on: May 20, 2013, 08:30:49 PM
Started by Crafty_Dog - Last post by Crafty_Dog
By JAMES TARANTO
Democracy is in peril: That is an emerging theme of the liberal left's response to the Obama scandals. The argument misses the point, no doubt deliberately. What we are witnessing now is not a crisis of democracy but a crisis of authority. The administrative state, in thrall to a decadent cultural elite, has lost the consent of the governed.
"After a week of scandal obsession during which the nation's capital and the media virtually ignored the problems most voters care about--jobs, incomes, growth, opportunity, education--it's worth asking if there is something especially flawed about our democracy," declares the Washington Post's E.J. Dionne.
He goes through a partisan litany of complaints--"a radicalization of conservative politics, over-the-top mistrust of President Obama on the right, high-tech gerrymandering in the House and a Senate snarled by non-constitutional super-majority requirements"--but makes no mention of the abuses of power by the Internal Revenue Service and the Justice Department. He does hint at Benghazi, in his concluding paragraph, but only to pooh-pooh it:
Since World War II, bouts of economic growth have allowed democracies to buy their way out of trouble. One can hope this will happen again--and soon. In the meantime, politicians might contemplate their obligations to stewardship of the democratic ideal. They could begin by pondering what an unemployed 28-year-old makes of a ruling elite that expends so much energy feuding over how bureaucrats rewrote a set of talking points.
But if the purpose of that rewriting was, as it appears to have been, to deceive voters and bolster the president's re-election prospects, then it was a subversion of democracy.
And the IRS scandal was a subversion of democracy on a massive scale. The most fearsome and coercive arm of the administrative state embarked on a systematic effort to suppress citizen dissent against the party in power. Thomas Friedman is famous for musing that he wishes America could be China for a day. It turns out we've been China for a while.
In a CNN.com column Donna Brazile strikes the same theme with a sinister twist:
A government of, by, and for the people requires that people talk to people, that we can agree to disagree but do so in civility. If we let the politicians and those who report dictate our discourse, then our course will be dictated.
Why am I alarmed? Because two "scandals"--the IRS tax-exempt inquiries and the Department of Justice's tapping of reporters' phones--have become lynch parties. And the congressional investigation of Benghazi may become a scandal in itself.
In one breath Brazile urges everyone to be civil and respectful. In the next she labels her opponents with one of the most racially incendiary metaphors in the American lexicon. And note that she is casting government officials who abused their power as lynching victims.
Brazile is on to something, however, in her skepticism about "those who report." The current crisis of authority very much includes the news media, which in significant measure have abdicated their guiding principles of impartiality, objectivity and sometimes even accuracy.
Liberal media bias is an old complaint, but the Obama presidency has given it a new and dangerous form. Never has the prevailing bias of the media been so closely aligned with the ideological aims and political interests of the party in power. The American media remain free and independent, or you would not be reading this column. But to a large extent they have functioned for the past few years as if they were under state control.
The problem of media bias runs deep, and it often does not take the form of open partisanship. Here's an example, from a Washington Post story on the IRS scandal:
Nonprofit groups that do not have to pay taxes are supposed to ensure that political activity is not their primary purpose, so evidence that some of the new organizations seeking tax-exempt status were fronts for campaign organizations drew bipartisan interest. Good-government groups started pressuring the IRS to more closely scrutinize applicants. One such group, Democracy 21, wrote a series of letters to the IRS arguing that many of the groups should not receive favored tax status.
"In all of these cases, the groups were claiming (c)(4) status basically for the purpose of hiding their donors," said Democracy 21 President Fred Wertheimer.
There's a whole world of bias in that phrase "good-government groups." According to the Inspector General's report, one of the red flags the IRS used to identify dissident organizations for targeting was "education of the public via advocacy/lobbying to 'make America a better place to live.' " Tea Party organizations conceive of themselves as good-government groups, just as Democracy 21 does. The Post accepts the latter characterization, but not the former, unquestioningly.
Fred Wertheimer: Nonprofit status for me, but not for thee.
The description of Democracy 21 as a "good-government group" is especially inapt in this particular story. Wertheimer's organization wrote letters lobbying the IRS to take action against political groups of whose activities it disapproved. The IRS did Wertheimer's bidding, and in so doing massively abused its power. The IRS, not Wertheimer, is culpable for the abuse of power. But it is preposterous to label Democracy 21 "a good-government group" in the course of telling how its activities encouraged an abuse of governmental power.
"Good-government group" is a misleading designation for another reason. As we noted last week, Democracy 21 is itself a tax-exempt 501(c)(4) corporation. In lobbying the IRS to investigate nonprofits for engaging in political activity, Democracy 21, a nonprofit, was engaging in political activity.
That's not "good government," it's rent-seeking. A large, established corporation was seeking to use the regulatory power of the state to set up barriers to entry by smaller competitors. It is an exact parallel to the McCain-Feingold media's insistence that corporate free speech is an outrage against democracy. In making that claim, the New York Times and others almost never mention that "media corporations" were exempt from McCain-Feingold's unconstitutional censorship.
There's been a lot of talk about Watergate lately, most of it unintentional apophasis (or "Bimbo," to use the technical term). A very funny example is the lead paragraph of a column by the Chicago Tribune's Eric Zorn:
If it makes me a media lackey or a tail-wagging lap dog for President Barack Obama to hold out for, you know, actual evidence that he had anything to do with the various and glaring misbehavior, blundering and butt-covering in the governmental ranks before I begin invoking Watergate and floating the possibility of impeachment, then so be it.
Do go on, Eric. What was that you were saying about Watergate and impeachment?
As we wrote Friday, this will be a scandal like Watergate if it turns out that the IRS was acting under orders from Barack Obama or Valerie Jarrett. If the White House's conduct turns out to be unimpeachable, then it is something far worse: a sign that the government itself has become a threat to the Constitution.
But it's worth pondering how Watergate helped bring about the current crisis of authority. It oversimplifies matters only slightly to say the liberal left owes its cultural authority to three events in the 1960s and 1970s. The culmination of the civil-rights movement in 1964-65 established its moral authority. The antiwar movement's success at securing defeat in Vietnam established its political authority. Watergate discredited the Republican Party. (It also made heroes of journalists and provided impetus for restricting the political speech of those who are not media professionals.)
The political result of all this was more polarization. The ascendant left became dominant in the Democratic Party, driving conservatives into the Republican camp, which in turn encouraged liberal Republicans to become Democrats. The cultural result--the effect on journalistic, educational, charitable and scientific institutions--was both polarization and left-wing domination.
The left, certain of its moral authority, felt entitled to rule. The grandiose Barack Obama was the personification of that attitude, if not a caricature of it. The Portland Press Herald notes a lovely example from the newly released memoir of Maine's recently retired Sen. Olympia Snowe:
In an earlier phone call, Obama had told the Republican that she could be "a modern-day Joan of Arc" by supporting his health care bill, now known as "Obamacare." When Snowe pointed out Joan of Arc had been burned at the stake, Obama reportedly replied: "Don't worry, I'll be there with a fire hose!" She still voted against the bill on the Senate floor.
Try to imagine Lyndon Johnson or Bill Clinton making that pitch.
Moral authority entails a moral hazard: the temptation to abuse political and cultural power. Today's liberal left conceives of itself as being on the side of all that is good, right and reasonable. It caricatures the right as racist, extremist, greedy, dishonest, fanatically religious, prone to violence--and dangerous because, through the Republican Party, it has maintained parity in the political arena. Of the 10 presidential elections since Watergate, each party won 5; and voters haven't entrusted the Democrats with full control of government for more than two years since the Carter era.
If ordinary politics are a battle between good and evil, then winning becomes an overriding moral imperative. The end justifies the means: Journalists shade or conceal the truth in the service of a "larger truth." Government restricts political speech in the name of promoting democracy. Administrative agencies perpetrate injustice in the name of "social justice." That's how IRS agents could think it was their patriotic duty to help fix an election for the party in power.
These wrongful actions subvert the institutions with whose stewardship the perpetrators have been entrusted. They also undermine the moral authority of those institutions' leaders. National Journal's Ron Fournier offers five suggestions for how "Obama can restore the public's trust and rescue his presidency." None of the ideas are likely to achieve those goals, but three of them seem worthy: Bring in some adult supervision at the White House, appoint a special prosecutor for the IRS, and adopt a more media-friendly policy on leak investigations. One of them--"appoint a bipartisan oversight board to oversee the implementation of Obamacare"--won't fly. Even Republicans are savvy enough not to share responsibility for that fiasco.
But the final proposal is downright ludicrous: "Reset the narrative and public expectations with a major speech on trust." It's not just that Fournier continues to imagine, against all evidence, that Obama is a dazzling orator. He fails to see that whether or not the president is personally culpable in the scandals, they all flow from his basic political character. Fournier's fantasy that Obama could "reset the narrative" with a speech suggests that he has not yet abandoned the fantasy that Obama is some sort of savior.
If Obama is no savior, neither is he the devil. He is but a man who, through a combination of ambition, talent, character and luck, became the central figure in the left's crisis of authority. That crisis had been building for decades, seems to be reaching a culmination now, and will be resolved we know not how, except that we expect the process to be convulsive.
What if we're wrong? What if the country collectively shrugs, loses interest in politics, and goes on with life? Then we really will be like China--or worse. In his Saturday column, the New York Times's Charles Blow, who at 42 is just under a decade younger than Obama, shows us where the corruption of moral authority leads.
He begins by asserting that the Obama scandals are failing to "resonate" with the public. That claim is based on a single opinion poll, so it may prove evanescent even if true. But Blow's explanation of this purported fact is chilling:
As for Tea Party groups that received extra scrutiny from the I.R.S., an Associated Press-GfK poll released last month found that fewer than a fourth of Americans say they support the group. The Tea Party may well be passé. . . .
So an unpopular movement applied for tax-exempt status under conditions made possible by an unpopular court decision, in order to influence politics with unfathomable amounts money from unnamed donors? Good luck gaining sympathy for that.
This passage exemplifies the moral and intellectual decadence of the 21st-century left. A comparison to one of Blow's Times predecessors will illustrate why. Anthony Lewis, who retired in 2001 and died this March two days shy of his 86th birthday, was insufferably smug too. But it is impossible to imagine him crowing over the persecution of an out-group because it is unpopular.
One common argument against such persecution is a slippery-slope appeal to self-interest: You may be next. That's the gist of the famous Martin Niemöller poem:
When the Nazis came for the communists,
I remained silent,
I was not a communist.
When they locked up the social democrats,
I remained silent,
I was not a social democrat.
When they came for the trade unionists,
I did not speak up,
because I was not a trade unionist.
When they came for me,
there was no one
left to speak out.
The analogy isn't precise. When the U.S. government came for the Tea Party, Blow's colleagues on the Times editorial board did speak out--in support of its IRS effort. But what happens when they come for the mainstream media? Then, the editorial board speaks out. But Blow remains blasé:
It is clear that the Justice Department overreached on the Associated Press scandal and that its strong-arm tactics are likely to have a chilling effect. But Americans are not big fans of mass media. A November Gallup poll found that only a fourth of Americans rate the honesty and ethical standards of journalists highly. Even bankers ranked higher.
Not only is Blow untroubled by abuses of power at the expense of an out-group he loathes, but he's only mildly bothered by what he considers an abuse of power against his own kind, mainstream journalists. The next step after the corruption of authority, it would seem, is uncritical submission to it.
Let's again quote Barack Obama, from his May 5 commencement address at the Ohio State University:
Unfortunately, you've grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that's at the root of all our problems; some of these same voices also doing their best to gum up the works. They'll warn that tyranny is always lurking just around the corner. You should reject these voices. Because what they suggest is that our brave and creative and unique experiment in self-rule is somehow just a sham with which we can't be trusted.
His words were soothing, reassuring, like a lullaby. The scandals are a wake-up call.
Is democracy in peril? Is it really true that "we can't be trusted" with America's "brave and creative and unique experiment in self-rule"? That all depends on what the president meant by "we."
on: May 20, 2013, 08:28:02 PM
Started by Crafty_Dog - Last post by Crafty_Dog
Natural Gas Exports, Maybe
The feds approve one new terminal, with multiple caveats.
President Obama can't seem to decide whether America's unconventional oil and gas revolution is good for the country, which is resulting in passive-aggressive government. Witness last week's approval of a new natural gas export terminal that may not be a real approval.
On Friday the Department of Energy greenlighted the $10 billion Freeport LNG project at Quintana Island, Texas, though with an asterisk. Five years ago the facility was built for liquefied natural gas imports. Today the U.S. is the world's largest gas producer and amid the hydraulic fracturing and horizontal drilling boom could become a global supplier.
But only if the Administration gets its act together. Under a vestigial 1938 law, the feds must approve natural gas exports for countries with which the U.S. lacks free-trade agreements, including such trading partners as Japan. Freeport is only the second terminal to win this license, with 19 other applications outstanding, the longest of which has been waiting for 28 months.
The Energy Department ruling is encouraging as far as it goes, which is not very far. This regulatory laying on of hands is conditional and could be revoked at bureaucratic whim. And Energy provided no larger guidance about how it will handle permits going forward or what standards it will apply. The only leg Energy will show is a cryptic statement that it will process applications on "a case-by-case basis" and a promise (or threat) to assess "market developments" as terminals come on line.
This is silly because the U.S. already exports about as much natural gas every day via pipeline to Mexico and Canada as Freeport will export every year via liquefied gas on tankers. But it is also troubling because the DOE's review is based on the "public interest," rather than more objective standards like economic benefits.
The Excelsior arrives at the Freeport LNG (Liquid Natural Gas) terminal in Houston in 2008.
Plenty of DOE and other studies have demonstrated those benefits, but big business and the green lobby are kicking in unison against new exports. Some manufacturers (notably Dow Chemical DOW -0.59% ) want to restrict world commerce to preserve artificially low domestic feedstock prices. Never mind that the inability to export could depress the incentive to drill and raise domestic prices. Domestic supply is likely to follow rising global demand if market signals are allowed to work.
As for the greens, they don't want to expand the market for any carbon-based fuel, even one that would reduce global carbon emissions. They also worry that increased production of a cheap and abundant source of energy through fracking might mean fewer subsidies for windmills and solar farms.
The DOE approval genuflects to these political-protectionist impulses, explaining that "agency intervention may be necessary to protect the public in the event there is insufficient domestic natural gas for domestic use. There may be other circumstances as well that cannot be foreseen that would require agency action." Will the approval last? "We cannot precisely identify all the circumstances under which such action would be taken."
Regulatory indecision is nearly as much of a threat to gas development as political opposition in an ultra capital-intensive industry. This month Japan's Mitsubishi and Mitsui and France's GDF Suez GSZ.FR +0.36% committed to invest $6 billion to $7 billion in a Louisiana LNG development backed by the U.S. Sempra Energy SRE +0.18% —assuming regulatory approval.
Such deals will wither if regulatory uncertainty grows. A barrage of federal regulations and enforcement decisions over the last several years means that natural gas permits that used to take 60 days now require up to 18 months, and projects that used to win approval in a year take three times that.
The danger is that the U.S. is lilting into a system in which politicians second-guess markets and decide how much of America's natural gas assets to sell abroad. All the more so given that big business and the green lobby are the constituencies the White House tends to listen to. The Senate Energy Committee holds two hearings this week on gas exports, and maybe someone can get a straight answer out of DOE.
on: May 20, 2013, 08:25:49 PM
Started by Crafty_Dog - Last post by Crafty_Dog
China Eco-Boosterism, Revisited
Why did Western liberals think China was a model for environmentalism?
By BRET STEPHENS
Once upon a time the future belonged to China—and China was going to be green. Greener than the hills of olde England.
"China is pulling ahead on the environment," was the title of a 2009 column in Forbes. "China is pushing ahead on renewable technologies with the fervor of a new space race," Peter Ford reported in the Christian Science Monitor the same year. "Green Giant" was the title of a 7,000-word thumb-sucker by Evan Osnos in the New Yorker, which spelled out the scale of the Chinese government's investment in green tech.
And there was this: "Being in China right now," wrote Tom Friedman of the New York Times in January 2010, "I am more convinced than ever that when historians look back at the end of the first decade of the 21st century, they will say that the most important thing to happen was not the Great Recession, but China's Green Leap Forward. The Beijing leadership understands that the E.T.—Energy Technology—revolution is both a necessity and an opportunity, and they do not intend to miss it."
Well, all of us columnists have off days.
The heady optimism of four years ago has now given way to more sober views, thanks to the accretion of facts. Facts like 16,000 dead pigs floating down Shanghai's Whampoa river in March. Or the worst air pollution on record in Beijing in January, with levels of tiny particulate matter reaching levels 25 times higher than the standard in the U.S. Or 80% of the East China Sea lost to fishing because of the pollution, according to Elizabeth Economy of the Council on Foreign Relations. Or 1.2 million premature deaths due to air pollution, according to the Global Burden of Disease Study.
Another nugget: "A recent social media campaign led by locals and international activists shed light on the growing phenomena of 'cancer villages'—areas where water pollution is so bad that it has led to a sharp rise in diseases like stomach cancer," wrote Thomas Thompson last month in Foreign Affairs. "The China Geological Survey now estimates that 90% of China's cities depend on polluted groundwater supplies. Water that has been purified at treatment plants is often recontaminated en route to homes."
Kosher it isn't.
Think about that one as you plan your family holiday in the Middle Kingdom. But think also about how the minters of conventional wisdom managed to get it so totally wrong about China's environmental prospects, even as the reality of China's environment burns into your lungs the moment you step outside the airport terminal.
One explanation is that the media's China boosterism was really Obama boosterism in disguise, following the rule that the best way to promote statism at home is to point to (alleged) successes of statism abroad.
"The Obama administration is busy repairing the energy legacy of its predecessor," wrote Mr. Osnos. "The stimulus package passed in February  puts more than $38 billion into the Department of Energy for renewable energy projects. . . . Obama vowed to return America's investment in research and development to a level not seen since the space race. 'The nation that leads the world in the 21st century clean energy will be the nation that leads in the 21st century global economy,' [Mr. Obama] said recently."
It's hard to say, in the midst of the shale revolution, whether it's Mr. Obama or his media ventriloquists who sound sillier. But an even sillier mistake was to conflate "green energy" and other supposedly environment-friendly investments with the interests of the environment itself. "Green," in other words, should not be confused with green.
So it is with China, which is installing wind turbines and producing solar panels at world-beating rates. But as the Manhattan Institute's Robert Bryce keeps pointing out, renewables will never substitute for traditional fuels. Had China invested the money and time it wasted on renewables into developing its shale resources and seeking to substitute coal with gas it would be on its way to a greener future. That's something the Sierra Club might consider in its fervid opposition to fracking, given that Chinese contaminants account for most of the pollution in California's Lake Tahoe.
Finally, there is the little matter of corruption. Western liberals adore the China model because they think being "China for one day" can force the kind of sweeping environmental legislation that democratic, interest-group driven politics prevents.
But the biggest reason China is so filthy isn't a lack of environmental legislation. It's rampant corner-cutting by unaccountable politicians and managers at state-owned enterprises trying to meet production quotas. Statism always wrecks the environment.
That's a lesson you might have thought Western liberals would have learned following the collapse of the Soviet Union and all the environmental rot it exposed. Instead, it didn't even occur to them that enthusing about a "Green Leap Forward" didn't exactly hark back to an auspicious historical precedent.
But then, the left never learns. Let's just hope the current Leap Forward doesn't prove as catastrophic as the last one.
on: May 20, 2013, 08:23:54 PM
Started by G M - Last post by Crafty_Dog
A Journalist 'Co-Conspirator'
The feds accuse a Fox reporter of criminal behavior for doing his job.
Ok, we've learned our lesson. Last week we tried to give the Obama Administration the benefit of the doubt over its far-reaching secret subpoenas to the Associated Press, and now we learn that was the least of its offenses against a free press. No attempt to be generous to this crowd goes unpunished.
The latest news, disclosed by the Washington Post on Monday, is that the Justice Department targeted a Fox News reporter as a potential "co-conspirator" in a leak probe. The feds have charged intelligence analyst Stephen Jin-Woo Kim with disclosing classified information to Fox reporter James Rosen. That's not a surprise considering that this Administration has prosecuted more national-security cases than any in recent history.
The shock is that as part of its probe the Administration sought and obtained a warrant to search Mr. Rosen's personal email account. And it justified such a sweeping secret search by telling the judge that Mr. Rosen was part of the conspiracy merely because he acted like a journalist.
In a May 2010 affidavit in support of obtaining the Gmail search warrant, FBI agent Reginald Reyes declared that "there is probable cause to believe that the Reporter has committed or is committing a violation" of the Espionage Act of 1917 "as an aider and abettor and/or co-conspirator." The Reporter here is Mr. Rosen.
And what evidence is there to believe that Mr. Rosen is part of a spy ring? Well, declares Mr. Reyes, the reporter published a story in June 2009 saying that the U.S. knew that North Korea planned to respond to looming U.N. sanctions with another nuclear test. That U.S. knowledge was classified. But the feds almost never prosecute a journalist for disclosing classified information, not least because reporters can't be sure what's classified and what isn't.
We can recall only a single such prosecution of a journalist under the Espionage Act in 95 years. Julian Assange of WikiLeaks, who isn't a journalist, published far more damaging leaks but has never been indicted for it.
To add to his cloak-and-dagger hype, Mr. Reyes also makes much of the fact that Mr. Rosen used an alias, "Alex," while his alleged source Mr. Kim used the alias, "Leo." Believe it or not, Mr. Rosen also disclosed in one email that he is interested in "breaking news ahead of my competitors." And he even went so far as to urge "Leo" to help him "expose muddle-headed policy when we see it—or force the administration's hand to go in the right direction, if possible."
On the evidence of five years in office that isn't possible, but trying isn't a criminal motive. And if working with a source who uses an alias is now a crime, we've come a long way from the celebration of Bob Woodward and "Deep Throat."
The best face on these accusations is that Mr. Reyes was playing up the conspiracy angle to get the judge to approve a more sweeping search, which he did. The feds were then able to read widely in Mr. Rosen's personal email account, and thus potentially use it against him.
As with the AP subpoenas, this search is overbroad and has a potentially chilling effect on reporters. The chilling is even worse in this case because Mr. Rosen's personal communications were subject to search for what appears to be an extended period of time. At least in the AP case, the subpoena was for past phone logs during a defined period. The message is that anyone who publishes a story the Administration dislikes can be targeted for email searches that could expose personal secrets.
Mr. Reyes is far exceeding his brief here, but the larger fault lies with higher-ups. U.S. Attorney Ronald Machen, who is conducting the AP and Kim leak investigations, clearly has little regard for normal Justice standards and protocol for dealing with the media. Such a sweeping probe should also have been approved by senior Justice officials, at least by the Deputy Attorney General.
With the Fox News search following the AP subpoenas, we now have evidence of a pattern of anti-media behavior. The suspicion has to be that maybe these "leak" investigations are less about deterring leakers and more about intimidating the press. We trust our liberal friends in the press corps won't mute their dismay merely because this time the target is a network they love to hate.
on: May 20, 2013, 08:21:52 PM
Started by Crafty_Dog - Last post by Crafty_Dog
David Rivkin and Lee Casey: The IRS and the Drive to Stop Free Speech
Such a scandal was bound to happen after the government started trying to rule the expression of political views.
By DAVID B. RIVKIN JR. AND LEE A. CASEY
The unfolding IRS scandal is a symptom, not the disease.For decades, campaign-finance reform zealots have sought to limit core political speech through spending limits and disclosure requirements. More recently, they have claimed that it is wrong and dangerous for tax-exempt entities to engage in political speech.
The Obama administration shares these views, especially when conservative, small-government organizations are involved, and the IRS clearly got the message. While the agency must be investigated and reformed, the ultimate cure for these abuses is to unshackle political speech by all groups, including tax-exempt ones, from arbitrary and unconstitutional government regulation.
Beginning in March 2010, the IRS engaged in an unprecedented campaign of harassment against conservative groups, either through denials or delays in approving their tax-exempt-status applications, or through endless and burdensome audits.
In notable contrast, liberal and "progressive" organizations got approvals with remarkable speed. The most conspicuous example involves the Barack H. Obama Foundation, which was approved as tax exempt within a month by the then-head of the IRS tax-exempt branch, Lois Lerner. From media reports and firsthand accounts, we also know that the IRS disproportionately audited donors to conservative causes and leaked confidential tax information concerning conservative groups in violation of federal law.
This IRS politicization is not an isolated problem. It is an inevitable result of the broader efforts to regulate and, in fact, suppress political speech.
The IRS crackdown on tax-exemption approvals for conservative groups was directed at nonprofit social-welfare groups, often called 501(c)(4)s after the Internal Revenue Code section granting them tax-exempt status. Such groups do not have to disclose their donors and are exempt from most taxation, although donations to them generally aren't tax deductible.
Social-welfare organizations are permitted to engage in a range of political activities promoting their causes or beliefs, so long as these activities aren't their "primary purpose." This has been generally understood to mean that they must spend less than 50% of their total resources on political activities.
The IRS had little interest in 501(c)(4) political activities until the 2002 McCain-Feingold campaign-finance reform. That law barred dedicated political-advocacy groups from soliciting and spending soft money—funds that aren't subject to tight federal campaign-contribution limits and are used for issue advocacy and party-building.
This IRS restraint was doubtless reinforced by the fact that virtually all politically active (c)(4)s, mostly labor and environmental groups, were ideologically liberal and their activities were not attacked in the mainstream media or by the political establishment. Meanwhile, Republicans financed their political activities largely through candidate-specific campaigns and party and congressional committees.
Yet McCain-Feingold had the unintended effect of making 501(c)(4) political activities far more important than they had been, since the law's ban on soft money doesn't apply to such groups. Thus, it prompted the creation of conservative 501(c)(4)s—although there is little hard evidence of improper political activities by any such groups, whether liberal or conservative.
The Supreme Court's 2010 decision in Citizens United further increased the importance of the groups by invalidating the restrictions against much political speech by corporations. This freed 501(c)(4) groups, which ordinarily are organized as corporations, to engage in the express advocacy of political causes and candidates.
The Obama administration made clear its deep dislike of Citizens United and of the various new conservative groups spawned by the "tea party" movement. The IRS bureaucrats took the hint. No express order from senior administration officials would have been necessary. Like other federal enforcement agencies, the IRS has always been well-attuned to even subtle guidance from the White House, Congress and the political establishment.
Thus, the IRS crackdown on conservative organizations was a direct and inevitable consequence of political and policy messaging by the Obama administration, and by the campaign-finance reformers who share these views. Congressional Democrats are also to blame, since many of them have publicly—as with Max Baucus, chairman of the Senate Finance Committee, which oversees the IRS—or privately urged the IRS to go after conservative tax-exempt organizations.
Ignoring their own share of responsibility, campaign-finance reformers and their allies are now pressing to broaden the IRS crackdown to apply to all tax-exempt organizations. In their view, the problem is not only with express political advocacy, but with all tax-exempt activities that might have political overtones, or be related to political issues. Indeed, many argue that such organizations should be conspicuously apolitical.
This is wrong as a matter of law and policy. Congress doesn't have to provide tax-exempt status to social-welfare organizations, but having done so it cannot discriminate by the kind of advocacy in which such groups engage. To say that such activities can have no political implications is an insult to common sense. In a vibrant democracy, every major policy debate has political implications.
The spirited debate about policy issues should be at the core of social-welfare organizations. Politics is how we govern ourselves and political speech is essential to self-governance. The fact that 501(c)(4) group contributors aren't subject to campaign disclosure requirements is a good thing.
There is nothing inherently evil about anonymous political speech. It is firmly anchored in our political and legal culture and was used by the Framers during the founding. Hamilton, Madison and Jay published their Federalist Papers under a pseudonym. The fact that the IRS was able to target conservative donors—similar to the way donors to the NAACP were targeted at the height of the civil-rights battles—shows how disclosure can lead to speech-suppressing government actions.
The courts have long held that the IRS cannot use subjective, "value-laden" tests in administering nonprofit status. As the Court of Appeals for the D.C. Circuit stated in one leading case, Big Mama Rag, Inc. v. United States (1980): "although First Amendment activities need not be subsidized by the state, the discriminatory denial of tax exemptions can impermissibly infringe free speech."
The proper lessons of the unfolding IRS scandal are twofold. First, any effort to have the IRS police advocacy activities of social-welfare organizations is bound to be clumsy and prone to degenerate into either selective or broad witch hunts. Second, the remedy is not to further limit political speech by nonprofit entities—which would certainly raise significant constitutional issues—but to encourage such speech by imposing fewer restrictions.
Messrs. Rivkin and Casey served in the Justice Department during the Reagan and George H.W. Bush administrations. They are partners in the Washington, D.C., office of Baker & Hostetler LLP.