Speaking of Obama administration management lapses, I have written multiple times in this space suggesting that the press needed to pay attention to management weakness—in fact, sheer indolence—at the division of the Internal Revenue Service that handles applications for tax exempt status. This includes the agency’s failure to change long-outdated rules used to deny tax exempt status to nonprofit news gathering institutions, as well as its failure to issue regulations mandated three years ago with the passage of Obamacare that would limit nonprofit hospitals’ abusive bill collection practices.
However, the most prominent lapse of all—though still never reported on until the scandal erupted three weeks ago—has been the agency’s failure to act on the obvious abuse of the 501(c)4 section of the IRS code that allows plainly political organizations such as Karl Rove’s Grassroots GPS and the Obama camp’s Organizing For America (which has since become Organization for Action) to keep donors secret because they claim to be “social welfare organizations.” When I wrote about that last year, I suggested reporters should demand to know why these organizations’ applications have been gathering dust for years awaiting a formal decision, during which time they were allowed to collect and spend millions while keeping donors secret.
For me, the story of how these heavy-hitters’ fake 501(c)4s were allowed to prosper with secret money while the IRS kept their applications in a drawer is as important as what seems to be the obviously unfair plan by some mentally challenged bureaucrats in Cincinnati to single out the applications of much smaller 501(c)4s by using key words such as “Tea Party” or “patriot.”
Sure, the president or his Treasury secretary—in whose Cabinet department the IRS presides—is not supposed to interfere politically in the IRS. But that doesn’t mean they can’t or shouldn’t concern themselves with whether the agency is doing its basic job. Both men had to know for years that the tax exemption application process was broken, because highly publicized organizations lavishly funding both their side and the other side were benefitting from the breakdown of the process. So, why didn’t anyone at the White House or Treasury simply ask what’s taking so long—or even demand that the IRS issue clear guidelines or regulations defining the limits of the political activity a “social welfare” organization can engage in and then make decisions accordingly?
Note to reporters thinking about undertaking this project: Be sure to ask former Treasury Secretary Timothy Geithner about all of this. This happened on his watch, yet I haven’t seen his name mentioned in a single story about the IRS scandal.
The IRS is responsible for the most important, far reaching consumer service performed by our national government. Yet its basic customer service (including an incomprehensible website) is as lousy as its policies are inscrutable. No mayor could be reelected who ran his sanitation department the way Barack Obama—aided by Geithner and now Jack Lew—runs the IRS. And, as we now know with the multiple failures of the division responsible for tax exempt applications, IRS incompetence is more than a matter of bad customer service; it affects all kinds of areas from abusive hospital billing to the integrity of our elections.
Sure, the Treasury secretary, not to mention the president, have responsibilities far heavier than worrying about the IRS. It’s also true that one of the “reforms” following revelations during the Watergate investigation that the Nixon administration had ordered IRS audits of its political enemies required that everyone at the agency except for the director and the general counsel would be civil servants and not political appointees. This means they can’t be fired for refusing to do the White House’s bidding, which is good. It also means that without going through a long, bureaucratic review process, they can’t be fired for incompetence or even misconduct by a Treasury secretary or a president who bothers to pay attention to their failures. That’s not good.