A Senate hearing into the ongoing IRS scandal produced more heat than light Tuesday, with Republicans expressing skepticism that midlevel IRS employees could undertake on their own the political targeting that an inspector general’s report uncovered, while Democrats on the Senate Finance Committee cited confusion over vague standards suddenly being applied to an onslaught of quasi-political groups seeking tax-exempt status.
It was the first public grilling since the scandal broke for former IRS commissioner Doug Shulman, who was appointed by President Bush in 2007 and served until November of last year. He stressed that he had been out of the IRS for six months and that when he read the IG’s report last week, he was “dismayed and saddened” by the “gross mismanagement of this program.”
Shulman said he learned about the existence of a BOLO list, a police term for “be on the lookout for,” in the spring of 2012. He was told “Tea Party” was on the list, but knew of no other words used to single out groups for additional scrutiny. He said he was told the practice had stopped and the IG was looking into it, and from his perspective that was it.
His refusal to say more directly that what happened was his responsibility as commissioner infuriated the lawmakers. Kansas Republican Pat Roberts pressed Shulman, a soft-spoken individual who had a deer-in-the-headlights look throughout his more than three hours at the witness table, to say he accepted responsibility. “Three words,” Roberts goaded.
Texas Republican John Cornyn picked up where Roberts left off, saying, “So the buck doesn’t stop with you.” That elicited a response from Shulman, the closest he would come to the apology that the senators demanded: “I certainly am not personally responsible for creating a list that had inappropriate criteria on it. This happened on my watch, and I very much regret that it happened.”
Democrat Max Baucus, who chairs the tax-writing committee, set the tone in his opening statement as to where he thinks at least some of the responsibility lies and what should happen next. He assailed the proliferation of groups “masquerading as social-welfare groups” in order to gain a tax status that will allow them to engage in political activity and raise money without disclosing their donors. He quoted the finding of OpenSearch.org that these groups spent $254 million in the 2012 election, an amount equal to that spent by the Republican and Democratic parties. “This is all secret money,” he said. “A Mack truck is being driven through the 501(c) loophole,” the provision that grants tax exempt status to nonprofits and “social welfare” groups who claim their primary activity is not political.
Baucus called Priorities USA, which promotes the Obama administration, and Crossroads GPS, founded by GOP strategist Karl Rove, “the two big guerrillas in the room.” Neither group is the focus of the current scandal, but that’s where the abuse seems to be, in terms of dollars, said Baucus. “Holy mackerel, in the wake of Citizens United, it doesn’t take rocket science to know what’s going on here.” The challenge for Baucus, who has announced he will not run again, is to use his clout as chairman of the Finance Committee to have Congress step up to its responsibility for what went awry by rewriting and clarifying the statute governing these groups or do it by regulation.
Acting Commissioner Steven Miller, who turned in his resignation last week, repeated the apology he made to a House committee for mistakes and poor customer service and took responsibility for the events that brought the scandal to light 11 days ago. It was his idea, he said, to have Lois Lerner, the IRS official who heads the Exempt Organizations Division, plant a question at a meeting of tax lawyers in Washington to ask her whether the IRS targets conservative groups. Her affirmative answer opened the political floodgates.
Why did he think it was a good idea to have a government employee secretly plant a question? “Obviously the whole thing was an incredibly bad idea,” Miller said. “I thought mistakenly we should get in front and apologize, then reach out to the Hill—we were wrong.”
The question of who knew what when reaches beyond the White House to the Treasury Department and to Capitol Hill. Inspector General Russell George, testifying alongside Miller and Shulman, said he routinely briefed Deputy Treasury Secretary Neal Wolin and Rep. Darrell Issa, the chair of the government-reform committee, last summer about the report he had in the works on the improper targeting of conservative groups.
That would have been in the middle of a contentious presidential campaign, prompting Sen. Orin Hatch, the ranking Republican on the committee, to observe, “Were top IRS officials willfully blind to what was going on, or were they holding out until after the election?” Hatch was furious that he had written some four letters to the IRS on behalf of conservative groups experiencing unwarranted scrutiny and that the responses he received were not truthful. “This was a lie by omission,” Hatch said. “I did not lie,” protested Miller, who claimed he answered the questions posed in the letters. “You lied by omission,” Hatch exclaimed. “You knew we were concerned, and you knew this was going on.”
“No finding of political motivation is almost beyond belief,” declared Republican Sen. Mike Crapo. He pressed the IG, George, to explain how he arrived at that conclusion. Based on interviews with the people involved and their assertions that they had no contact with people beyond the IRS, George replied. But the IG report is an audit, not an investigation, and the interviews were not sworn testimony, so when Crapo asked the IG whether he could say there was no political motivation, or that it was more accurate to say he has not found it, George conceded it was the latter.
Miller was more forthcoming in his testimony than Shulman, who seemed intent on preserving what distance he could from the internal workings of the agency he headed. When lawmakers pressed for who originated the BOLO list, Miller said he could share names off camera, but that there was “less clarity” about who ordered it resumed in May 2012 after Lois Lerner had ordered the practice stopped in July 2011. “How can we come to the conclusion it is not politically motivated if we don’t know the identity?” asked Colorado Democrat Michael Bennet. “It’s frustrating to have no answers in a hearing like this. Who made the decision to resume? It doesn’t seem like it’s asking too much.”
Republicans will get another crack at finding a link to the White House on Wednesday, when Lerner and Wolin appear before a House committee. “There must have been a directive from Washington,” Republican Sen. Pat Roberts said Tuesday, expressing the certainty he and his colleagues feel that there must be more here. He said the evasiveness reminds him of his 4-year-old granddaughter, who, when she’s in trouble, puts her hands over her eyes and says, “You can’t see me.” That’s not quite what the White House is doing, but so far President Obama’s Teflon is holding.