Another Bit of Collusion Evidence

Shane Harris reports at The Wall Street Journal that Republican oppo guy Peter W. Smith -- now deceased -- tried to get Clinton emails stolen by Russian hackers.

Mr. Smith died at age 81 on May 14, which was about 10 days after the Journal interviewed him. His account of the email search is believed to be his only public comment on it.

The operation Mr. Smith described is consistent with information that has been examined by U.S. investigators probing Russian interference in the elections.

Those investigators have examined reports from intelligence agencies that describe Russian hackers discussing how to obtain emails from Mrs. Clinton’s server and then transmit them to Mr. Flynn via an intermediary, according to U.S. officials with knowledge of the intelligence.

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In the interview with the Journal, Mr. Smith said he and his colleagues found five groups of hackers who claimed to possess Mrs. Clinton’s deleted emails, including two groups he determined were Russians.

“We knew the people who had these were probably around the Russian government,” Mr. Smith said.

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In phone conversations, Mr. Smith told a computer expert he was in direct contact with Mr. Flynn and his son, according to this expert. The person said an anti-Clinton research document prepared by Mr. Smith’s group identified the younger Mr. Flynn as someone associated with the effort. The expert said that based on his conversations with Mr. Smith, he understood the elder Mr. Flynn to be coordinating with Mr. Smith’s group in his capacity as a Trump campaign adviser.

Another Addition to Scandalabra

The Wall Street Journal reports:

At the same time the Internal Revenue Service was targeting tea-party groups, the tax agency took the unusual step of trying to impose gift taxes on donors to a prominent conservative advocacy group formed in 2007 to build support for President George W. Bush's Iraq troop surge.

The probe of the group, Freedom's Watch, began in the unit led by Lois Lerner, the IRS official already under scrutiny for her role in the more recent targeting of conservative groups.

While the IRS confirmed the existence of the gift-tax initiative in 2011, the identity of the group involved—as well as the affiliation of individual donors—remained a mystery.

Former officials of Freedom's Watch say they believe all five of the IRS audits involved donors to their group, based on conversations with IRS agents and donors at the time of the audits in 2011.

The IRS declined to comment, citing taxpayer confidentiality.

Scandalabra: Restraint and Overreach

At a committee hearing, Darrell Issa allowed Lois Lerner to leave after invoking the Fifth Amendment.  At RealClearPolitics, Caitlin Huey-Burns writes:

Issa isn’t typically empathetic or restrained. He has accused Lerner of providing false or misleading accounts to Congress in previous conversations with members of Congress. But he accomplished two ends on Wednesday. While the beginning of the hearing and Lerner’s exit made for some drama and headlines, he avoided what could have been a major distraction. (Recall a 1999 oversight hearing where then-Chairman Dan Burton let former White House official Mark Middleton be questioned for more than half an hour after Middleton took the Fifth in an investigation of a Clinton campaign funding controversy. That tactic brought a scathing response from then-ranking member Henry Waxman, who stated in a letter to Burton: “Our investigation has become far better known for its abuses rather than its results.”)

Also, by saying he intends to call Lerner back before the committee, Issa ensured that the story and his committee will stay in the spotlight heading into the Memorial Day recess, when congressional news tends to tamper off.

In a recent Tweet, RNC chair Reince Priebus wrote of the administration's "lawlessness and guerrilla warfare." At RealClearPolitics, Ron Fournier writes:

While the White House is guilty of incompetence and mangling its credibility in recent weeks, and while the IRS admittedly engaged in wildly inappropriate political targeting, nobody has been charged or convicted with a crime.

Congressional and FBI investigators will determine who directed (and knew of) the targeting, but there is no evidence today that it reached into the White House or Obama's campaign. Based on what we know so far, it is incorrect to say the president is "in the middle" of "lawlessness and guerrilla warfare."

It is also irresponsible. And it's bad politics.

Priebus was scheduled to appear Thursday on MSNBC's "Morning Joe" shortly after my appearance on the show so I pointed out the tweet to panelist John Heilemann of New York magazine. He pressed Priebus to clarify. The chairman doubled down.
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Some Republican strategists watched in frustration. "When you have your opponent on the ropes, no need to punch below the belt," emailed Republican consultant Reed Galen. "Now is the time to swing to what make the GOP different and better for these times."

Scandalabra and Senate Races

Stuart Rothenberg writes that Scandalabra may help the GOP in next year's Senate races:

For the past few years, the public’s focus has been on Republicans’ opposition to the president’s agenda, their desire to shrink (even cripple) government and their conservatism. But the IRS scandal, along with controversies involving the attack in Benghazi and the Justice Department’s collecting of journalists’ telephone records, has change the political narrative.

While the Oklahoma tornado tragedy will dominate media coverage for the next few days, the new political narrative that will re-emerge when journalists return to politics involves questions about what the administration knew, said and did.

The new focus on the Obama administration puts it on the defensive and should boost enthusiasm on the political right throughout this year.

While we don’t know how long the focus will stay on the administration — or whether Republicans will stumble over the investigations or matters of public policy — between now and the November midterms, it is undeniable that recent events have altered, at least for now, the trajectory of the 2014 elections.

Given the different natures of midterm electorates, the new political narrative increases the risk for Democratic candidates in red states, where Democrats must win independent and, in many cases, Republican voters to be successful.

Public Opinion and Scandalabra

A previous post examined public reaction to Scandalabra. ABC reports:

Americans in a new ABC News/Washington Post poll sharply reject special scrutiny of conservative groups by the Internal Revenue Service, suspect an administration cover-up of the Benghazi incident and express substantial distrust of the federal government more generally.

Yet the national survey also finds no backlash against Barack Obama, at least at this point. His job approval rating is stable, albeit at a tepid 51 percent; he’s aided by accelerating economic optimism as well as by comparison with the much less-popular Republicans in Congress.

See PDF with full results and charts here.

Longer-term impacts of contentious current issues remain to be seen, but there’s potential for significant damage to the administration. Americans by a vast 74-20 percent see the IRS’ behavior as inappropriate, with most feeling that way strongly – and 56 percent see it as a deliberate attempt to harass conservative organizations, not a mere administrative error.

The public divides on whether or not the administration is honestly disclosing what it knows about the IRS’ actions; 45 percent suspect a cover-up, 42 percent instead see full transparency. And more than a third overall in this poll, produced for ABC by Langer Research Associates, think these actions not only are inappropriate, but illegal.

Further, on the attack on the U.S. diplomatic mission in Benghazi, Libya, last fall, suspicions of a cover-up rise to a majority, 55 percent. And in this case only a third of Americans are persuaded that the Obama administration is disclosing honestly what it knows about what occurred.

Pew reports:

So far, public interest in a trio of controversies connected to the Obama administration has been limited. Roughly a quarter (26%) of Americans say they are very closely following reports that the IRS targeted conservative groups. About the same number (25%) are tracking the Benghazi investigation very closely, and even fewer (16%) are very closely following news about the Justice Department subpoenaing phone records of AP journalists.

The new survey by the Pew Research Center, conducted May 16-19 among 1,002 adults, finds that 37% of Republicans are paying very close attention to the IRS story, compared with 21% of Democrats and 25% of independents. And the Benghazi investigation continues to draw much greater interest from Republicans (34% very closely) than Democrats (18%).

A historical review of previous controversies involving White House or cabinet officials finds that these levels of public interest – and the partisan divide in attentiveness – are not necessarily new. Previous scandals – such as the Lewis “Scooter” Libby case during George W. Bush’s administration or the “Pardon-gate” scandal at the end of Bill Clinton’s second term – received similar levels of public attention, and were generally more interesting to those in the opposition party.

A Rationalization Falls Apart

IRS official Lois Lerner and others have claimed that the agency's scrutiny of conservative groups resulted from a flood of applications for tax-exempt status. But as Garance Franke-Ruta reports at The Atlantic, there was no flood at the time:

"[W]e saw a big increase in these kind of applications, many of which indicated that they were going to be involved in advocacy work," Lerner said.

But Todd Young, a Republican congressman from Indiana, pointed out at Friday's House Ways and Means Committee hearing with former acting IRS commissioner Steve Miller and Treasury Inspector General J. Russell George that this was not the case, according to the very data the IRS provided to the Treasury IG's office.

There were, he noted, actually fewer applications for tax-exempt status by groups seeking to be recognized as social-welfare organizations that year than the previous one, according to this IRS data. The real surge in applications did not come until 2012 -- the year the IRS stopped the practice of treating the Tea Party class of groups differently from others.

The IRS Scandal: Deeper and Deeper

The IRS scandal gets worse.  USA Today reports:

In the 27 months that the Internal Revenue Service put a hold on all Tea Party applications for non-profit status, it approved applications from similar liberal groups, a USA TODAY review of IRS data shows.

As applications from conservative groups sat in limbo, groups with obviously liberal names were approved in as little as nine months. With names including words like "Progress" or "Progressive," these groups applied for the same tax status and were engaged in the same kinds of activities as the conservative groups.
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A federal official who has been briefed on the matter said the investigation could focus on potential violations of civil rights law, including targeting groups based on political affiliation and infringing free speech. The official, who is not authorized to comment publicly, said authorities could consider possible violations of the Hatch Act, which restricts political activities of government workers.

Enter the IRS

Jeanne Cummings writes at Politico:

An Internal Revenue Service effort to collect gift taxes on large individual donations to social advocacy groups, which eventually could include the new political organizations that cropped up in the 2010 midterms, is already drawing threats of lawsuits.

According to one attorney familiar with the backroom discussions, the groups could challenge the IRS on two fronts: that the gift tax was not intended to apply to such donations, and that the IRS failed to give notice that it intended to begin enforcing the tax, after two decades of nearly no action.Continue Reading

In the years since 2008, more groups came onto the scene. In the 2010 midterms, two GOP giants were founded with the help of former Bush adviser Karl Rove: American Crossroads, which discloses donors, and Crossroads GPS, which doesn’t. The majority, $43 million, of the $70 million Crossroads officials said they collected flowed through the non-disclosing organization.

On Friday, The New York Times reported:

“There are a whole heck of a lot of people misusing (c)(4) groups as a means of getting around campaign finance regulations, and we lack a coherent system of laws to deal with that,” said Donald B. Tobin, a legal expert on campaign finance and tax laws at the Moritz College of Law at Ohio State University. “Now here’s a stick, frankly, that says there are consequences for doing that.”

In a statement released Thursday, Michelle L. Eldridge, a spokeswoman for the I.R.S., said that the inquiries were initiated by agency employees, not White House or other Obama administration officials, “as part of their increased efforts in the area of nonfiling of gift and estate tax returns.”

The letters informed donors that investigations had been opened to determine why a gift tax form had not been filed, and requested that donors submit records of all donations in the year 2008, according to a redacted copy obtained by The New York Times.

While tax lawyers who learned of the investigations have been issuing warnings to clients of potential trouble on a broader scale, the I.R.S. statement denied casting a wider net, “These examinations are not part of a broader effort looking at donations to 501(c)(4)’s.”

This denial seems inconsistent with the IRS Exempt Organizations workplan:

Section 501(c)(4), (5) and (6) Organizations. In recent years, our examination program has concentrated on section 501(c)(3) organizations. Beginning in FY 2011, we are increasing our focus on section 501(c)(4), (5) and (6) organizations. With the additional information available on the new Form 990, we will look at issues including political activity, inurement and the extent of compliance with the requirements for tax exemption by organizations that self-identified themselves as a section 501(c)(4), (5) or (6) organization.

Liz Peek writes at Fox:

The IRS has gone out of its way to portray this unprecedented inquiry as the labor of two “career civil servants” in the estate and gift tax department, trying to suppress suspicions that the move is politically motivated. Still, the Financial Times calls the move a “radical departure in how tax authorities have treated such “gifts” over the last 30 years.”

The timing of the investigation is, to put it mildly, suspect. The media has emphasized that while the Koch brothers, Karl Rove and other leading conservatives have supported such organizations, uber-liberal George Soros might also be caught in the net. That is true, but Republicans are unquestionably much bigger supporters of such groups.

From a 1997 article in The Cato Journal:

Some observers point out that political considerations may influence enforcement activities such as audits. The blatant use of the IRS for political purposes is not new. During the Kennedy presidency, a mysterious IRS organization called ‘‘The Ideological Organizations Audit Project’’ was formed to investigate right-leaning groups; among those apparently targeted was Young Americans for Freedom (Davis 1997: 246). The Special Services Staff (SSS) was formed during the Nixon administration to coordinate ‘‘all IRS activities involving ideological, militant, subversive, radical, and similar type organizations’’ (Davis 1997: 88).