Tag: corruption

IRS Lied to Congress about Targeting Tea Party

On Friday, the IRS admitted that when “social welfare” groups with the terms “tea party” or “patriot” in their names applied for 501(c)(4)/tax-exempt status, IRS agents targeted them for extra (and extra-legal) scrutiny to ensure they were not engaged in politicking. The Washington Post reports, “about 75 groups were selected for extra inquiry — including, in some cases, improper requests for the names of donors.” IRS agents did not apply similar scrutiny to groups with “progressive” in their names.

Over the weekend, more details emerged. It now appears the IRS lied to Congress about this practice for more than a year. It also appears the IRS is still targeting tea-party groups today, in part because IRS bureaucrats believe groups that “educat[e] on the Constitution and Bill of Rights” deserve greater scrutiny.

Here’s a rundown. 

Senior IRS officials have known about these abuses for nearly two years. The Associated Press reports: “Senior Internal Revenue Service officials knew agents were targeting tea party groups as early as 2011…on June 29, 2011, Lois G. Lerner, who heads the IRS division that oversees tax-exempt organizations, learned at a meeting that groups were being targeted, according to the watchdog’s report. At the meeting, she was told that groups with ‘Tea Party,’ ‘Patriot’ or ‘9/12 Project’ in their names were being flagged for additional and often burdensome scrutiny…Lerner instructed agents to change the criteria for flagging groups ‘immediately’…”. IRS agents also gave extra scrutiny to groups that “criticize how the country is being run.”

The IRS tried to get away with it again. The Washington Post reports:

the agency revised its criteria a week later.

But six months later, the IRS applied a new political test to groups that applied for tax-exempt status as “social welfare” groups, the document says. On Jan. 15, 2012 the agency decided to target “political action type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform movement”…

The agency did not appear to adopt a more neutral test for social welfare groups…until May 17, 2012…

Of course, these revised criteria are not politically neutral either. Tea-party groups are still far more likely to receive extra scrutiny than progressive groups. Lots of right-leaning political groups describe their mission as working to limit government or educate people about the Constitution. Far fewer left-leaning groups emphasize educating people about the Constitution or openly declare their mission is to expand government. And note: the U.S. government treated groups as suspect if they educate the public about the Constitution and Bill of Rights. Let that one sink in.

The IRS lied to Congress for more than a year. The Associated Press reports: “At a congressional hearing March 22, 2012, [then-IRS commissioner Douglas] Shulman was adamant in his denials. ‘There’s absolutely no targeting.’” Senior IRS staff knew that claim was false nine months before Shulman made it. Yet they let Shulman’s false statement to Congress go uncorrected, amid a congressional investigation into whether the IRS was targeting tea-party groups, for another 14 months. According to the Washington Post, “The IRS made no mention of targeting conservative groups in five separate responses to congressional inquiries between Nov. 18, 2011, and June 15, 2012, according to the [inspector general’s] timeline.” Even if we view the facts in the light most favorable to the IRS and assume Shulman did not know he was uttering a falsehood – which, by the way, would mean he is a very poor manager – the IRS’s failure to correct that falsehood pretty much makes it a lie. I don’t mean that in the phony way PolitiFact uses the term. I mean a real lie.

The IRS did not come forward of its own accord. The Associated Press: “The Treasury Department’s inspector general for tax administration is expected to release the results of a nearly yearlong investigation in the coming week.” House Oversight Committee chairman Darrell Issa (R-CA) put it, “Before the IG’s report comes to the public or to Congress as required by law, it’s leaked by the IRS to try to spin the output. This mea culpa’s not an honest one.”

IRS officials maintain the targeting of tea-party groups was the work of low-level employees and not politically motivated. Yet the agency has shown a willingness to deceive Congress and the public about its own misconduct. Congress should conduct a thorough investigation.

Even if it is true that low-level IRS bureaucrats were acting on their own, Congress’ investigation should examine the role Obama administration officials played in encouraging those bureaucrats to single out the tea party. As New York Times columnist Ross Douthat explains:

Where might an enterprising, public-spirited I.R.S. agent get the idea that a Tea Party group deserved more scrutiny from the government than the typical band of activists seeking tax-exempt status? Oh, I don’t know: why, maybe from all the prominent voices who spent the first two years of the Obama era worrying that the Tea Party wasn’t just a typically messy expression of citizen activism, but something much darker — an expression of crypto-fascist, crypto-racist rage, part Timothy McVeigh and part Bull Connor, potentially carrying a wave of terrorist violence in its wings.

It would be very bad if senior Obama administration officials ordered the IRS to intimidate the president’s political opponents. It would scarcely be better if administration officials denounced their opponents until IRS bureaucrats took the hint.

People should lose their jobs over this.

Great Moments in Government: The IRS Apologizes for Bias while Simultaneously Denying Bias

I’m happy to bash the IRS, but I usually try to explain that our anger should be focused on the politicians who created the corrupt, 74,000-page tax code.

But sometimes the IRS deserves some negative attention. The tax collection bureaucracy has thieving employees, incompetent employees, thuggish employees, seemlingly brainless employees, and victimizing employees.

The senior folks at the IRS also deserve scorn for bone-headed decisions such as squandering millions of dollars on a P.R. campaign and a scheme to regulate and control private tax preparers.

Now it seems we have another reason to condemn the tax-collection bureaucracy. As Michael Cannon has noted, the IRS is engaging in Nixon-type political harassment.

Here’s some of what the Associated Press just reported.

The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday. Organizations were singled out because they included the words “tea party” or “patriot” in their applications for tax-exempt status, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups.

New York Is Open for Business, Cuomo Style

Danny Hakim of the New York Times tells us how state government works under Andrew Cuomo, in an in-depth investigation of the Empire State Development Corporation:

New York State’s economic development agency created a new position last June, and then found a candidate to fill it: a young man named Willard Younger, who had just graduated from Colgate University with a degree in classics and religion. He became a special projects associate, at a salary of $45,000 a year, according to state personnel records.

His father, Stephen P. Younger, is a lawyer and power broker in legal circles who was a member of one of Gov. Andrew M. Cuomo’s transition teams. He has also donated $26,000 to Mr. Cuomo’s campaigns over the years, disclosure records show.

The next month, the agency hired 23-year-old Andrew Moelis, a University of Pennsylvania graduate, for another new position, strategic planning associate, at a salary of $75,000 a year.

Shortly before Mr. Moelis’s first day of work, his father, Ron Moelis, a prominent real estate developer, gave $25,000 to Mr. Cuomo’s re-election campaign, according to the records.

Check out the return on investment available to political donations: give $25,000, get $75,000 within a year. I wonder if any of Mr. Moelis’s real estate developments offered such an ROI. As I wrote many years ago in the Wall Street Journal:

Business people know that you have to invest to make money. Businesses invest in factories, labor, research and development, marketing, and all the other processes that bring goods to consumers and, they hope, lead to profits. They also invest in political processes that may yield profits.

If more money can be made by investing in Washington than by drilling another oil well, money will be spent there….

Every dollar spent by the federal government ends up in someone’s pocket as a salary, a transfer payment, a subsidy, a purchase or a loan. But there are other valuable services available, too: regulations that eliminate or hamstring your competitors, for instance, or a tax provision that induces consumers to purchase your product.

But “jobs for the boys” can also be a way to reward political supporters. And if it’s a job for your own boy, so much the better.

Agencies like this can also be very helpful to a politician with larger ambitions:

Empire State has also hired friends of Mr. Cuomo who may help form his political brain trust should he decide to run for president in 2016.

James P. Rubin, a former State Department spokesman, was hired at the agency in 2011 as counselor on competitiveness and international affairs, with a salary of $150,000 a year. Mr. Rubin’s appointment was seen by political consultants as a move by Mr. Cuomo to add a foreign policy hand to his stable.

Empire State hired 49 people in the first 20 months of the Cuomo administration, according to personnel records obtained by The Times. Nearly a third were the governor’s political associates, donors and friends, or their relatives, the records and interviews show.

At least seven of the new hires with connections were placed in newly created positions.

We hear a lot about austerity in government today. We hear that “state and local government coffers [are] empty.” We hear that spending has been “cut to the bone.” I’d say that the Empire State Development Corporation would be a good place to save the New York taxpayers $741.8 million this year.

Karzai’s Latest Outrageous Comment

Yesterday, Afghan President Hamid Karzai alleged that the United States and the Taliban are “working in concert to convince Afghans that violence will worsen if most foreign troops leave.” His accusation exposes a strange irony. Karzai not only supports U.S. forces in Afghanistan after 2014, but also disparages that presence to evade his own failings. 

Since 2001, senior U.S. officials have tethered our military might to the sick man of Central Asia. In 2004, President George W. Bush pledged America’s “ironclad commitment” to help Karzai’s country succeed. In 2010, President Obama made clear that the U.S. role in Afghanistan “is a long-term partnership.” 

President Karzai codified those pledges last May by concluding the Enduring Strategic Partnership Agreement between the Islamic Republic of Afghanistan and the United States of America. Despite his history of hindering U.S.-backed anti-corruption investigations, denouncing the international community, and claiming the U.S. ferried Taliban to the north in order to spread violence, he eagerly signed an Agreement that commits the U.S. government to Afghanistan’s future. It provided for the possibility of a U.S. troop presence until 2024, and a long-term framework for training Afghan security forces and targeting al Qaeda. 

Washington’s devotion to nation building still holds fast despite Karzai’s inability to fulfill its lofty expectations. As former U.S. ambassador to Kabul Karl W. Eikenberry bluntly warned his superiors in November 2009, Karzai “is not an adequate strategic partner.” 

Certainly, the United States is not blameless for Afghanistan’s downward spiral—it took responsibility back in 2001 to rebuild the war-ravaged country and then shifted its attention and resources in 2003 to invade and occupy Iraq. Yet, the endemically corrupt Karzai regime and its band of thugs and cronies are also culpable. 

Ample reporting on Afghan corruption need not be repeated here. More to the point, Karzai fails to appreciate the way in which his poor governance vindicates insurgent propaganda and drives many Afghans to fight. A widespread perception of the central government’s massive corruption delegitimizes the state and inspires the sense of injustice that makes the Taliban appear as an effective alternative. Apart from Karzai himself, Afghan police are notorious for perpetrating crimes they are supposed to be stopping, such as corruption, theft, kidnapping, murder, and child abuse. Meanwhile, the Afghan army, long hailed as the mission’s shining success story, is rife with factionalism and patronage networks that could splinter the institution along political and ethnic lines. Foreign policy planners in Washington overlooked the second- and third-order consequences of their attempts to build a strong central government that wields a monopoly on the legitimate use of force. 

As the Democratic majority staff of the Senate Foreign Relations Committee admitted two years ago, “Foreign aid, when misspent, can fuel corruption, distort labor and goods markets, undermine the host government’s ability to exert control over resources, and contribute to insecurity.” (Emphasis mine.] 

Perversely, the corruption of the Afghan central government and the failures of the foreign-led nation-building project feed off one another in disturbing symbiosis. The Washington Post hasreported that foreign military and development spending provide roughly 97 percent of Afghanistan’s gross domestic product, fomenting fears that withdrawal will push the Afghan economy into depression. The alternative to popping that foreign aid bubble, some argue, would be to commit several hundred thousand troops and decades of attention, resources, and patience to transform Afghanistan’s deeply divided society into a stable, non-corrupt, electoral democracy. Of course, such success would hardly be guaranteed and assumes we possess the local knowledge as well as the cultural and religious legitimacy to operate indefinitely in a country notoriously suspicious of outsiders and largely devoid of central authority. 

Over twelve years of nation-building has had little success in creating an economically viable Afghan state, much less a self-sustaining Afghan security force. Indeed, nation building has propped up an erratic and unreliable regime whose behavior feeds the insurgency’s momentum. 

Policymakers must reject the flawed premise on which their policies rest. They must overcome their tendency to overestimate the strategic importance of a small, underdeveloped country to the narrower and more achievable goals of disrupting terrorist networks and preserving U.S. national security.

My Heart Breaks and Tears Flow When I Read about Sequestration Being a Big Defeat for Lobbyists

I believe in the First Amendment, so I would never support legislation to restrict political speech or curtail the ability of people to petition the government.

That being said, I despise the corrupt Washington game of obtaining unearned wealth thanks to the sleazy interaction of lobbyists, politicians, bureaucrats, and interest groups.

So you can imagine my unfettered joy when reading about how this odious process is being curtailed by sequestration. Here are some cheerful details from story in Roll Call.

…sequester cuts…reflect not only Washington’s political paralysis but a bitter lobbying failure for K Street interests across the board. From university professors and scientists to cancer victims, defense contractors and federal workers, hundreds of advocacy, trade and labor groups have lobbied aggressively for months to head off the cuts. They’ve run ads, testified on Capitol Hill, staged demonstrations and hounded lawmakers, all to no avail. …the path forward could be a lobbying nightmare.

Reading the story, I recalled a Charles Addams cartoon from my childhood. Thanks to the magic of Al Gore’s Internet, I found it.

Slightly modified to capture my spirit of elation, here it is for you to enjoy.

Except I like to think I’m a bit more prepossessing than the Uncle Fester character, but let’s not get hung up on details.

What matters is that sequestration was a much-needed and very welcome victory for taxpayers. Obama suffered a rare defeat, as did the cronyists who get rich by working the system.

To be sure, all that we’ve achieved is a tiny reduction in the growth of federal spending (the budget will be $2.4 trillion bigger in 10 years rather than $2.5 trillion bigger). But a journey of many trillions of dollars begins with a first step.

Pakistan’s Dysfunctional Democracy

News out of U.S. “ally“ Pakistan appears promising for its fragile democracy, but may actually signal a continuation of that country’s destructive political pattern. For the past two days, Sufi cleric Tahir-ul Qadri has led protests in Islamabad calling for a caretaker administration to take over for the ruling coalition, a swap he claims will help to ensure that upcoming parliamentary elections (yet to be scheduled) remain honest. Amid those protests, Pakistan’s Supreme Court issued an arrest order for Prime Minister Raja Pervaiz Ashraf, who as minister for water and power allegedly received illegal kickbacks. 

A colleague asked me: “What does this mean for Pakistani democracy?” To which I replied, “When did it ever exist?” 

Certainly, any and all condemnations of public sector corruption comes as welcome news, especially in a country ruled by a tiny minority of kleptocratic elites. Still, such developments require historical background. On cleric Qadri, last week Radio Free Europe’s Daud Khan Khattak asked rhetorically “Can This Islamic Cleric Liberalize Pakistan’s Politics?“ Perhaps, but unlikely. The federal government responded quite rightly that Qadri’s demand for the government to step down—and the judiciary and the military help appoint a caretaker government—is unconstitutional. What makes Qadri’s demands especially troubling, writes Eurasia Group’s Shamila N. Chaudhary, is that the current government will be the first time a [civilian] government in Pakistan finishes a complete term.” It seems imprudent to derail such a historic moment by emboldening Pakistan’s military, which carries a long history of dictatorship. In fact, Qadri once supported Pakistan’s former General-President Pervez Musharraf. 

On that note, another prominent figure in this unfolding drama who once supported the maintenance of dictatorial authority is none other than Pakistan Supreme Court Justice Iftikhar Chaudhry. In February 2000, after Musharraf overthrew democratically elected Prime Minister Nawaz Sharif in a bloodless coup in 1999, Chaudhry, then chief justice of the Balochistan Supreme Court, swore an oath of office under Musharraf to become a judge on Pakistan’s Supreme Court. As Pakistan analyst Seth Oldmixon points out, the court, in its own words, “validated the extra-constitutional step on the touchstone of the doctrine of state necessity and the principle of salus populi suprema lex” (Let the good of the people be the supreme law). 

Spontaneous bouts of pro-democracy protests are promising, but sadly it appears that no one is innocent in this confusing political spectacle. Democracy or no democracy, though, Islamabad’s relations with Washington will likely continue its transactional nature, with a heavy and unpredictable mixture of antagonism and cooperation.

How Government Actually Works, Especially Unaccountable, Multi-Jurisdictional Government

In my book Libertarianism: A Primer, I have a chapter of pop public choice called “What Big Government Is All About.” The Metropolitan Washington Airports Authority isn’t really big government, just a local D.C.-Virginia-Maryland authority to run a couple of airports. But it demonstrates some of the problems you can expect from economic entities that don’t face a market test. Here’s how the Washington Post story today begins:

Meet the Kulle family: mom Helen, daughter Ann Kulle-Helms, son-in-law Douglas Helms, son Albert, daughter-in-law Michele Kulle and Michele’s brother, Jeffrey Thacker.

They all worked for the Metropolitan Washington Airports Authority. All at the same time.

And what about Dad, I wonder. No job for Dad?

Anyway, officers of the agency don’t seem perturbed by the story.

“There were no clear-cut guidelines,” said MWAA board member H.R. Crawford, who will leave the board next month when his term expires.

Crawford, who has had at least three relatives, including a daughter-in-law, work at the agency, said family members are employed frequently, particularly among board members.

“If you ask a third of those folks, their relatives work there,” he said. “I never thought that we were doing anything wrong.”…

“This is a government town and an agency town,” Crawford said. “If there’s a possibility that you can hire a relative . . . it was the norm.”…

“This is not a patronage mill,” said Davis, whose daughter worked in the fire department for two months in 2011. “Dozens of employees’ kids worked there.”

At this point the response of good-government liberals is always: Pass an ethics law. Yeah, that ought to work.

MWAA’s ethics code prohibits employees from hiring, supervising or working with relatives. They also cannot supervise family members — directly or indirectly — or “have influence over their work.”