Asymmetrical Information - Megan McArdle

05.16.13

Yes, What Happened at the IRS is a Scandal

It's not the president's fault. But the rest of us should still care.

What, exactly, consitutes a scandal at the IRS?  

To hear Democrats talk, a scandal would be: Barack Obama sat down with Timothy Geithner, and said "Tim, I'd like you to make sure that those Tea Party groups don't get tax exempt status.  Hassle the hell out of 'em until they cry 'Uncle'."  Timothy Geithner said "Yes sir" and got on the horn with the IRS commissioner to make it so.  

There's no evidence that this happened.  I'll go further and say that there never will be any evidence that this happened, because it didn't happen.   Even if you think Barack Obama and Tim Geithner were stupid and vicious enough to do something like that (I don't), the IRS commissioner at the time was a Bush appointee.  Any such request would have stopped with him. And whatever Republican congressional attack dogs he chose to share it with, of course.

So no, this isn't the type of scandal that will take down a presidency.  But nonetheless, the behavior of the IRS was scandalous.  Scandalous even though I doubt that anyone, at any time, sat down in a meeting and said, "none of those tea-partiers are going to get a tax exemption on our watch, eh?"

Rather, I suspect that two forces were at play.  The first is that, as Tim Carney has reported, the IRS office that started this seems to lean heavily Democratic (even more so than the IRS as a whole).  And the second is that government agencies have a tendency to be unfriendly to groups that are unfriendly to them.  It's hard to get enthusiastic about helping someone who spends a lot of time arguing that you should lose your job.  

I don't know that anyone in Cincinnati, or Washington, even consciously understood that what they were doing was cracking down on people who had political beliefs they dislike.  (The crackdown on pro-life groups, if true, is harder to excuse).  No, I'm not just making mealymouthed excuses.  As I've written before, bias doesn't have to be conscious to be a problem.  A lot of times, it's simply a case of what attracts your attention as worthy of further investigation.  If you're a liberal, sad stories about uninsured people just seem more interesting than sad stories about businesses struggling under the burden of new Obamacare mandates.  And of course, if you're a conservative, the reverse is probably true.  If you're a staunch Democrat, and you work for the tax agency, then a group of angry people talking about how taxation is theft seem obviously political, while a group of angry people talking about how the environment is being destroyed seem more like a social welfare group trying to protect our precious natural resources.

But here's the thing: the government's job is to be evenhanded, even with folks who don't like the job they're doing.  The IRS clearly failed at this mission, singling out conservatives for more intense inspection than liberals.  Moreover, their story for why they did so makes no sense.  The IRS claims that they had to come up with a way to cope with a spike of 501(c)(4) applications from political groups inspired by the growing Tea Party movement, and the Supreme Court's Citizens United decision striking down parts of McCain Feingold.  But according to the Chronicle of Philanthropy, the decision to single out the tea party came before the spike in applications; indeed, at the time, applications were falling slightly.  Moreover, even if it was true that conservatives were actually flooding the IRS with applications in early 2010, a random sample would have turned up mostly conservative groups without the office needing to resort to searches for phrases like "Tea Party" and "Patriot".  

Which makes it hard to believe that this wasn't bias at work.  A natural, understandable bias.  But also a sort of bias that a responsible government worker is expected to fight.  

It looks very much like the Cincinnati office didn't try, and like the people who were supposed to be managing them flubbed their responsibility to ensure that the office was doing its job in an evenhanded manner.  Coming from arguably the most powerful agency in government, that's a real scandal.  Even if it doesn't take down a president.