How the IRS Scandal Could Backfire

CBS News reported yesterday that senior officials in the Treasury Department knew of the IRS targeting of conservative groups during the 2012 campaign.  While this doesn’t yet place the matter inside the West Wing, it assures another leg to the scandal at least.  To paraphrase an old Watergate-era slogan, “Follow the money-grubbers.”

(CBS News) WASHINGTON – There were new questions Saturday night concerning if anyone in the White House was aware of the IRS’ targeting of conservative groups.  Inspector General Russell George said he informed a deputy at the Treasury Department in June of 2012 about the probe into the IRS.

In a separate story, however, CBS News notes that the IRS didn’t seem to scrutinize larger politically-oriented groups like Karl Rove’s American Crossroads or Obama’s Priorities USA.  Only a mainstream news organization would be surprised by this; larger, more establishment connected groups, like large established crony-capitalist corporations, are always able to deploy more resources and more expensive K Street lawyers to speed their way through the government thicket.  Like all other forms of government regulation, it is the little guy—like local Tea Party groups—that the regulators will target.

I’ve always said that the way to get rid of corruption in high places is to get rid of high places, and surely that’s the right answer here: let’s get rid of the byzantine campaign finance rules that stifle political expression or limit it to the insiders like Rove and Axelrod.  But the opposite is likely to happen.  The so-called “reform community” (Fred Wertheimer, chief nanny), which is very well organized and has media sympathy, is going to argue that the IRS scandal shows that we need more regulation of political speech, or at the very least, disclosure of donors, so that more people can receive the Koch brothers treatment by the left.  (Of course, the so-called “reformers” always want to change the subject when you bring up the exemption from campaign contribution disclosure that the Socialist Workers Party still enjoys; most reporters don’t even know it exists.)  At the very least, the IRS will argue that it needs a bigger staff to handle the workload from the confusing and admittedly vague regulations in this area.  The New York Times, furiously working on the counter-narrative, says the IRS Ohio office was “unprepared and unclear about the rules.”  Isn’t that always the way of government failure?  If a government agency screws something up, obviously they need a bigger budget.  For example:

Some congressional Democrats, fearful of being tied to the scandal, are backing the push for more aggressive enforcement of these groups. . .  Wertheimer, of Democracy 21, said the “laundering of secret money into elections” will become a greater scandal than IRS misconduct unless something is done.

Want to hear some really bad news?  John McCain is on the case.  Which means we’re doomed:

A Senate investigative panel led by Democrat Carl Levin of Michigan and Republican John McCain of Arizona has been reviewing the use of social welfare groups for political causes for the past year and now is examining the agency’s handling of the tax-exempt reviews.

Keep you eye on this.  Months from now, or maybe next year, after the scandal has died down, look for an attempt in the Senate to ratchet up regulation of campaign speech in the cause of “reform.”  They’ll say it will be to prevent the IRS from targeting conservative groups, but what it will mean in practice is that the hurdles to even applying for tax-exempt status will become that much higher.  Can’t target anything if there’s nothing to target in the first place.  It’s another case study in the irrepressible nature of the administrative state.  Can’t wait to see how the IRS handles enforcement of Obamacare.

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