Saturday, May 25, 2013

Editorial: ‘Scandals’ Don’t Stick

Republican attempts to gin up controversy over last year’s attacks at Benghazi and IRS targeting of Tea Party groups were helped by sloppy reporting by the corporate media.

But Republicans lost most of the traction that was left with Benghazi when it was disclosed that a purported White House “email” quoted by Jonathan Karl of ABC News apparently was enhanced for dramatic effect. Karl quoted national security communications adviser Ben Rhodes’ writing that talking points should “reflect all agency equities, including those of the State Department” to protect the administration, but the actual email released by the White House didn’t mention State. CBS News reported that the email Karl quoted was leaked by Republicans. Apparently the leakers didn’t think the White House would release the actual emails.

Republicans then sought to blame Obama for the IRS’s scrutiny of Tea Party applications for tax-exempt status as “social welfare” organizations in 2012, until the Inspector General reported that the controversial scrutiny occurred under the holdover commissioner appointed by President George W. Bush and there is no credible evidence that Obama or his White House had anything to do with the Tea Party episode.

If anything, the blame lies with the austerity measures imposed by Congress, which cut IRS resources at the same time the caseload in its tax-exempt offices increased by nearly 60% after the Supreme Court in 2010 provided opportunities for political money launderers to operate tax-exempt as 501(c)(4) groups.

The Citizens United decision allowed corporations to get involved in politics, setting aside more than a century of laws and court precedents. The attraction of 501(c)(4)s is that corporations may bankroll a group’s operations without the bankrolls being publicly disclosed. The law requires that 501(c)(4)s be “operated exclusively for the promotion of social welfare,” but the IRS in 1959 interpreted “exclusively” to mean “primarily,” which has since been whittled down to “at least 51%” non-partisan activity.

The Tea Parties and other right-wing groups, which appear to be primarily political organizations with little, if any, social welfare functions, could have organized as “527” tax-exempt organizations, which would allow them to engage in most political activities, but then they would have to disclose their donors and file periodic reports of contributions and expenditures. Instead, they chose to keep the money-laundering option, but they squealed like stuck pigs when the IRS questioned their bona fides.

Republicans are howling now, but they were not outraged in 2004, when the IRS threatened to revoke the tax-exempt status of All Saints Episcopal Church in Pasadena, Calif., after the rector gave an anti-war sermon criticizing then-President Bush the Sunday before the 2004 election. In 2007, the IRS found that the church violated rules preventing political intervention, but it did not revoke its nonprofit status.

The IRS also went after the NAACP in 2004, auditing the nation’s oldest civil rights group after then-Chairman Julian Bond criticized President Bush for being the first sitting president since Herbert Hoover not to address the organization. Republicans didn’t share the outrage.

In 2005, the IRS investigated Greenpeace after it labeled ExxonMobil the “No. 1 climate criminal.” After a three-month audit that concluded in December 2005 the organization got a letter in March 2006 that it still qualified for tax-exempt status.

Glenn Smith, a political activist in Austin, noted that during the Bush II administration he started a 501(c)(4) organization called that was audited because, “in the words of the auditor, the ‘Democracy’ in its name clearly meant the org was partisan Democratic.”

And while all the tea parties eventually got their tax-exempt status, Emerge America, a progressive non-profit that trains Democratic female candidates for public office, was denied 501(c)(4) status in 2011, forcing it to disclose donors and pay some taxes, Bloomberg News reported. Progress Texas faced the same lines of questioning as the Tea Party groups from the same IRS office that issued letters to the Republican-friendly applicants. A third group, Clean Elections Texas, which supports public funding of campaigns, also received IRS inquiries, Bloomberg News reported.

I was an editor at The Texas Observer in Austin in the 1990s when, for good reasons mainly related to fundraising, the perennially underfunded magazine was converted from a privately owned corporation to a non-profit tax-exempt 501(c)(3) organization. The process required the assistance of a CPA and a lawyer and it took months before the tax-exempt status was approved by the IRS in 1994. The editorial staff was advised that under the new status we should not endorse candidates or advocate for specific legislation, but we figured that wouldn’t interfere with the muckraking that was the Observer’s stock in trade.

When we set up The Progressive Populist in 1995, we didn’t want to have to answer to the IRS for our political beliefs or editorial content, so the publication was set up as a subchapter S corporation, which does not pay federal income taxes, but passes profits or losses through to our shareholders. You might say we operate as a “non-profit by other means,” as losses are reported most years.

Congress should return permitted functions of 501(c)(4)s to their original intention — that they must be exclusively for the promotion of social welfare — and Congress should require the disclosure of major donors to non-profit organizations — that is, those over $200, the same as for political campaign disclosures. Those whose motives are pure shouldn’t fear having their names associated with non-profit organizations.

THE DEPARTMENT OF JUSTICE overreached when it secretly snooped into the phone logs of the Associated Press for April and May 2012 as investigators sought to find out who leaked news that US allies had placed an informant close to the al Qaeda leadership in Yemen. In another case, Justice also apparently considered bringing charges against Fox News Channel’s James Rosen when it investigated the source of his June 2009 story on US intelligence sources in North Korea.

DOJ violated its own rules in not informing AP or Fox News when it issued subpoenas for phone records under the expanded national security authority passed after 9/11. At least now the nation’s news organizations are on notice that they, too, can be victimized by the knee-jerk legislation that set aside civil liberties enshrined in the Bill of Rights in the pursuit of “security.” And leakers with classified information they’d like to pass on to reporters are on notice that they should use disposable cell phones or other non-traceable methods of communication to contact reporters.

Attorney General Eric Holder’s Department of Justice has prosecuted a record number of leakers and investigative reporters say they have detected a chilling effect on their sources.

President Obama supports a law to shield reporters from being required to reveal sources. News organizations should take him up on this offer and persuade a bipartisan coalition to proceed not only with a shield law for journalists, but also restoration of civil liberties for all. A step in the right direction is the bipartisan HR 2014, the Telephone Records Protection Act, which would require court approval when the government seeks telephone records.

We’re inclined to say that journalists should not have special privileges, other than the right to print the facts as they find them, as the First Amendment provides, but Associated Press President Gary Pruitt reminds us that if the government is allowed to restrict how journalists gather news about controversial government actions, “the people of the United States will only know what the government wants them to know and that’s not what the framers of the Constitution had in mind when they wrote the First Amendment.”

Or, as John Nichols wrote at, “No matter what action is taken, or not taken, journalists will continue to clog the corridors of the Capitol and crowd into White House press briefings. The question is whether those journalists will be present to challenge the status quo or as mere stenographers to power.” — JMC
From The Progressive Populist, June 15, 2013
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