In Washington, After the Oversight Must Come Reform


News that individuals at the IRS improperly targeted certain groups for scrutiny thrust DC’s “House Cleaners” into high gear. Indignant talking points have been drafted, hearings have been announced, and heads will roll. (Already, Acting IRS Commissioner Steve Miller was forced to hand in his resignation).

But what happens after the dust settles and is swept away? In terms of public policy about campaign finance transparency, there could be a silver lining, but only if the outrage is channeled into reform efforts. So far, hearings have been scheduled by Representatives Issa and Cummings of the House Oversight and Government Reform Committee (who would do well not to lose sight of the “reform” mission embedded in the name of the committee) Representatives Camp and Levin of the House Ways and Means Committee, Senators Baucus and Hatch of the Senate Finance Committee, and by Senate Permanent Subcommittee on Investigation’s Levin and McCain—the latter the “maverick” reformer who hasn’t put his name on a significant piece of reform legislation since the Bipartisan Campaign Reform Act of 2002. Each of those Members should acknowledge—during their hearings and beyond—that underlying the IRS actions is the real and dangerous problem of political organizations masquerading as social welfare organizations, impacting elections with hundreds of millions of dollars in dark money expenditures.

Those members should form a new bipartisan Gang of Eight to come together to find a way to address dark money, in a fair and nonpartisan manner, and they should demand assurances from others leading the charge against the IRS—specifically House Majority Leader John Boehner and Senate Minority Leader Mitch McConnell—that despite their prior opposition to transparency legislation, they will not undermine efforts at compromise reform.

As a start, legislation should clarify that under the tax law, 501(c)(4) “social welfare organizations” should not be in the business helping candidates get elected. Indeed, the law is explicit that tax-exempt organizations that fall under section 501(c)(4) of the tax code must be “operated exclusively for the promotion of social welfare.” Political activity has never been considered “for the social welfare,” yet over the years, a vague and outdated “primary purpose” test has evolved, allowing organizations to retain their 501(c)(4) status and keep their donors’ names secret, even if as much as 49% of the organization’s activities are political. Sunlight has argued in favor of a bright line bright line rule making clear that only a minimal—if any—percentage of a 501(c)(4)’s expenditures may be used for political purposes. (The IRS Inspector General Report calls on the IRS and the Treasury Department to clarify the primary purpose rules. We think, given the importance and sensitive nature of the issue, the IRS’s current lack of credibility, and the fact that Congress has spoken on this before, the direction should come from Congress.)

In addition, it is time for Congress to finally come to agreement on how to disclose donors to groups engaged in political activities, and get past false claims that such disclosure “chills speech.” Disclosure rules do not prevent anyone from saying anything, nor do they limit how much can be spent on political speech. Instead, they allow the public to understand who might have access to their elected officials, and judge what monetary special interests might be influencing politicians’ decision. Likewise, disclosure does not limit freedom of association. There are simple ways to craft legislation so that donors to membership organizations who wish to remain anonymous can do so, as long as their contributions are not used for political purposes.

The intense focus by Members of Congress and the media on the IRS’s inappropriate queries into the activities of specific groups risks losing sight of the bigger picture—that massive amounts of dark money have influenced and will continue to impact our elections. A meaningful bipartisan effort must coalesce around transparency of campaign money, so that groups like Republican operative Karl Rove’s Crossroads GPS and Democratic campaign man Jim Messina’s OFA can no longer claim they are acting in the public’s social welfare when it is clear the only welfare they are concerned with is that of the people they want to elect to public office. The IRS fiasco should be a wake up call for leadership, not an excuse for inaction.