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Opinions of IRS controversy differ

Posted at 12:16 PM, Jun 04, 2013
and last updated 2013-06-04 12:16:51-04

WASHINGTON (CNN) — Like a partisan version of the proverbial blind men touching the elephant, members of Congress have starkly differing views of the scope and magnitude of the Internal Revenue Service targeting of conservative groups seeking tax-exempt status that dominates headlines and committee hearings.

Depending on their party, legislators offer particular takes on the controversy based on which part of the IRS elephant they are describing.

Republicans portray the controversy uncovered by an inspector general’s report last month as another example of big government gone wild under President Barack Obama.

“It is his administration, it is the Obama IRS, and we intend to try and get to truth here as to what exactly happened and get to the facts,” House Majority Leader Eric Cantor, a Virginia Republican, told reporters Tuesday.

As part of their messaging for next year’s congressional elections and the 2016 presidential vote, Republicans try to draw parallels to the Watergate scandal of the 1970s that led to GOP President Richard Nixon’s resignation.

“We will not tolerate another political enemies list,” House Appropriations Committee Chairman Hal Rogers, a Kentucky Republican, said Monday in a clear reference to the Nixon administration. “We’ve been there before. Having an enemies list harkens back to a dark page in our past, and the arrogance of power that we’ve seen from those involved in this instance is deeply, deeply disconcerting.”

Democrats say they are equally outraged that the IRS unit based in Cincinnati that handles requests for 501(c)(4) tax-exempt status used a list of criteria including group names that included “tea party” and other conservative labels to assess the level of scrutiny applied.

However, they argue, no evidence of an administration-wide conspiracy has emerged so far, with the inspector general’s report that revealed the problem blaming poor management and stating there was no known political motivation.

Some suggest that tougher scrutiny of groups seeking tax-exempt status was warranted after the 2010 Supreme Court ruling in the Citizens United case that removed limits on some campaign spending by corporations and unions.

“I agree with the members on both sides of the aisle here who don’t want to target any group based on political ideology, or any kind of ideology, but I will tell you this 501(c)(4) category is one that demands serious attention by the IRS,” Democratic Rep. Marcy Kaptur of Ohio said Monday, citing a doubling in applications for the tax-exempt category in the two years after the Supreme Court decision.

“There might have been some smart people working in the Cincinnati office who were concerned that there are a lot of new 501(c)(4) filings in this country, and that there have been tax cheats in the history of this country, that maybe somebody over there at the IRS is doing their job,” Kaptur added.

In particular, she noted that 501(c)(4) status allowed groups to avoid revealing their donors, adding that was probably the prime motivation of politically oriented groups seeking such categorization.

“They were trying to find people who wanted to be hidden donors, and not be on record,” Kaptur offered as a reason for the IRS targeting. “Then I think the American people ought to take a second look at this.”

At the same committee hearing where Kaptur and Rogers spoke, the new head of the embattled IRS was asked how he would restore public trust in the agency after the targeting scandal and a new report Tuesday that described wasteful spending.

“It is going to be a difficult process,” acknowledged Daniel Werfel, a career public servant appointed by Obama last month to clean up the mess dominating the early months of his second term.

Werfel described a process of identifying what happened, who was responsible and steps to ensure it can never happen again to address what Republicans depict as politically motivated harassment that abused the constitutional rights of conservative groups.

Another congressional hearing Tuesday will hear from conservative groups that filed applications for tax-exempt status targeted by the IRS, while a different House committee will examine the wasteful spending report at a hearing Thursday.

The report coming out Tuesday will show that the IRS spent close to $50 million on 225 conferences between 2010 and 2012, according to briefings given to the House Oversight and Government Reform Committee.

One of those, an August 2010 meeting for 2,700 employees in Anaheim, California, cost $4 million, and the agency spent $50,000 to produce two videos that were shown at the event, including one with a “Star Trek” theme.

In a response to the new audit, obtained by a congressional source, the IRS says it has cut training costs and reduced spending on meetings by 87% since 2010.

“The expenditures related to this 2010 meeting are not reflective of the current spending environment at the IRS or the spending that has occurred over the past several years,” wrote Pamela LaRue, the agency’s chief financial officer.

At the same time, LaRue defended the need for large-scale conferences at the time, noting that nearly a third of managers in the division under scrutiny were inexperienced, and the agency faced added concerns about security after a Texas man crashed his plane into the IRS office in Austin, killing himself and two other people.

“Although the average cost per employee was reasonable, the IRS recognizes that a number of less significant costs warranted additional scrutiny and were not the best use of government resources,” LaRue wrote.

The IRS targeting also is under investigation by the Justice Department, the Treasury inspector generals office and Werfel in his new capacity.

Rogers, who sat in on his appropriations panel’s Financial Service’s subcommittee on Monday, made clear that he would assess the effectiveness and commitment by Werfel to uncover the source of the targeting when considering IRS funding for the next fiscal year.

“The power of the purse rests in the Congress, and we’re prepared to use that purse to get to the truth,” he said.

A former Office of Management and Budget official, Werfel took over from former IRS Commissioner Steve Miller, who resigned under pressure after news of the targeting emerged. He described himself Monday as a fixer of problems in government.

“The IRS is an agency in need right now,” Werfel said, adding that he took the job “because I thought it could be helpful.”

That didn’t impress some Republicans on the panel, who expressed frustration with the lack of answers to their main question: Who ordered the targeting?

Werfel said he also was frustrated and urged patience to allow the various investigations under way to work through the process.

Werfel and J. Russell George, the inspector general who conducted the audit that revealed the IRS targeting, repeated past assertions that the findings so far indicated gross mismanagement rather than political malfeasance.

Meanwhile, White House spokesman Jay Carney sought to tone down the rhetoric over an increasingly bitter dispute with congressional Republicans over the issue.

Asked by reporters about an accusation by House Oversight Committee Chairman Darrell Issa that he was a “paid liar,” Carney at first jokingly feigned ignorance, answering: “I hadn’t heard that. That’s amazing.”

As laughter erupted in the briefing room, Carney took a more serious tone.

“I am not going to get into a back-and-forth with” Issa, he said, adding that the White House focus was on finding out what “inappropriate activity” occurred, holding responsible those at fault for “inappropriate, outrageous activity” and ensuring that it never happens again.

It was a diplomatic effort to avoid prolonging headlines about harsh statements Sunday from Issa and a former White House official that escalated the controversy into a full-fledged Washington political imbroglio, including name-calling and references to decades-old allegations of wrongdoing.

Appearing on CNN’s “State of the Union,” Issa said Sunday that the White House was misleading the public about the full magnitude of the IRS targeting.

In particular, he called Carney a “paid liar” and said that interviews with IRS officials in the Cincinnati office that considered requests for tax-exempt status showed that Washington officials were involved.

However, he stopped short of providing proof of his claim, saying only that further investigation would reveal “the whole truth.”

In response, former White House adviser David Plouffe, a Democratic strategist, denied any political motivation in the IRS targeting.

In a tweet posted later Sunday, Plouffe referred to Issa’s comments as “strong words from Mr Grand Theft Auto and suspected arsonist/insurance swindler.”

The tweet also called Issa “loose ethically today,” adding a link to a story about Issa’s appearance on CNN.

Plouffe’s tweet referred to allegations from 1972 and 1982 against Issa, the former owner of a car alarm company.

In 1972, then-19-year-old Issa was arrested under suspicion of stealing a car, but charges were ultimately dropped. Issa’s brother, on the other hand, is a convicted car thief.

In 1982, the office and factory of two companies Issa had purchased — Quantum Enterprises and Steal Stopper International — caught fire.

The insurance company’s investigation found “suspicious burn patterns,” and company officials noted that in the month before the fire, Issa had increased his insurance from $100,000 to $462,000. Again, no criminal charges were filed.

— CNN’s Dana Bash, Ashley Killough and Jake Tapper contributed to this report.