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  • IRS Failing to Regulate Dark-Money Political Spending


    Prof. Tom Ferguson discusses why IRS fails to investigate political spending by groups such as Karl Rove's Crossroads GPS -   October 3, 14
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    Bio

    Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston, a Senior Fellow of the Roosevelt Institute, and a Contributing Editor at AlterNet. He received his Ph.D. from Princeton University and taught formerly at MIT and the University of Texas, Austin. He is the author or coauthor of several books, including Golden Rule (University of Chicago Press, 1995) and Right Turn (Hill & Wang, 1986). Most of his research focuses on how economics and politics affect institutions and vice versa. His articles have appeared in many scholarly journals, including the Quarterly Journal of Economics, International Organization, International Studies Quarterly, and the Journal of Economic History. He is a long time Contributing Editor to The Nation and a member of the editorial boards of the Journal of the Historical Society and the International Journal of Political Economy.

    Transcript

    IRS Failing to Regulate Dark-Money Political SpendingJESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore.

    A recent investigation by the Center for Public Integrity has found out how the IRS has not gone after groups who have violated political spending limits, specifically 501(c)(4) group Crossroads GPS, which was founded by former Bush adviser Karl Rove. They go further, to even look at the systemic stripping of these regulations.

    Now joining us to get into this issue is our guest, Thomas Ferguson. Tom is a professor of political science at the University of Massachusetts Boston, and he's a senior fellow of the Roosevelt Institute.

    Thank you for joining us, Tom.

    TOM FERGUSON, SENIOR FELLOW, ROOSEVELT INSTITUTE: Hi there.

    DESVARIEUX: So, Tom, first of all explain to us the back story here. What kind of spending limit did Crossroads GPS violate?

    FERGUSON: Well, I mean, look, they're not--. Alright. The basic story is, if you're--one would have thought--I mean, the problem is is they may have violated nothing at all, given the way our law is interpreted. The bottom line on this is that if they're doing political spending, they're supposed to be reporting that, either to the FEC or to the IRS. And instead--there that would depend on how the IRS classify them. They ought to be classified as a political spending group and not allowed not to report who their contributors are. Instead, the IRS seems to just sit there and look at them and do basically nothing about it as they and lots of other groups just flout what one would think would be the intent of the law.

    DESVARIEUX: So why didn't the IRS go after them? I mean, the Center for Public Integrity mentions how, basically, the IRS scandal, the Tea Party scandal happened, and that's what set it off. Remind our viewers a little bit about what that's about. And how did it sort of defang the IRS from going after Crossroads GPS?

    FERGUSON: Okay. Well, look, the real question here is how do you defang the IRS, period. And if you followed the General Motors scandal, where they were supposed to have known for years that they had a problem in their cars and they sat on it and there was this long investigation and they concluded, well, gee, it seems like nobody ever bothered to actually do anything and they spent a lot of time with an internal culture that said to do nothing, it's just like that at the IRS. When you read the Center for Public Integrity investigation, you discover that, gee, they keep cutting down the size of the staff who can deal with this, even as the workload explodes. They don't launch many investigations. You know why? Those cost time and money.

    Now, in the case of the Tea Party groups, you had folks--as I recall, it was originally in the Cincinnati office--poking around, making some trouble, and then just the IRS just sort of sitting on it for long periods and trying--there were some suggestions that they tried to crack down. Then nobody did much of anything. And then the IRS lost all the files anyway in the case of the Tea Party one, or so it is said--by the files I mean the email accounts.

    So, I mean, what you've got here is very plainly something you see over and over in American politics, or, just generally, American institutions, a regulatory institution that is underfunded, plainly staffed by people who mostly don't want to do the work, who are subject to both short- and long-term political pressure. I mean, my favorite example of this--and you can think of this in regard to the IRS case that we're talking about here--is the old study by George Stigler and some folks, who concluded that every time the Antitrust Division of the Justice Department brought a major antitrust suit, they got their budget cut by Congress in subsequent years. And that type of regulatory authority just typifies the American scheme of regulation.

    And it's perfectly obvious what's driving this, which is that you're trying to pay lip service to have regulation, and then you actually set the situation up so that nobody has an incentive to regulate. If that sounds like the Securities and Exchange Commission or the Commodity Futures Trading Commission, waiving an occasional exception when they have an unusual chair in an emergency, well, that's because it is. I mean, you see this pattern over and over. And what you're actually doing is sort of a kind of fraud on the whole population, where you say you're regulating and you're not.

    DESVARIEUX: But, Tom, how do we get out of this pattern? I mean, what is the solution here? Is it more regulation? More money? Public financing? What do we do?

    FERGUSON: Look, the first thing I wouldn't do is what I am amazed to see some political scientists saying, which is, oh, we just need more money to fix this problem--more money in the sense we just need more money in politics. That's insane. We need that like we need a hole in the head there.

    I mean, I basically think the way you fix regulatory agencies is you have to professionalize them, meaning you're going to have to pay people enough to get them to do the job. I mean, a real problem in a lot of regulatory agencies is that they become employment agencies for the regulated. That is to say, after a while, you go off and you go do some specialist work, depending on what you are. You know, if you're a lawyer, you might go to work for somebody that is regulated. You go to work for a campaign group and help them bring challenges to what your old office was and things like that. I mean, you've got to end this business of underpaid regulators.

    And then you've got to sort of get the Congress out of the business of leaning on them like that. I mean, these folks need, I think, multiyear budgets, for example. They can't be in a situation where Mitch McConnell or somebody will immediately lean on the staff if they go too far.

    It's often said that the Federal Election Commission is the most abject regulatory agency in the whole government. You know, the stuff that the Center for Public Integrity found on the IRS basically suggests that's not true. The IRS is fully in that category, at least as far as the classification of political groups. I actually think this is a fairly straightforward problem. If you spend money on politics over truly tiny sums, you should have to report it. And that's not a terribly difficult criterion to get at. It's just the IRS, like the FEC, has totally defaulted on this stuff. And, I mean, everybody knows this is a fraud, and one just needs to label it as such and treat it as--they sweep the place out. I mean, I do think that those IRS employees that managed to lose their emails on the Tea Party case--[I think (?)] the Tea Party people had a complaint. I think there was evidence at the time that they were also targeting some liberal groups. That mostly got--the Republicans in Congress in the House committee were not interested particularly in that, but there was some evidence of that too. I mean, my sense was that the IRS looked hard at both groups on the left and the right for a while, then drew back, and in the end, on all the big and powerful groups, like Crossroads, they don't do hardly anything.

    DESVARIEUX: Yeah. Yeah. This is definitely an issue, Tom, that we want to have you back on to discuss further. Thank you so much for joining us.

    FERGUSON: Okay. Have a good one.

    DESVARIEUX: And thank you for joining us on The Real News Network.

    End

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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