by extension the American people, has become his most effective and favored rhetorical tool. With his Bully Pulpit, President Obama wields the power to singlehandedly shape the national dialogue. In this case, President Obama’s Bully Pulpit led to the Internal Revenue Service’s targeting of conservative tax-exempt applicants. 

On the evening of January 27, 2010, President Barack Obama stood in the chamber of the House of Representatives to deliver his annual State of the Union Address. Speaking to the assembled audience of Congressmen, Senators, Cabinet officials, and Supreme Court Justices – and to the millions of Americans watching on television – President Obama delivered a stunning rebuke of the Supreme Court. “With all due deference to separation of powers,” the President intoned, “last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests – including foreign corporations – to spend without limit in our elections.”1       The President continued: “I don’t think American elections should be bankrolled by America’s most powerful interests, or worse by foreign entities. They should be decided by the American people. And I’d urge Democrats and Republicans to pass a bill that helps to correct some of these problems.”

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Wall Street Journal: IRS Contempt of Congress

Editorial

Yet in its letter on Friday the IRS slipped in the following: “In early 2014, Chairmen Camp and Issa reiterated their requests for all of Lois Lerner’s email, regardless of subject matter . . . Fulfilling the request,” said the IRS, meant it had to compile Lerner emails that went beyond the “search terms” it had “originally loaded for review.” By mid-March, the agency admitted, it had produced for Congress only the Lerner emails that it—the IRS—considered “related” to the scandal.

In other words, the IRS has from the start been picking and choosing which of Ms. Lerner’s emails it deigned to show Congress. And it did so despite knowing that Congress wanted everything.

This IRS filter has delayed the investigation and denied Congress access to important information. Congressional investigators learned only last week that Ms. Lerner corresponded with the Justice Department about potentially prosecuting conservative nonprofits. Congress had to subpoena Justice to obtain that Lerner correspondence. Only after Congress demanded the IRS explain why it hadn’t provided this Lerner-Justice correspondence did the IRS suddenly confess in its Friday letter that it had been picking and choosing emails.

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Wall Street Journal: Notable & Quotable: Attorney Cleta Mitchell sends the IRS a letter about Lois Lerner’s “lost” emails.

Late Friday, the IRS apparently advised the Ways & Means Committee that the IRS has “lost” Lois Lerner’s hard drive which includes thousands of Defendant Lerner’s e-mail records. However, several statutes and regulations require that the records be accessible by the Committees, and, in turn, must be preserved and made available to TTV [True the Vote] in the event of discovery in the pending litigation. . . . We are deeply troubled by this news and . . . seek your consent to immediately allow a computer forensics expert selected by TTV to examine the computer(s) that is or are purportedly the source of Ms. Lerner’s “lost” emails, including cloning the hard drives, and to attempt to restore what was supposedly “lost,” and to seek to restore any and all “lost” evidence pertinent to this litigation.  

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NRO: IRS Has Lost More E-mails . . .

By Eliana Johnson

It’s not just Lois Lerner’s e-mails. The Internal Revenue Service says it can’t produce e-mails from six more employees involved in the targeting of conservative groups, according to two Republicans investigating the scandal.  

The IRS recently informed Ways and Means chairman Dave Camp and subcommittee chairman Charles Boustany that computer crashes resulted in additional lost e-mails, including from Nikole Flax, the chief of staff to former IRS commissioner Steven Miller, who was fired in the wake of the targeting scandal.  

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Bloomberg View: Missing E-Mail Is the Least of the IRS’s Problems

By Megan McArdle

As it happens, I used to administer just the sort of e-mail systems that the IRS seems to be using. So I fired off a set of queries to the IRS about its e-mail system, its archiving policies and how the loss of data happened. Many of those queries remain unanswered, but I was given some documents that explain how the files could have been lost. My conclusion: It is plausible that this was an innocent coincidence. But it is only plausible if the IRS is managing its IT systems so badly that it is very easy to lose critical records — or for abusive employees to destroy the evidence of their misbehavior. A private company under investigation that responded to regulators, or a judge, with this sort of explanation rather than producing the requested documents would rightly expect to be handed an adverse judgment or a whopping fine. This incident should be thoroughly investigated, and steps should be taken throughout the government to make sure that no similar incident can ever happen again.

As far as I can tell, the agency is using exchange servers with Microsoft Outlook e-mail clients. In a system like this, messages are normally stored on the server. However, the IRS sharply limits the size of mailboxes. In 2009, the limit was 150 megabytes; by 2011, it had increased that to 500 MB. Either way, this is a low limit, in these days of sizable attachments. This would require anyone but the proverbial Web-browsing grandmother to regularly archive their e-mails on a hard drive or delete them.

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Independent Groups

Des Moines Register: Turns out ‘big money’ isn’t getting much for those campaign donations

Editorial

Post mortems on the election suggest that while Cantor had apparently become detached from his Virginia House district, Brat energized tea party Republicans. “The good news is dollars don’t vote,” Brat said last week, “people do.”

A similar story played out in Iowa, where Senate candidate Mark Jacobs spent roughly $3 million of his own money in an unsuccessful bid for the Republican nomination. His self-funded campaign bank account dwarfed fundraising by his opponents, including Joni Ernst who eviscerated them all.

The outrage about big campaign contributors tends to be selective. Democrats who have no problem with a multibillionaire like George Soros spending is own money to influence elections are furious when the Koch brothers do the same thing — and vice versa. There is shared concern about corporate spending on elections, but research shows corporate spending has been insignificant.

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SCOTUS/Judiciary

Cato Institute (Event): McCutcheon v. FEC: Two Books on the Supreme Court’s Latest Campaign Finance Case

Featuring Shaun McCutcheon, CEO, Coalmont Electrical Development Co., and Author, Outsider Inside the Supreme Court: A Decisive First Amendment Battle; Ronald Collins, Harold S. Shefelman Scholar, University of Washington Law School, and Co-Author, When Money Speaks: The McCutcheon Decision, Campaign Finance Laws, and the First Amendment; and Donald McGahn, Partner, Jones Day LLP, and Former Chairman, Federal Election Commission; moderated by Ilya Shapiro, Senior Fellow in Constitutional Studies, Cato Institute. 

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Wall Street Journal: Opinion: Supremes Rebuke Speech Censorship

Best of the Web Today Columnist James Taranto on Susan B. Anthony List v. Driehaus and its implications for the First Amendment. Photo credit: Getty Images. 

Watch…

More Soft Money Hard Law: The Court Bides Its Time in Susan B. Anthony

By Bob Bauer

Yet it is a law that is so plainly unconstitutional that it seems odd to keep it in place and available to anyone who in this statute’s golden years wishes to make mischief with it. Does anyone seriously doubt that the state may not take criminal action against someone for making a false statement, as the state judges it to be, about a political candidate or public official’s voting record, or just “concerning” such a  candidate, in order to influence an election?  Under a process, no less, that authorizes anyone, including political adversaries, to file a complaint and that expedites probable cause determinations, hearings and referrals for prosecutions within weeks of primary and general elections?

The Court would not even conclude that the threat of administrative proceedings alone was sufficient to confer standing. Only by combining this threat with the risk of criminal prosecution was it confident that the plaintiffs had successfully pled “injury in fact.”  It is a surprisingly equivocal performance.

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Cincinnati Enquirer: Give up trying to stop political lies

Editorial

Ohio’s election law banning lying in political campaigns – while perhaps well-meaning – is constitutionally questionable and should be repealed by the General Assembly as soon as possible.

We’d love to see candidates stop telling lies. However, the First Amendment right to free speech trumps a wish that’s simply unattainable.

Truth – particularly in politics – is measured in shades of gray, not black and white, and Ohio’s “false statements” law gives a bipartisan commission appointed by the governor the power to decide what’s true and false, and how egregious the falsehood is.

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Kochs Obsession

Washington Post: Koch network adds super PAC to its arsenal, expanding into overt political activity

By Matea Gold

The foray into explicit campaign activities is unusual for the Koch network, a complex web of nonprofits and limited liability corporations that was designed to cloak the identities of its financial backers.

The super PAC, on the other hand, will have to report its donors to the Federal Election Commission. The group could still find ways to protect the names of its contributors, however, if donors give money through LLCs registered in states such as Delaware, which allow corporate officers to remain a secret.

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FEC

FEC: Statement of Vice Chair Ann M. Ravel and Commissioner Ellen L. Weintraub on Judicial Review of Deadlocked Commission Votes

On December 3, 2013, the Commission deadlocked 3-3 on whether to find reason to believe that Crossroads Grassroots Policy Strategies (“Crossroads GPS”), a 501(c)(4) “socialw elfare organization,”‘ should have registered and reported as a political committee under the Federal Election Campaign Act (the “Act”) and Commission regulations. As we explained at the time, we believe that, as a result of our colleagues’ votes in that case, the Commission “failed to adhere to its own policy on political committee status or to recent judicial decisions finding that policy to be valid and constitutional.” The complainants then brought suit against the Commission for its failure to take action against Crossroads GPS.  

We are writing now to address an issue that arises in the context of this litigation, but that has much broader significance^the issue of how courts review a 3-3 deadlock at the FEC. In particular, we are concerned about the potential that courts will continue to grant deference to the perspectives of oniy half of the members of the  Commission when the Commission has a split vote. This “deadlock deference” appears to be unique to the enforcement process at the FEC, for reasons that the D.C. Circuit has never fully explained. Such deference undermines the bipartisan structure of the agency and puts complainants at a unique disadvantage in precisely the process where Congress sought to empower them. Moreover, the longstanding justifications for granting deference to an administrative agency—the presence of subject-matter expertise and the ability to craft policy compromises—are entirely absent in the case of a deadlock.  

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State and Local

Massachusetts –– Boston Globe: Grossman, Coakley spar over campaign finance pledge

By David Scharfenberg

Just two hours before the debate, Coakley challenged Grossman and the third candidate in the race, former Obama administration health care official Donald Berwick, to sign a People’s Pledge designed to limit third-party spending.

At the Jamaica Plain forum, Grossman labeled Coakley’s call for a pledge “laughable,” because he had proposed something similar in September and she had declined to sign it. He added that she should not be lecturing the rest of the field, given that state election officials recently found she had violated campaign finance law.

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New York –– NY Times: Mistrial Declared in Malcolm Smith Corruption Trial

By JOSEPH BERGER

Judge Kenneth M. Karas of United States District Court granted Senator Smith and one of his two co-defendants a mistrial because federal prosecutors had failed to turn over promptly to the defense more than 70 hours of wiretapped conversations, about a third of them in Yiddish, and translating and digesting them would require jurors to serve longer than some could manage.  

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North Carolina –– News Observer: Sen. McKissick’s testimony on campaign donations irks Art Pope

By Ned Barnett

In his submitted testimony, Pope rebuked the Durham senator for making “the false and outlandish claim that I, Art Pope, a single person, was able to ‘buy our democracy’ in North Carolina, and that an amendment to the United States Constitution is needed so that some people cannot ‘buy’ a legislature or governor’s mansion.”

Pope wrote that McKissick was responding badly to his party’s political defeat. “Worse than simply trying to discredit the winning Republican majority in a state election, state Senator McKissick is now supporting an amendment to the U.S. Constitution to silence his opponents,” he wrote.

Pope said the amount he spends on elections is inflated by critics who cite groups “tied to Art Pope.” He wrote, “It simply is not true that I or my company spent a single million dollars, much less spent millions, plural, of dollars for either the 2010 or 2012 North Carolina elections.” Moreover, he wrote, Democratic and progressive organizations outspent Republicans and conservative groups in the 2010 state elections.

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Brennan Mancil