IRS Scandal Is Much Ado About Small Stuff While Karl Rove Gets Off Scott Free

Small Tea Party groups were bit players—not so with the big dark money groups.


Republicans, as usual, are in a tizzy over what they say is a big scandal brewing at the Internal Revenue Service, because on Friday, Lois Lerner, the lawyer in charge of the department that reviews applications for tax-exempt organizations, said that the IRS had improperly flagged and scrutinized applications by ‘Tea Party’ and ‘Patriot’ groups. 

The problem with this latest dust-up is that GOP outrage over the small but obvious stuff misses the real issues and bigger points. First, Lerner’s testimony—read it—says that her office discovered and tried to correct this. Moreover, does anybody really think that Tea Party chapters were not overt political creatures? They weren’t created to sell cookies.

The real scandal is that Lerner’s disclosure and apology, conveyed at a House Ways and Means Committee hearing Friday, ignores that the agency has not taken any meaningful decisions on the big political fish who hide behind this tax non-profit ruse and hide their donor’s names, notably Karl Rove’s Crossroads GPS.

Rove’s group spent more than $70 million on political ads in 2012. Its application to be a social-welfare organization is pending before the IRS—more than two years after it was filed. There are many forms of non-profits, but those at issue here, so-called C-4s, don’t pay taxes or disclose donor names.

The Tea Partiers are political little leaguers. Perhaps their best-known brethren in 2012, “TrueTheVote,” tried to recruit and train volunteers to challenge the credentials of black and brown voters in Democratic strongholds in swing states. They were so sloppy and offensive that election officials in Ohio and Wisconsin barred them from going near voting sites during the November 2012 presidential vote.

But Karl Rove is not a political rookie. He pioneered the latest dark money strategy by creating a major political organization that masqueraded as a social-welfare group just by filing a tax-exempt application. Other GOP political consultants, and then top Democrats, including the Obama campaign’s top allies, and 100s of others all followed suit.

Longtime Washington campaign finance groups have been crying ‘foul’ for years, urging the IRS to issue rulings on the prolifieration of the C-4 ‘dark money’ groups. The fact that the IRS still has not ruled on Rove’s group will not be helped by this latest scandal, as the agency will now be in ‘damage-control’ mode and will be even more cautious.

Similarly, this bureacratic dust-up is like Christmas in July for Washington’s influence industry. In the era of Citizens United, the Supreme Court decision that removed decades of limits on some forms of political spending, legal ambiguity serves to perpetuate the ‘maybe it’s legal, maybe it’s not’ abuses that have driven the campaigns that Americans now are subjected to: paid media deluges with more negative messages than ever.

It is all too predictable how this ‘scandal’ will unfold. It’s like the line from Bob Dylan’s song, Sweetheart Like You: “Steal a little and they throw you in jail; steal a lot and they make you king.” The GOP will now claim the ghost of anti-communist crusader Joesph McCarthy resides in the Obama administration IRS. There’s nothing like being on an ‘enemies list’ to bouy morale and fundraising among the GOP paranoics.

Meanwhile, Rove and his ilk—including dark money Democats—will just quietly smile and keep plying their trade. And what will happen to Lois Lerner, the messenger in this so-called big scandal. She’s been a government lawyer for three-decades, starting at the Justice Department in the Reagan Administration, and then at the Federal Elections Commission, and then the IRS since 2001.

She will probably be pressured to ‘retire’ sooner than the IRS will make a decision on the biggest dark money groups’ tax-exempt status. That’s how Washington works.


Steven Rosenfeld covers national political issues for AlterNet, including America's democracy and voting rights. He is the author of several books on elections, including Democracy Betrayed: How Superdelegates, Redistricting, Party Insiders, and the Electoral College Rigged the 2016 Election, to be published in March 2018 from Hot Books.


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