The Intimidation Game (17 page)

Yes, Republicans still gripe that we don't know what happened at the IRS. Yes, they have a bit of a point: Lerner wouldn't testify; the IRS lost key e-mails; the White House covered things up. But that does a disservice to the investigations, which pieced together some origins of this story, and demolished some lies.

Among the first falsehood to go was the “Cincinnati did it” line. Jordan's team interviewed those employees. One dismissed the idea of rogue agents as “ridiculous.” Another agreed, “Rogue employees means doing their own acting. I don't think anybody in our team, including myself, did their own thing out of the command of chain.” Hofacre, the Cincinnati employee so frustrated with the review process that she requested a transfer, told Congress that she believed the public had been purposely misled to focus on Cincinnati.

Jordan also put the lie to the administration's claim that it hadn't really known about any of this until TIGTA readied his report. The IRS commissioner and general counsel, remember, are appointed by the president. The IRS is also a branch of the Treasury Department. And the Treasury Department reports directly to the president. All the evidence shows that both the presidential appointees to the IRS and the senior political appointees at Treasury knew about the targeting of conservative groups before the 2012 presidential election, and sat on that information.

Doug Shulman admitted to the Senate Finance Committee that he knew something was wrong in the spring of 2012, during the election—and yet said nothing. He'd later plead that he did not know all the facts until the TIGTA report. But he knew enough to have stopped things, if he'd chosen to.

We know that the highest officials at the Treasury Department were aware something rotten was going on at the IRS in the spring of 2012. Russell George, TIGTA, told Congress that in the spring of 2012 he advised the general counsel for Treasury, Christopher Meade, that he was “conducting an audit of the IRS's processing of applications for tax-exempt status, and I may have advised him that we were looking at allegations that the IRS was using names such as ‘tea party' to identify tax-exempt applications for review.” Documents back up TIGTA's recollection. Meade would nonetheless later claim that TIGTA hadn't told him much. Similarly, TIGTA told Oversight that he'd briefed the Treasury Department's chief of staff, Mark Patterson, about the audit and the “tea party” phrase in September 2012. Patterson would later claim that he didn't even remember meeting with George that fall. When Jordan pressed him to try to remember the conversation, Patterson got testy. “All I can tell you is what I remember, okay?” he shot back. Jordan's reply: “All I know is that Russell George remembers it differently.”

Connect these dots. Assuming the inspector general for the Treasury Department isn't lying to the nation (and why would he?), both the top lawyer and the chief of staff to Treasury Secretary Tim Geithner knew about the targeting of conservative groups months prior to the presidential election. Does anyone truly think this information wasn't relayed up the chain?

One possible answer came on May 16, 2013, when Bloomberg News's Julianna Goldman asked President Obama a few pointed questions. Obama offered a careful response:

Obama didn't say that he was unaware of targeting. He didn't say he was unaware of BOLO lists or Lerner or donor questions. He said he didn't know about the IG report. That's a little different.

Some in Treasury and the White House knew about the TIGTA report an entire month before Lerner's bombshell, and in fact coordinated with the IRS to craft the manufactured Lerner admission. As early as April 16, Treasury's deputy general counsel informed a White House attorney about the inspector general's findings, telling him (at the very least) that the “IG had identified some problems or concerns with the application process as it related to conservative organizations.” Miller, the IRS head at the time, ran nearly every detail of the Lerner apology—to the time and date and circumstances—past Treasury, which in turn informed the White House deputy chief of staff about the plan. This was done, said a Treasury official, “so that the White House wouldn't be surprised by the news.” Some of the frantic calls in those last days also included yet another White House lawyer and a press official. And yet Obama to this day insists he learned about the entire affair through the news.

The more Jordan, Orrin Hatch, and groups like Judicial Watch dug, the more they uncovered evidence that Democrats drove the IRS targeting from day one. From the moment Obama won the 2008 election through early 2013, the tax agency fielded no fewer than thirty-five formal congressional requests for investigations into, or new rules covering, tax-exempt organizations. Many went express to the IRS commissioner's office. Investigators also found e-mails showing IRS staffers assisting Democratic members with their own probes into conservative groups, and in turn getting “heads-up” tips about that congressional work. Miller would later admit that it was all this pressure that forced the internal IRS debate about how to handle (c)(4)s: “I mean, I think we were—we had, you know, [Michigan senator Carl] Levin complaining bitterly to us about—Senator Levin complaining bitterly about our [regulation].…And, you know, we were being asked to take a look at that. And so we were thinking about what things could be done,” Miller confessed.

The press put a lot of emphasis on Baucus and Durbin and other senators who'd written letters to the IRS with specific demands. Levin's own role was far more integral and direct, effectively raising him to the level of conspirator. Levin, too, signed on to those IRS letters demanding probes of conservative groups. But he was far more aggressive in his demands, handing the IRS specific target lists in the run-up to the 2012 election. In a July 2012 letter, he listed twelve groups he wanted investigated for political activity. Eleven of those were conservative organizations (he tossed in one liberal group for good form). In September, he demanded that the IRS provide him political spending figures for a list of conservative players. Miller wrote back that “as discussed” in two earlier responses to Levin (the IRS and Levin communicated a lot), the agency wasn't legally allowed to tell him whether the organizations on his list had even applied for tax-exempt status. Levin kept up the pressure, complaining that the IRS “misinterprets” the law. He at one point called the agency's failure to prosecute conservative groups “unacceptable.” He also told the
New York Times
(incorrectly) that “tax-exempt 501(c)(4)s are not supposed to be engaged in politics,” and vowed that “we're going to go after them.” Levin in May 2013 scheduled his Senate Permanent Subcommittee on Investigations to hold hearings into the IRS's failure to “enforce the law” on nonprofits engaged in “partisan politics.” He canceled it when Lerner dropped her bombshell.

What no one found out until after that fallout is that Levin's subcommittee had spent the entire year of 2012 dragging IRS officials in front of it, putting the screws to them over nonprofits. One of the officials attending those frequent meetings was Lois Lerner. Also attending was staff from ranking member John McCain's office.

Interestingly, Levin himself revealed these facts. As the IRS scandal exploded, the Michigan Democrat clearly sensed how bad it would look for Republicans to uncover these meetings, so he decided to get out ahead of the news. He released the information in an extraordinary joint letter (with McCain) to Danny Werfel a few weeks after Lerner's announcement. The letter began as a full-throated call to suspend Lerner from the IRS. Levin and McCain explained that among the reasons for why this should happen was that Lerner had failed to disclose the targeting to them in the course of their own “investigation” into nonprofits and the “statute.” That's how Levin and McCain cleverly slipped out the news that they'd conducted “a year's worth of correspondence between the Subcommittee and the IRS, as well as document productions and repeated consultations with IRS staff.” The letter was carefully worded, designed to reveal yet minimize the committee's pressure on the IRS. McCain undoubtedly had the Keating scandal in his mind. Twenty-five years earlier he'd got rapped for pressuring a regulator in the banking sector. He didn't now want to be accused of bullying the IRS. (It didn't help. McCain would later be accused by conservative groups of taking part in the targeting, an accusation he reacted to with a furious press release, calling it “demonstrably untrue.”)

It was Judicial Watch, again, that obtained papers documenting Lerner's attendance at one of those Levin meetings. “We don't know exactly what happened at that meet-up,” notes Fitton. “But suddenly you have these two senators—after the sugar hits the fan—claiming to be outraged by the IRS's actions. And doing so in a letter designed to exonerate them from their own roles.”

Investigators also quickly demolished what had become a favorite Democratic claim: that liberal groups had also been targeted. TIGTA himself had undercut this baloney in his report, simply listing the numbers. The IRS targeted 292 conservative groups, and all 292 were put under review. It subjected 6 liberal groups to review. And while it's true that the term “progressive” was later found on the infamous BOLO list, it was in a section of that spreadsheet that ultimately wasn't used by screeners to isolate targets. Only one side got the IRS treatment.

Jim Jordan,
Orrin Hatch, Dave Camp, Russell George, dozens of staffers, and Judicial Watch toiled along, unraveling the affair bit by bit. They were joined by yet one more powerful force in the sleuthing. The targeted Tea Party groups might have been molested by the IRS, but they refused to surrender to a victim's mentality.

The targets spent three years in turmoil—first in suspended animation, then confusion, then fear. The consequences were very real. Democrats wanted the IRS to shut these groups down, and at a crucial time—the elections of 2010 and 2012. They got their wish.

Fitton notes that it wasn't as clear-cut a victory as some on the left would have liked, but it worked all the same. “Lerner had been at the FEC. She knew the law inside out. And she knew that any formal action would likely get slapped down by the courts. So rather than reject applications, she did the next best thing. She kept them in limbo, so that the groups couldn't fully operate.” He throws in an additional irony: The only reason why Lerner could do this was because conservative groups were trying to do the right thing. “The truth is, the law doesn't require you to immediately file an application to get (c)(4) status. The smart groups on the left sure weren't doing it. It was just the poor suckers in the Tea Party, who, because they tried to cross the T's and dot the I's, the whole movement was shut down.”

Lerner hadn't hit full operational speed by the 2010 midterms, and the “shellacking” that Obama received in that election was in no small part due to Tea Party groups spreading the words on issues and getting out the vote. By the estimates of one study, the Tea Party pushed an additional 5.8 million additional Republican voters to the polls in 2010. But the IRS muzzling took its toll on the movement in the two years that followed. Grover Norquist, president of the influential Americans for Tax Reform, makes a compelling argument in his own book on the IRS,
End the IRS Before It Ends Us
, that Obama's siccing of the agency on conservative groups saved his presidency. He intimidated them out of the game.

Many groups pulled their applications, tired of the hassle. Others couldn't get funding from donors and dwindled away. Some got hit by a weird fillip in the law that subjected them to an automatic revocation of their application if it dragged on too long—an issue that Lerner was aware of, and made use of. Some, wary of the delays, and the stories they were hearing, and the questions they received, pulled back on their activities and toned down their work. “They couldn't handle the onslaught,” says Jordan. “These were people doing this in their garage. Or part-time. Or in the spare minutes, away from their real job, when they had a moment to send out an e-mail. And that's the part that most bothers me. I despise the bully picking on the weak kids in the playground. This is the sophisticated, powerful IRS going after folks hand-painting signs in their backyard.”

The targeting was hardest on the small groups, but it also hurt the big (c)(4)s—even the ones that could afford sophisticated lawyers. Steven Law, the president of Crossroads GPS (which Lerner was especially determined to bring down), explained to me that the hit to his own group was financial. Among the many reasons groups like Crossroads pursue tax-exempt status is to qualify for special mailing rates that nonprofits receive. And Crossroads does a bucketload of issue-related mail. Yet the group had to wait five years to finally get its nonprofit status, costing it a small additional fortune every time it went to the post office.

Obama won in that regard. Then again, his IRS couldn't have chosen a more ornery or knowledgeable group of people to pick on. The Constitution is the Tea Party's bread and butter. And that Constitution had been violated. So as congressional investigators set to interviewing and issuing subpoenas, conservative groups set to documenting the horrors and seeking justice.

At the epicenter of that movement was Jenny Beth Martin, the charismatic leader of Tea Party Patriots (TPP), a national umbrella group for the movement. Martin served double duty during the scandal. She had to cope with the IRS interrogatory of TPP (it was on the targeting list), but she also became the go-to organization for other groups under assault.

“Our own accountant got our first IRS letter, and it was at just the same time as everybody else. But we were the only national organization targeted—the other groups, they were small, they were local—and so we started doing everything we could to help them out,” says Martin. She started weekly webinars, where people could tune in and get general advice from an attorney about how to approach the interrogatories. Sometimes the local groups would find their own counsel, sometimes Tea Party Patriots helped arrange for counsel—and paid the legal bills. Martin remembers through all that crazy time—before the targeting was revealed—that she felt the need to be very careful about what she said, to not make accusations. “That was another whole part of this. We all knew something was going on. But if you went to a major donor and said you thought the IRS was targeting you, they would think you were crazy. ‘Look at all those Tea Party people, out with signs and conspiracy theories.' And also, the IRS still held the cards, nothing had yet been revealed. And none of us wanted to say anything that might derail our approval. So we did our best, and found counsel, and answered many of the questions.”

After the targeting was revealed, all bets were off. Martin also had Cleta Mitchell as counsel, and when the Lerner news broke, they were ready to go live to the nation with the stories of what had happened to groups across the country. She also reached out to her network and within days had arranged and paid for a group of dozens of local Tea Party members to come to Washington and tell about their experiences.

TPP arranged the meetings and made introductions to legislators. It arranged for video crews to document their stories. And it arranged press conferences.

It also started going back to groups, collecting information, making a record of the abuse. Martin remembers the Albuquerque Tea Party sending her a photo of the “stacks and stacks” of boxes of information they had sent to the IRS. “That image will always be burned into my memory,” she says. TPP started demanding that government departments hand over documents. Her organization also funneled local parties over to Jay Sekulow, who was preparing a lawsuit. Tea Party Patriots ended up doing a documentary about the IRS that featured many of the stories of average Americans who had been harassed into silence.

Martin appeared in front of Congress in July 2015, to sum up everything her group had done to record and unravel the IRS dishonor. “Two people on our support team made over one thousand phone calls in the spring and summer of 2013 to make sure we had the details necessary to provide various congressional committees with the information and evidence they needed,” she told Congress.

“We arranged town hall meetings to discuss the issues, and we coordinated and paid for travel for our local coordinators to come to Washington to testify and/or talk to committee staff.

“We filed FOIA requests, and we paid for smart lawyers to help understand the gibberish and thousands of redacted pages of paper we got in response.

“And, of course, we had to spend precious man-hours filling out all those crazy questionnaires from the IRS in the first place.”

Martin overall estimated that her group spent at least forty-five hundred man-hours working on IRS targeting–related issues. As she explained, “Think about that for a minute: forty-five hundred man-hours. That's the equivalent of one employee working two and a half years on this issue alone—just since 2013.”

Karen Kenney was among representatives from twenty groups whom the Tea Party Patriots underwrote to come to Washington to tell their stories and meet with congressmen in late May 2013. She was happy to join, though less than impressed by the city and its occupants. She spent one day talking to staffers, and has good memories of meeting with California representative Tom McClintock, who personally came to hear the stories of abuse. Mostly what she remembers, though, is a lot of staffers, and few informed members. And also that she wasn't allowed to use the drinking fountains because of lead in D.C. pipes. (
Where's the damn EPA when you need them?
) She got dehydrated and missed meetings, sick in her hotel room.

Kenney took a second trip to D.C. in June, funded by the grassroots organization FreedomWorks, when she testified. That was when she had her adventure finding the bathroom. (
I felt like a Christian in the coliseum in Rome.
) Even years later, she looks nervous recounting the moment, and that look is a vivid reminder that most Americans are not called upon to tell their ugly tales to millions of TV critics, to face the withering questions of haughty congressional members. Starting a Tea Party organization was, in Kenney's mind, an act of civic duty. Testifying in front of Congress was, in Kenney's fluttering heart, a supreme act of bravery.

Kenney remembers sending a silent thank-you to Michigan representative Dave Camp, who introduced her by noting that she worked with veterans. She believed he'd deliberately included that fact in an effort to shield her from nastier Democratic questions. She remembers Wisconsin representative Paul Ryan genuinely welcoming the witnesses to Washington. She remembers that every Republican member sat fixed in their seat for the duration of the hearing. She remembers that every Democratic member got up and left at some point and didn't bother to come back until it was their time to ask questions. She remembers looking down the line at the four other Tea Party witnesses and thinking, “I'm not alone.”

Kenney might have been nervous, but didn't look it come showtime. Her five minutes on the stage were a ringing retelling of her experience and a condemnation of government power. It was rebroadcast from coast to coast.

Within a few weeks of Lerner's admission, Sekulow had filed a lawsuit against the IRS that would grow to represent thirty-eight groups in twenty-two states. It accused the Obama administration of violating the First and Fifth Amendments, as well as the Administrative Procedures Act (which lays out how government must produce regulations) and the IRS's own rules. Mitchell filed litigation. Individual Tea Party groups filed litigation. Kenney's group to this day remains active in the Sekulow suit, even though she is no longer seeking tax-exempt permission. “The people need to know what happened,” she explains. “And that suit gives a reason for discovery.”

Several of the lawsuits are still winding their way through the courts, but they have in the near term served an important purpose: They've pressured the IRS to get applications approved. Mitchell sued on behalf of True the Vote, and on the day the federal government was supposed to respond to her lawsuit—in September 2013—it conveniently explained to the court that the IRS had just granted (c)(3) status to the group and was therefore moving to dismiss the suit.

Mitchell says congressional pressure also helped. The House in February 2014 publicly announced that Jenny Beth Martin of the Tea Party Patriots would soon testify about her own still-languishing (c)(4) application. Mitchell remembers telling Martin (who is also her client), “Wait for it. You will have it before you testify.” Sure enough, the day before that testimony, the IRS called to say it had granted the Tea Party Patriots tax-exempt status. “Coincidence?” asks Mitchell. “Hardly.”

Sekulow witnessed the same behavior. Only after he launched a lawsuit did his groups begin getting approval. As of the end of 2015, he had only two clients that had yet to receive tax-exempt status. “The reality is that without that litigation, we'd still be fighting for all those exemptions. They didn't want to give anything,” he says.

The Tea Party movement also jumped to hold lawmakers accountable. Obama was beyond their reach; he'd encouraged the IRS in every way possible, but he'd been careful never to outright call for action. And executive privilege keeps most White House documents beyond the reach of FOIA requests or congressional subpoenas.

Congressional Democrats never felt such constraint, however, and were on record vigorously and openly demanding that a federal agency go after their political enemies. How that pressure is any different than that exerted by the Keating Five against the federal bank regulator (and which cost senators their jobs) is hard to fathom. Conservative groups didn't miss the comparison. Since May 2013 they've filed dozens of ethics complaints against Democrats involved in the targeting. Congress is still an old boys' club, and reluctant to take aim at any of its own. So nothing has come of any complaint.

Nothing likely will.

It took Cleta Mitchell very little time to figure out that the Obama administration had no intention of stopping its campaign to silence its opponents. It had been caught unofficially targeting conservatives, in secret. That would clearly have to stop. It instead moved swiftly to a new phase of the operation: officially targeting conservatives, in the open.

Werfel debuted the first piece of this on June 25, briefing reporters about his thirty-day report on the scandal, which included his new “plan of action” for dealing with the conservative application backlog. One highlight was a new optional “expedited” process for obtaining 501(c)(4) status. Werfel's “fast track” deal boiled down to this: The IRS would finally, begrudgingly, do what it should have done from the start and quickly grant tax-exempt status. The hook? Groups would have to agree to give up their freedom of speech.

Those organizations taking the deal had to agree to limit to 40 percent the amount of money and time (calculated by employee and volunteer hours) they would spend on future political activity. The official legal amount was 49 percent, and the IRS had never before used time as a component of that calculation (it had always just been based on spending). By including the new time measure in the calculation, the IRS could significantly lower the amount of real political work that groups could engage in.