May 25, 2013

An American Gestapo

“From its creation in 1933 until its death in May 1945, anyone living in Nazi controlled territory lived in fear of a visit from the Gestapo…” –Gestapo: A History of Hitler’s Secret Police

In its day the Gestapo was the enforcement arm of German political power. It could investigate anyone for any reason unfettered by democratic restraints. Not even a general’s uniform provided protection from its reach.

As its reputation for heavy-handed enforcement grew, Gestapo power also grew. Beginning as a small group of 300 career and supposedly legitimate policemen in 1933, which operated out of a small office and relied on index cards to keep track of suspicious people, the Gestapo grew in number and “legitimacy” that allowed it to snoop unrestricted on an entire nation. In less than a decade the German people became so intimidated by this government agency that they relinquished asserting their rights as free citizens in order to avoid attracting attention that could bring a knock on their door in the middle of the night.

Does this description sound similar to any agency of American government? Which federal agency is feared by Americans as the Germans came to fear the Gestapo? The Defense Department? CIA? FBI? The IRS?

As I’ve noted in many previous blog posts, the central purpose on which our Republic was founded was a mistrust of a central government. Law-abiding citizens in the 18th century were willing to fight a war against the most powerful military in the world in order to throw off the shackles of government abuse. Were those patriots to come back from the grave today, they would be shocked to see the extent to which government routinely abridges the freedom of its citizens. They would be more shocked that it’s tolerated. Among the multiplicity of agencies we’ve grown to tolerate as our federal government metastasizes to every corner of our lives, none is more feared, none more powerful, and none more flagrant in its abuse of the rights of citizens than the IRS. Of all the other things it does, at its core the IRS is a police function. And with the passage of ObamaCare, which agency was assigned its enforcement? The IRS!

No agency of government can be given the power possessed by the IRS without abusing it. PERIOD. No matter how restrictively it is regulated by law, no matter how conscientiously its operation is managed, no matter how closely overseen by Congress, there is too much power centralized in the IRS. Its history provides the proof. In the years following the 16th Amendment, the IRS has been stained by scandal after scandal. But instead of being weakened by scandal, each outrage seemed to embolden it even more to withstand reform attempts.

Today, once again we find IRS misbehavior at the center of a controversy. As news about it dribbles out, this one seems to have been underway at least since 2010 if not from the first year of the Obama administration. And just so I’m on record in this debate as an equal opportunity critic of the IRS, members of both political parties in both the White House and Congress have abused the public trust by using the IRS to punish and intimidate their enemies. Even Presidents have unleashed the IRS dogs on members of Congress, although I know of no case where the reverse was true.

It is illegal for the federal government to target specific groups or people for tax enforcement, but the President and Congress have done so with impunity. Moreover, there is ample evidence that the IRS has exercised power on its own volition. While the media present the current scandal as a small rogue initiative in the Cincinnati office, the evidence paints a national campaign directed at tea party conservatives whose harassment may have tipped the outcome of the 2012 election. No smoking gun has been found in the White House – yet – but Jeffrey Lord writing for American Spectator this past Monday may be on to a trail that leads to Obama. If so, Watergate II may in in the making.

First, a bit of background.

James Bovard has made a career out of exposing government shenanigans that infringe on the rights of citizens by publishing a string of books. These books have been denounced by a veritable Who’s Who of past administration cabinet secretaries and government agency executives who found themselves on the wrong end of Bovard’s pen. Last week the Wall Street Journal published an excellent article by him entitled “A Brief History of IRS Political Targeting” which can be found at the link in this sentence. It’s well worth reading but allow me to hit the highlights so that I can thoroughly infuriate you before concluding this week’s blog.

Bovard, calling upon David Burnham’s book, A Law Unto Itself: The IRS and the Abuse of Power, cites “In almost every administration since the IRS’s inception the information and power of the tax agency have been mobilized for explicitly political purposes.” FDR used the IRS to make life miserable for his political opponents and the critics of his New Deal. JFK used news conferences to announce that he expected the IRS to police “the discordant voices of extremism” (i.e. people who distrusted political leaders) and investigate their tax-exempt status.

Had Kennedy signed an Executive Order it couldn’t have been more effective in mobilizing the IRS to suppress conservative groups. Within days the IRS targeted the American Enterprise Institute, the Christian Anti-Communist Crusade, and other right-leaning organizations. Oh, and how well I remember Kennedy unleashing the IRS dogs of war on the executives of steel companies who refused to go along with his price controls in the 1960s. All found themselves targets of tax audits.

Tricky Dick Nixon was infamous for his paranoia and the enemies list that grew out of it. He wasn’t shy about using the IRS Gestapo to spy and snoop on over 10,000 people on his list. When Watergate brought him down, John Dean, his personal lawyer, revealed that Nixon “use[d] the available federal machinery to screw our political enemies.” In this case “federal machinery” was a euphemism for the IRS.

The Clinton White House employed the IRS to conduct more than 20 audits of conservative organizations – the Heritage Foundation and American Spectator among them – which were critical of his policies, and IRS audits fell also on those critical of his libido, among them Gennifer Flowers and Paula Jones.

Toward the end of the Clinton era, the Associated Press (itself the subject of government intimidation at the moment) reported that “officials in the Democratic White House and members of both parties in Congress have prompted hundreds of audits of political opponents in the 1990s.” There were “personal demands for audits from members of Congress” that gave the IRS only 15 days to do its dirty work if requests were marked “expedite” or “hot politically.” Of course, requests to audit an enemy were appropriately camouflaged to prevent identifying the congressman who wanted to harass a citizen who’d “dissed” him. Since both parties engaged in these practices there was no hoots or howls calling for investigation like today.

Over 40 years ago, Sen. Joe Montoya of New Mexico announced plans to hold hearings looking into IRS abuses. The IRS responded by putting his name on a list of tax protesters capable of violence against agents. Over 22 years ago the nonprofit Josephson Institute of Ethics conducted a survey of 800 IRS executives and managers which revealed that three out of four felt no compunction about lying to a Congressional committee. About 15 years ago a client of my accountant wrote a critical letter to the IRS and two gun-packing agents showed up on his doorstep. The IRS is beyond criticism, beyond scrutiny, and beyond governance. It answers to no one except superficially.

Taking a cue from JFK’s tactics, Obama’s 2012 campaign singled out a number of Romney supporters by name. Among them was Idaho businessman and longtime Republican donor Frank VanderSloot whom Obama called a “wealthy individual” with a “less-than-reputable record.” Other Romney supporters were characterized by Obama as “on the wrong side of the law.” Republican PACs and Tea Party 501©(4) organizations were targeted by Obama by questioning whether their funding was coming from overseas. Obama used “tea baggers” as a pejorative and Biden called them “terrorists.”

The IRS didn’t need a memo from the White House. It got the clue and it got to work sandbagging the enemies of The Boss. VanderSloot’s divorce records were investigated. The IRS audited the VanderSloot’s tax returns for the past two years. The Department of Labor conducted an audit of the guest workers on his Idaho cattle ranch. Then he got notice of yet another tax audit. The harassment continues. His tax refunds have been held up and his legal bills have passed the $80,000 mark.

Tea Party organizations applied for tax exempt status during the 2012 election cycle. Exemptions would allow them to raise funds and advance their candidate preferences. Their applications were stonewalled by the IRS review process and many folded, unable to stay in operation until their exemptions came through. The IRS asked applicants for outrageous information – the mission of the organization and the people involved with it, including board members, donors and speakers at its events. An Ohio group was asked to write a synopsis of a 350-page book its members had studied. They were given two weeks to comply.

None other than Franklin Graham, son of the evangelical icon, suffered the consequences of voicing his beliefs which ran counter to White House ideology. Two of Graham’s non-profits were audited during the 2012 election campaign after the organizations took out ads urging people to support biblical principles in their choice of political candidates. Graham sent a blistering letter to Obama about the audits after learning that conservative groups with “tea party” and “patriot” in their name were being disproportionately audited or investigated by the IRS. “This is morally wrong and unethical – indeed some would call it ‘un-American’” Graham said. He may as well have saved the postage.

How is this possible in “the land of the free?”

It’s no secret that Obama is a friend of labor unions, among them the National Treasury Employees Union (NTEU.) It represents 150,000 government employees in the IRS and 30 other agencies, making it the most powerful government union in operation. Visitor logs show that one of the first “low level” visitors to the White House in Obama’s first term was Colleen Kelley, a 14-year veteran of the IRS and president of the NTEU. Kelley is recorded as visiting the White House on December 3, 2009 at 6:30 pm to attend the White House Christmas party, the first of the new Obama administration. Kelley was one of four labor activists invited. Heady stuff.

Six days after the party, Obama issued Executive Order 13522, “Creating Labor-Management Forums to Improve Delivery of Government Services,” whose purpose was to “allow employees and unions to have pre-decisional involvement in all workplace matters….” The EO gave the NTEU the clout to determine IRS employee policies, right down to who was given a government-paid Blackberry and what office size an IRS employee was allowed.

In other words, the EO let the inmates run the asylum.

Since the NTEU is the most active anti-Tea Party union in government, Obama’s EO was his Christmas gift. On March 31, 2010 Kelley again visited the White House according to visitor logs. The Inspector General auditing the IRS scandal says in its report that the day following this meeting the IRS ratcheted up its schemes to target Tea Party and conservative groups.

The NTEU raised $613,633 in the 2010 cycle, 98% of which went to anti-Tea Party Democrat candidates. Nevertheless, Democrats suffered massive political losses in the mid-term elections including the loss of the House majority and six seats in the Senate. State government gains went to the Republicans on a large scale.

Therefore, payday came again for the boss of the IRS union. One week after Obama and Democrats suffered their historic midterm losses, Obama appointed Kelley to the Federal Salary Council whose job is to recommend pay raises for IRS and other federal employees. The NTEU PAC thanked Obama by raising $729,708 in the 2012 cycle, of which 94% went to anti-Tea Party candidates.

The Treasury Inspector General of Tax Administration completed his audit of the IRS targeting in September 2012. (An audit is not an investigation.) Someone decided its findings should not be released until May 2013 – after the election. When the 54-page audit report was released last Tuesday, it was clear that the IRS was involved in a crime – the use of government power to suppress anti-Democrat political speech. Obama acted outraged and fired Steven Miller, the acting IRS Commissioner. Big deal! Miller was scheduled to retire in weeks. He will be receiving a taxpayer-funded pension, notwithstanding his firing.

Darrell Issa’s House Oversight and Government Reform Committee has its hands full lately keeping up with all of the Obama scandals. It is presently investigating three of them – the IRS, Benghazi, and the revelation that the Department of Justice secretly subpoenaed the private phone records of several Associated Press reporters and editors in the wake of a terrorist plot leak. Despite his newly-unemployed status, Miller was subpoenaed by the Issa committee.

Miller’s testimony before the House Committee was little more than a replay of the Abbott and Costello baseball parody, “Who’s On First.” Representative Kevin Brady (R-TX) asked Miller, “Who is responsible for targeting these individuals?”

Miller: “I don’t have names for you.”

After several rounds of “I used to know but now I’ve forgotten,” Representative Dave Reichert (R-WA) confronted Miller: “I’m disappointed. I’m hearing, ‘I don’t know. I don’t remember. I don’t recall. I don’t believe.’ Who knew? You don’t even know who investigated the case, but yet you say it was investigated … You’re not instilling a lot of confidence.” Reichert continued the questioning of Miller, asking who did IRS adviser Nancy Marks identify as the person responsible for the IRS targeting policy. Miller’s response: “I don’t remember.”

It’s unfathomable that the most illegal order given by the IRS, one that is likely to send one or more people to prison, can’t be recalled by the person in charge of the agency! Maybe Miller’s memory will clear if he is implicated as a candidate for prison time.

The Democrats are facing some serious losses in the 2014 midterm elections. Their cause was not helped, however, by Lois Lerner, the person in charge of granting IRS tax exemptions. She appeared before Issa’s Committee Wednesday. Her lawyer had warned she would plead the 5th Amendment if she was called before the committee, and that’s what she did. What’s noteworthy about Lerner’s appearance, however, is that she brought a lawyer. The presence of a lawyer in a congressional hearing is a clue that the client could be facing criminal charges. After making an opening statement (which may have voided her 5th Amendment rights) Lerner “took the 5th” on every question put to her. A furious Democrat, Representative Stephen Lynch (D-MA), warned Lerner that there’d be “hell to pay” for her obfuscation, possibly in the form of a special prosecutor, if she and other IRS officials maintained their code of silence to Congress’ questions.

Lerner was placed on administrative leave Thursday when newly-appointed Acting Commissioner Daniel Werfel asked her to resign and she refused. Concerning Werfel’s “acting” status, Jay Leno quipped, “They’re called ‘acting commissioner’ because you have to act like the scandal doesn’t involve the White House.”

In her essay on government, Ayn Rand wrote:

We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.

The latest IRS scandal is the legacy of this 100-year old agency writ large – another example that too much power is concentrated in this single agency.  If we are to escape the fulfillment of Rand’s prophecy, the IRS must be broken up and reconstituted as multiple independent, non-collaborative agencies.

The break-up of the IRS could defang the current model but it would only be a band aid. The underlying problem – the way government is funded – would remain unchanged: i.e. the century-old decision to tax income. Once that Pandora’s Box was opened it unleashed a flurry of imponderables: what is income, when is it taxable, and when is it exempt?

Unlike absolutes such as the case for gravity, there is no absolute to define income. That must be decided by arbitrary judgment, which inevitably conveys power upon the judge. However guileless the judge may be, arbitrariness in any form is despotic. It grants fiat power to one party while withholding it from another party. This is the antithesis of a free society.

The power to enforce tax compliance and the power to abuse are first cousins. We will continue to struggle with the flaws of the current system until we cease to tax income.

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