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IG Report Says IRS Has No Idea What Its Own Rules Mean

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| Tue May. 14, 2013 6:56 PM PDT

The Inspector General's report on the targeting of tea party groups by the IRS is now out, and I was hoping there might be some interesting tidbits now that we can see the whole thing. Not really, though. Mainly, it paints a drearily predictable picture of bureaucratic FUBARism, with various groups in various places either misunderstanding each other; not responding to each other; or assuming that stuff was getting done that, in fact, wasn't getting done. Anyone who reads Dilbert regularly gets the picture.

But the soporific paragraph below actually tells us something pretty important. In fact, it's the heart of the whole issue:

In April 2012, the Senior Technical Advisor to the Acting Commissioner, Tax Exempt and Government Entities Division, along with a team of EO function Headquarters office employees, reviewed many of the potential political cases and determined that there appeared to be some confusion by Determinations Unit specialists and applicants on what activities are allowed by I.R.C. § 501(c)(4) organizations. We believe this could be due to the lack of specific guidance on how to determine the “primary activity” of an I.R.C. § 501(c)(4) organization. Treasury Regulations state that I.R.C. § 501(c)(4) organizations should have social welfare as their “primary activity”; however, the regulations do not define how to measure whether social welfare is an organization’s “primary activity.”

Did you get that? IRS regs say that 501(c)4 groups can't primarily be engaged in political activity. Instead, their "primary activity" has to be social welfare. To call this vague would be a disservice to mirages and chimeras everywhere. How the hell are actual human beings sitting in cubicles in Cincinnati supposed to decide whether a group is planning to spend more than 50 percent of its time engaged in something other than social welfare? For that matter, how are they supposed to decide what "social welfare" is in the first place?

The IG report recognizes this, and Recommendation 8 in its audit is that this really needs to get resolved at a policy level, not a line level:

Recommend to IRS Chief Counsel and the Department of the Treasury that guidance on how to measure the “primary activity” of I.R.C. § 501(c)(4) social welfare organizations be included for consideration in the Department of the Treasury Priority Guidance Plan.

Good luck with that! Frankly, I think it's a mug's game. There's really no way to define this in any kind of rigorous way, and even if you could, how would you apply it to organizations that are merely applying for 501(c)4 status? In the wake of Citizens United, this whole section of the Internal Revenue Code is a definitional witch's brew that admits of no sensible resolution. If we had a functioning Congress, I'd suggest that they should address this from the ground up and provide a set of guidelines that makes sense in the modern world. But I don't suppose that's very likely, is it?

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Could Federal Seizure Be the Beginning of the End for Bitcoin?

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| Tue May. 14, 2013 5:03 PM PDT

In what may be the first move toward a federal shutdown of the wildly popular online currency known as Bitcoin, the Department of Homeland Security today issued an order that has restricted the transfer of funds in and out of Mt. Gox, the Bitcoin exchange that handles some 60 percent of the transactions.

A creation of bank-fearing techies, Bitcoins are now worth more than $1 billion, and consumer interest has been skyrocketing. For more background, read our Bitcoin explainer.

[Read more]

Elizabeth Warren to Obama Administration: Take the Banks to Court, Already!

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| Tue May. 14, 2013 4:34 PM PDT
Ron Sachs/DPA/ZUMAPress

On Tuesday, fierce consumer advocate and needler of banks Sen. Elizabeth Warren (D-Mass.) called out Wall Street regulators for their habit of giving tepid punishments to misbehaving banks, and asked the agencies to justify their policy of settling with the wrongdoers out of court.

Warren sent a letter to the Justice Department, as well as to the Securities and Exchange Commission and the Federal Reserve, asking them for evidence on how a settlement that doesn't require a bank to admit guilt would be better policy than taking the bad apple to trial. If regulators at least show that they are willing to play tough, she argued, it will help deter bad behavior and allow regulators to negotiate bigger fines in the event of a later settlement.

[Read more]

BREAKING: United States No Longer Going Bankrupt

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| Tue May. 14, 2013 3:05 PM PDT

The CBO has released its latest budget projections, and guess what? The medium-term national debt has stabilized. Hooray!

You might still not be happy about this. Maybe you won't be happy until debt drops back down to Carter-era levels. That's fine. It's a free country, after all. But for the next decade, at least, the trendlines are no longer shooting upward, and if the economy continues to improve the trendlines will look even better. So no more screaming about how the country is going bankrupt, OK?

Word of the Month for May: BOLO

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| Tue May. 14, 2013 2:43 PM PDT

Here's my favorite part of the IRS scandal yet. According to the Inspector General's report, the Cincinnati office of the IRS developed an acronym for "Be On the Look Out." Yep, they turned it into BOLO. Apparently the spreadsheet which listed words and phrases that might indicate political activity became known as the "BOLO Listing." I expect this to take Twitter by storm any second now.

UPDATE: Pardon my ignorance. Turns out this is a standard police term. A "BOLO alert" is issued when police are trying to find someone suspected of a crime. I guess the IRS appropriated the term, they didn't invent it.

Why "Feticide" Charges Are More Complicated Than They Seem

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| Tue May. 14, 2013 2:38 PM PDT

Prosecutors in Ohio have indicated that they will seek murder charges against Ariel Castro, the man they believe kidnapped, tortured, and imprisoned three women in his house for roughly a decade. The murder charges stem from reports that he raped, impregnated and abused one of the women, Michelle Knight, causing her to miscarry multiple pregnancies.

"I fully intend to seek charges for each and every act of sexual violence, rape, each day of kidnapping, every felonious assault, and each act of aggravated murder for terminating pregnancies that the offender perpetrated," Cuyahoga County Prosecutor Timothy McGinty said at a news conference late last week. Ohio prosecutors are assessing whether they could seek the death penalty against Castro.

Thirty-eight states have laws on the books that make killing a fetus in a violent act a separate crime from the harm done to the pregnant woman, according to the National Conference of State Legislatures. Ohio has had a feticide law since 1996. Although there is broad agreement on the idea that Castro should be prosecuted for his alleged crimes, the use of this type of "feticide" law makes some in the world of reproductive rights and law nervous, since these laws move toward the kind of "fetal personhood" measures that anti-abortion groups have tried to push to define a fetus as a full and separate human being.

"What Castro is accused of doing is so horrendous it defies comprehension. He allegedly forced Ms. Knight to become pregnant, and then forced her to miscarry—nobody disagrees that he should be punished for this," Farah Diaz-Tello, a staff attorney at National Advocates for Pregnant Women, told Mother Jones. "But when the law treats fertilized eggs, embryos, and fetuses as legally separate from the pregnant women who carry them, the door is open to a host of problematic consequences for pregnant women."

The concern is that this sort of law could in turn be used to prosecute women for seeking an abortion or other potential or perceived harms to a fetus. And as I've reported here before, women already have been prosecuted under this type of law in some states.

Lindsey Beyerstein has a great piece at RH Reality Check looking at the legal issues at hand in the case. Michelle Goldberg also makes an elegant argument against the murder charge at The Daily Beast:

But if he is convicted of capital murder, it will ultimately be an injustice—not to him, but to the rest of us. That's because it will mean that legally, ending a pregnancy is a greater crime than keeping three human beings locked in a squalid dungeon for a decade. Such a precedent will have implications beyond this terrible case.

Emily Bazelon made a similar point about this over at Slate. As Diaz-Tello puts it, "The acts of torture Castro allegedly committed against these three women are certainly more than enough to put him away for life without going down roads that lead to locking up pregnant women."

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John Kerry Updates His Climate Change Creds at the Arctic Council

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| Tue May. 14, 2013 2:13 PM PDT
Polar bear image by Patrick Kelley / US Coast Guard via US Geological Survey at Flickr. John Kerry photo courtesy the US Congress at Wikimedia Commons.

Secretary of State John Kerry is headed to Kiruna, Sweden, tomorrow, 14 May, for a ministerial meeting of the Arctic Council, the only diplomatic forum focused exclusively on the Arctic region. Members represent the eight nations with territory north of the Arctic Circle (Canada, the US, Denmark, Finland, Iceland, Norway, Russia, and Sweden), plus representatives of Arctic indigenous peoples. The Council's concerns include a broad swath of environmental issues stemming from a wildly changing global climate amplified in the Arctic.

The meeting comes 25 years after Kerry hosted climate change hearing with Al Gore in the Senate and nothing happened. This year's Arctic Council is focused on mitigating a future oil spill as drilling in the far north ramps up. Ministers will be signing of an historic Arctic Marine Oil Pollution Preparedness and Response Agreement. The State Department describes this as an agreement that will "forge strong partnerships in advance of an oil spill so that Arctic countries can quickly and cooperatively respond before it endangers lives and threatens fragile ecosystems."

Sounds great, except we can't contain offshore spills, no matter the level of cooperation. Still, Kerry's attendance will boost interest in an obscure Council and the problems—for most—of a faraway place. 

Attorney General Eric Holder Orders Investigation of IRS

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| Tue May. 14, 2013 1:27 PM PDT

At a Tuesday press conference, Attorney General Eric Holder announced that he had ordered the Justice Department and FBI to investigate whether the Internal Revenue Service violated the law by subjecting tea party groups applying for tax-exempt nonprofit status to special scrutiny. Other dark money organizations that have drawn criticism from advocates of campaign finance reform, including the pro-Obama Priorities USA and Karl Rove's Crossroads GPS, have received little attention from the IRS.

The controversy, which was first reported on Friday, is the latest in a long line of alleged IRS witch hunts against specific political and religious organizations.

The New York Times reports:

The activities of I.R.S. officials are already the subject of an investigation by the agency's inspector general. The results of that inquiry, which are expected in the next several days, are likely to detail how officials at the agency selected political groups for extra scrutiny about their tax status.

...

The attorney general said there were "a variety of statutes within the I.R.S. code" that could be the basis of a criminal violation. He said officials conducting the investigation would also look at "other things in Title 18" of the United States Code. Title 18 is the overall criminal code for the federal government.

During a concurrent press conference, White House press secretary Jay Carney said that "if the reports about the activity of IRS personnel prove to be true," President Barack Obama "would find them outrageous, and he would expect that appropriate action be taken, and that people be held responsible. He has no tolerance for targeting of specific groups."

What We Now Know About the CIA's Benghazi Turf War

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| Tue May. 14, 2013 12:19 PM PDT

The more we find out about the editing of the Benghazi talking points, the more the evidence points in one direction: this was a CIA fiasco from the start. As we all know by now, the Benghazi mission was primarily a CIA operation, and they were the ones responsible for security there. But when it came time to write up talking points for public consumption after the September 11 attacks, they immediately started trying to shift blame. Here is David Brooks writing about the role of State Department spokesman Victoria Nuland:

On Friday evening of Sept. 14, the updated talking points were e-mailed to the relevant officials in various departments, including Nuland....[She] noted that the talking points left the impression that the C.I.A. had issued all sorts of warnings before the attack.

Remember, this was at a moment when the State Department was taking heat for what was mostly a C.I.A. operation, while doing verbal gymnastics to hide the C.I.A.’s role. Intentionally or not, the C.I.A. seemed to be repaying the favor by trying to shift blame to the State Department for ignoring intelligence.

Marcy Wheeler had a more pungent assessment a few days ago:

In other words, the story CIA — which had fucked up in big ways — wanted to tell was that it had warned State and State had done nothing in response....The truthful story would have been (in part) that CIA had botched the militia scene in Benghazi, and that had gotten the Ambassador killed.

Today Jake Tapper tells us that previous reports about the role of Deputy National Security Adviser Ben Rhodes have also been mistaken. Rhodes didn't say anything to suggest that the White House was concerned with protecting the State Department's repution. All he said was this: "We need to resolve this in a way that respects all of the relevant equities, particularly the investigation." The next day, when everyone got together to vet the talking points, they were stripped down to their final mushy state.

Greg Sargent has more here. This was, pretty clearly, a turf war, and the evidence increasingly suggests it was a war started by the CIA. The State Department has already largely owned up to its own failures in the ARB report released last year. So far, though, the CIA hasn't.

Today's Austerity Smackdown: US vs. UK

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| Tue May. 14, 2013 11:27 AM PDT

This chart is making the rounds today, so I might as well join in the fun. It shows how well the U.S. economy has recovered from the recession compared to Great Britain. The Tory approach in Great Britain has famously been based on austerity measures, and it sure doesn't seem to be working all that well. Karl Smith provides the caveats:

The UK has an infamous productivity puzzle, that has allowed it to add jobs even as GDP stalls. The UK is more closely tied to the crumbling Eurozone economy. The UK has seen its energy resources dwindle while the US has seen them explode. The United States has seen a good deal more austerity than its President would have liked.

All true, and these things point in different directions. That said, austerity doesn't seem to be working in Britain and it's not working in the rest of Europe either. So why are Republicans so hellbent on emulating them?