Timothy Geithner Is Key To IRS Scandal

Cross-posted from Testosterone Pit. Contributed by Chriss Street: Specialist in corporate reorganizations and turnarounds, former Chairman of two NYSE listed companies. His latest book, The Third Way, describes how to achieve management excellence and financial reward by moving organizations from Conflict and Confrontation to Leadership and Cooperation. He lives in Newport Beach, CA.

Lambert here: Of course. Tim Geithner [slaps forehead].

Acting IRS Commissioner Steven T. Miller was forced by to resign, predominantly due to the July 7, 2011 memorandum that I published last weekend in my report, IRS HAD ENEMIES LIST IN 2010 & 2012. The document, written on U.S. Treasury Department stationary, demanded that senior IRS management terminate attempts to have donations to selected tax-exempt groups be fully taxed as gifts.

The IRS admitted the groups examined were conservative, such as Tea Parties. The Miller memo appeared to confirm that he knowingly lied to Congress while under oath at least twice last year about predatory audits of conservative organizations. But Mr. Miller has told the press he is only resigning when his “acting assignment ends in early June.”

I was suspicious Mr. Miller’s resignation was an effort to prevent him from being required to testify again under oath on Friday to three Congressional Committees. But if Mr. Miller is staying until June, he must testify on Friday. With the President throwing the IRS Commissioner “under the bus,” Mr. Miller may be ready to throw former Treasury Secretary Timothy Geithner and President Obama under the bus.
Steven T. Miller is a career civil servant at the IRS. He holds a Juris Doctorate law degree from George Washington University and a Master of Laws in taxation from Georgetown University. He has held several senior positions at the IRS and worked for a number of years as an attorney in the IRS Chief Counsel’s office. He also served as a Congressional staff member for the Joint Committee on Taxation. Holding prestigious law degrees and having given harsh warnings to senior IRS staff in 2011 to ban predatory examinations, it is doubtful Mr. Miller would have authorized continued examinations unless ordered to by his direct boss, former IRA Commissioner Douglas H Shulman.

Douglas H. Shulman was nominated by Republican President George W. Bush  and confirmed by the Senate as IRS Commissioner on Friday March 14, 2008 at the youthful age of 41. Mr. Shulman formerly served as the Vice Chairman of the Financial Industry Regulatory Authority (FINRA), at an even more youthful age, where he made a name for himself working closely with New York Federal Reserve Bank President Timothy Geithner, pioneering over-the-counter trading of derivatives by banks. As IRS Commissioner, he reported directly to Timothy Geithner as U.S. Treasury Secretary.

Over the next four days after his confirmation, the legendary Bear Stearns Brokerage firm collapsed, heralding the beginning the worst recession since the Great Depression. The U.S. Federal Reserve was required to take responsibility for $29 billion in toxic sub-prime assets from Bear Stearns’ portfolio. As the FINRA whiz-kid he was the regulatory architect that championed banks and brokerage firms’ taking on sub-prime asset leverage. Douglas Shulman again showed incredible timing for avoiding horrific personal blame for scandal by resigning on November 9, 2012, a day after the reelection of President Barack Obama. 

By the time Barack Obama came into office in January of 2009, real estate was collapsing, the stock market was down by 40% and unemployment was about to vault to over 10%. President Obama summed up his opinions of leveraged banks on CBS’s “60 Minutes” stated: “I did not run for office to be helping out a bunch of fat cat bankers on Wall Street.” Mr. Obama went on to say: “They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it’s gone through in—in decades, and you guys caused the problem. And we’ve got 10% unemployment.”

It was always baffling to me that IRS Commissioner Douglas Shulman had managed to convince the President to not demand his resignation as punishment for his dubious leadership at FINRA that contributed to the financial crisis. As IRS Commissioner, Mr. Shulman must have received a copy of Deputy Commissioner for Services and Enforcement Steven T. Miller’s memo of July 7, 2011 that screamed the audits and examinations had: “significant legal, administrative and policy implications with respect to which we have little enforcement history.” It is documented President Franklin Roosevelt used the IRS to investigate and intimidate his political enemies, so IRS Commissioner Shulman must have known that Mr. Miller was concerned the retaliation against conservative groups exceeded FDR’s using the IRS against political enemies.

The IRS continues to mislead the public, as Fox News reported that at least 471 tax-exempt organizations, not the 300 admitted to by the IRS, were examined with “extra scrutiny.” Then Treasury Secretary Timothy Geithner must have received a copy of the 2011 Miller memo, because it was written on Department of Treasury stationary and Shulman and Miller reported to him. Therefore, to find out if the IRS has been running a massive enemies list for the White House, Congress must demand that Timothy Geithner testify under oath.

Harry Truman said that he took personal responsibility for the actions of his Administration’s by saying: “Buck stops here.” Barack Obama said at his Benghazi press conference “there is no there, there.” The question the American people want to know about any illegal use of the IRS for political purposes, “Is there any here, here?” By Chriss Street.

During their second term, Presidents not only get tangled up in scandals but also become obsessed with “legacy.” This includes their performance as measured by the stock market. Many people can relate to it. Retirement depends on it. Outside of a few shorts, everyone wants it to go up. But President Obama must be biting his fingernails down to the quick. Read…. Every President His Bubble – And Its Aftermath.

* * *

Lambert here: This, to me, is the key paragraph:

Then Treasury Secretary Timothy Geithner must have received a copy of the 2011 Miller memo, because it was written on Department of Treasury stationary and Shulman and Miller reported to him. Therefore, to find out if the IRS has been running a massive enemies list for the White House, Congress must demand that Timothy Geithner testify under oath.

Grant “must have received” (though these people are one and all twisty as corkscrews, and I don’t see why Timmy’s dog couldn’t have eaten that memo). Therefore, if the Republicans do not demand that Geithner testify, wouldn’t that show this scandal is all kayfabe? In that regard, note this paragraph from Pravda’s WaPo’s Editorial Board:

The origins of the IRS’s practice of targeting tea party-type groups applying for 501(c)(4) tax-exempt status are still murky. In testimony on Friday, Steven T. Miller, the outgoing acting IRS commissioner, couldn’t identify whose idea this was — though so far there is no evidence that it came from Washington.

But surely the “origin” of the practice is less interesting than who signed off on it? And here WaPo’s coverage, like most other coverage, seems to think that the chain of command in the executive branch goes Miller -> Shulman -> White House, when in fact the chain, as Street points out, goes Miller -> Shulman -> Geithner -> White House. Why move Geithner out of the line of fire?

From accounts of Miller’s four hours of “mistakes were made” testimony Friday (yesterday), he denied White House involvement, but if Miller threw Geithner “under the bus,” it didn’t make the news. (The last hit for “Geithner” at the FedNews transcript service is Thursday 5/16.) The Reuters account summarizes who knew what when at Treasury:

Deputy Treasury Secretary Neal Wolin, an Obama political appointee, learned nearly a year ago that a government watchdog was looking into inappropriate targeting by the IRS.

Wolin, the No. 2 official at Treasury, is due to testify next week before the House Oversight and Government Reform Committee. …

Treasury Secretary Jack Lew was told [by whom?] about the investigation when he took office in March, the department said, but neither he nor Wolin was told about its findings even as a preliminary version circulated elsewhere within the department.

Of course, being told about an investigation isn’t the same as being told about the Miller Memo. Odd, though, how Geithner’s name just keeps not coming up. “He wasn’t there again today / O how I wish he’d go away…”

Miller and Shulman testify before the Senate Finance Committee Tuesday. Will the Democrats make the demand that the Republicans didn’t? Or will some Republican staffer clever up, read Street’s post, and induce their boss to take a bite at the Miller Memo apple?

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. LifelongLib

    My first reaction when I heard about conservative groups being targeted was “I’ll bet if I started something called the Progressive Socialist Workers Coalition it’d get a lot of scrutiny too.”

    1. jrs

      Tea party groups were targeted for tax audits, but remember Occupy was targetted for asassination, by whom we are not told.

  2. kimsarah

    I like that, “Mistakes were made.” Sounds just like Jamie the Whale Dimon and a host of other untouchables in the past few years.
    There are many young shoplifters and those who get caught with small amounts of drugs who end up in prison and get stuck with a criminal record, many of whom a judge didn’t buy the “mistake” excuse.
    Perhaps Timmy will become the gift that keeps giving.

    1. Jim Haygood

      ‘To find out if the IRS has been running a massive enemies list for the White House, Congress must demand that Timothy Geithner testify under oath.’ — Lambert Strether

      As evidenced by Speaker Boehner’s reaction — ‘Who’s going to jail over this scandal?’ — using government institutions for political retribution is not merely a career risk, it’s an imprisonment risk. Axiomatically, ‘low-level bureaucrats’ do not decide, within their own tiny sphere of authority, to commit major institutional resources to a politically explosive undertaking.

      Standard procedure in federal criminal prosecutions is to work up the chain of command, promising leniency or immunity to underlings willing to testify about criminal acts by their bosses. Obviously, Tim Geithner should be questioned under oath. His own hinky profile of past tax evasion suggests that he was bent well before arriving at Treasury.

      However, a criminal prosecution presumes a special prosecutor. And there is none. Obama has thrown Steve Miller under the bus. If Miller observes the Chicago Mafia’s code of omerta, the buck is supposed to stop with him.

      But Miller does not fit the profile of a political dirty trickster. Indeed, his memo suggests a lawyer urgently trying to stop criminal behavior without outing himself as a whistleblower.

      As Watergate showed, really dirty tricks come straight from the top, because that’s the only place where the potential gain from crime can appear to be worth the risk.

      1. Susan the other

        So who stood to benefit here? The republican party neocons is who. Because by 2009 they knew 2 things: Obama was a little naive about the banking industry and the Tea Party was planning to get to the bottom of the banking mystery. Enter Geithner; protege of Larry Summers. The added benefit of going after the Tea Party was that it would help the republicans win the 2012 election if they could just sorta get rid of them. That didn’t happen though. And the lunacy of many of the TP’s political positions tanked the republicans. Who benefited by targeting TP tax status? If they had vanquished the Tea Party, Obama would not have benefited so it was in his interest to protect them. He might well have been in league with Mr. Miller on this one. It’s pretty obvious that there was never any love lost between Geithner and Obama. After all Schulman was both a Bush appointee and derivatives buddy of Timmy.

        1. Stan Musical


          Very interesting and convincing set of points there. Cui bono? is always the salient question.

          More generally, I am continuously impressed, at times amazed, by your perspicacious posts. Keep that occam’s razor sharp!

    2. sgt_doom

      Am I the ONLY one who ever bothers to read the IRS web site?

      Guess so, since it appears EVERYONE has missed the obvious!

      The Day Before

      Whether a certified fraud examiner, an actual investigative journalist, or a volunteer activist (such as yours truly was for many a year in their spare time), the crucial thing one learns is when any nonsensical news event, or momentous event occurs, it is always best to look closely at what transpired the day before.

      On May 10th recently, an old IG report was dredged up referring to several IRS agents who targeted Koch brothers’ front groups (which newsies reports as Tea Party outfits?) and immediately received, or was mandatorily given, focused and massive national news attention!

      So what occurred on May 9th? On that day, a press release at the IRS web site announced the largest tax investigation in history, an international joint effort between the tax administrations of the USA, Australia and the UK, looking into those untaxed trillions of dollars parked in offshore tax havens from information leaked to them.

      This would be the most momentous event on behalf of the citizenry, and against the super rich since the Kennedy and Roosevelt administrations, yet nary a word was mentioned in the national media about this epochal announcement?

      On 9/11/01, an airliner crashed dead center into the Pentagon’s west wall, killing almost their entire auditing team (DIA’s Financial Management staff), and severely injuring the rest.

      So what occurred on 9/10/01, the day before?

      On 9/10, the Pentagon’s comptroller announced that the very same auditing team had uncovered the unaccounted for sum of $2.3 trillion of DoD funds; that is, $2.3 trillion in DoD funds were missing and unaccounted for.

      Always examine the events of the day before for the most interest causal factors!



  3. sd

    I feel like the IRS Scandal as well as Benghazi are red herrings. I just don’t know what ‘they’ are trying to distract us from.

      1. ohmyheck

        “But even the guys who would ordinarily be in the know at least to some extent do not know what is going on. And they are getting concerned. And that bothers me. There is something out of the ordinary going on.

        That is what is tipping me over to think that this is something fairly significant. When I see water running up hill, it doesn’t take a whole lot of effort to realize that something is not quite right with the contextual backdrop being presented.

        I think the shit hit the fan late last year, and everything that has happened since then has been a reaction to that. I do think there will be a bank/market holiday, of perhaps three days, and I am looking for any little things that suggest when that might be. Then we can work back from there.”
        Firstly, “late last year”…might it have something to do with U. of Texas and Germany and others wanting to take physical possession of gold?

        Secondly, “a bank/market holiday of perhaps 3 days”…is that like a Cyprus-style “bail-in”? Will they be taking money from our bank accounts?

        I would certainly like to know.

        1. AbyNormal

          im w/you ohmyheck…the ‘somethings in the air’ is leaning toward a major monetary shift. controls need to be put in place and shored up to continue the ‘business as usual’ mantra.
          (with the lights on…im spooked)

          1. ohmyheck

            I know Jesse is a “doom-and-gloom-er” but jeez… this link would do well in Lambert’s article today titled The Savings Heist. I hope sd doesn’t mind if I use his link.

      2. Susan the other

        The Benghazi cover up was a cover up. The History Channel had a doc last nite and one of the authorities was Webster Tarpley who gave a good explanation about how our compound was destroyed by Al Qaeda (of the Shiite variety) because we were busy carrying out our genocide against them in Turkey, shipping arms from Libya to Turkey and the Turks from there to Syria. That makes partial sense. One thing that doesn’t make sense is how Romney got his info so fast and jumped on it so aggressively for disinformation purposes in the election. Another is why so many generals were suddenly “retired.” And why Petraeus went to such lengths to make his retirement look sex-scandal related. So there is something more to this than just a shipment of missiles to our Sunni “rebel” allies in Syria. The only way the picture gets sufficiently bigger is to include Iran. Which the documentary did not do. Odd. And then the question has been clear for a while – it is a choice between war or diplomacy and this whole Benghazi thing could have been an attempt (by our own hawks) to force us into war. But who knows.

        1. nonclassical

          Benghazi was NOT a “diplomatic embassy”-it has been commonly described as CIA outpost…not much doubt as to reason for targeting, as you note, with tendencies towards other areas, Middle-East…

          ridiculous rightwing inflaming of=evermore scapegoating-history lesson-BBC:


          This video has been up on youtube for years-now considered so controversial, with actual U.S. media clips of bushitter LIES told to drive WAR CRIMES, it has been removed for “copyright” reasons…yet another lie…

          1. LucyLulu

            Exactly nonclassical! I’ve thought it odd from the start that the focus has been on “talking points” and that any talk of Benghazi being a CIA installation has been completely ignored. That would go to why the installation was attacked by the terrorists. CIA operations have surely never been made transparent to the public. There were stories reported of a planned hostage taking in exchange for a blind Egyptian sheik gone wrong and another more plausible one that Stevens was secretly meeting with the Turkish ambassador there re: running arms to Syrian rebels. The emails from State to the CIA saying “oh no, don’t you dare try to pin this one on us” (heavily paraphrased) would make sense in that context, but the stories are unconfirmed rumors AFAIK.

            Do we know what Stevens was officially supposed to be doing in Benghazi, a region known to be dangerous, tribal, with extremist Salafis, and run by local militias, rather than hanging out at the (relatively) safer embassy in Tripoli? In any case, the fact that the majority of personnel at the facility were CIA staff (42? if not 42, it’s close) with only a handful of diplomatic staff has been skipped over by Congress in favor of a meme that Benghazi was a “diplomatic outpost”.

        2. wunsacon

          The most interesting/extensive commentary I’ve seen (that is, in my very limited search for info on this topic) appears on the Moon of Alabama blog.

          1. wunsacon

            Well, of course, there’s Washington’s blog. But, Moon of Alabama has more day-to-day news and comments on Libya, Syria, etc.

        3. 3CPO

          There are is no similar organization to AQ of the Shi’ite variety and they don’t exist in Libya. Hezbollah is in Lebanon, not Syria. The sadr militia is in Iraq. Most reports on Hezbollah are purely Israeli propaganda.

          The “embassy” was really a CIA front and they were already making drone strikes in Libya. There were a lot of attacks similar to the one that happened on 9/11/12.

          On June 5, the same “embassy” in Bengazi was attacked, as well as a Red Cross office in Benghazi.
          Leaflets were left at the scene of these attacks, and a group called itself the Imprisoned Omar Abdul Rahman Brigades took responsibility. They claimed this was in retaliation for the death of Libyan al Qaeda No. 2 Abu Yahya al Libi. They promised more attacks against American interests.

          Before the successful attack this was reported:

          Recently, Libya’s grand mufti, Asadiq Gherayli, met with five militant commanders, and four of them in the area including Azuz, agreed with the government terms not to carry out attacks.
          Only one refused: Sufian bin Qumu (also known as Abu Faris al Libi).

          Following this agreement, Abdulbasit Azuz complained that a drone strike had targeted his training camp in the east of Libya.
          Last month, there were reports of explosions outside the Derna area in the vicinity of the camps, according to a different source.

          Who were Abdulbasit Azuz and Sufian bin Qumu?
          Abdulbasit Azuz is a senior AQ operative and longtime close associate of the group’s leader, Ayman al-Zawahiri,
          dispatched to Libya from the tribal areas of Pakistan in spring 2011 to recruit fighters.

          Azuz is a veteran jihadist who fought the Soviet-backed government in Afghanistan in the early 1990s.
          He later to moved to the UK, and came on the radar screen of British security services for his radical recruitment efforts in Manchester.

          Following the July 2005 London bombings, he was detained in the Belmarsh high-security prison and placed under a Control order, according to the sources.

          He left the UK in 2009 and traveled to the tribal areas of Pakistan, from where al-Zawahiri redeployed him to Libya to set up a bridgehead.

          Sufian bin Qumu (also known as Abu Faris al Libi), a released Guantanamo detainee who is believed to be operating a camp in the mountainous woods along the sea outside Derna.

          Qumu, 53 served as a tank driver in the Libyan army before spending several years in prison on accusations of murder and drug dealing.
          Escaped prison in 1993, and first traveled to Afghanistan, where he participated in jihad in the early and mid-1990s and joined the LIFG in Sudan in the mid-1990s, where he worked as a truck driver for bin Laden’s company

          He subsequently moved to Pakistan and then to Afghanistan and declared allegiance to the Taliban. He was arrested in Pakistan after fleeing Afghanistan after the fall of the Taliban and handed over to U.S. authorities.

          Gadhafi’s government said the assessment considered him “a dangerous man with no qualms about committing terrorist acts.” The assessment said he had once assaulted guards at the detention facility in Cuba.

          Missing from mainstream reports:
          When Gaddafi reported Osama Bin Laden to interpol, the Brits were covertly working with the LIFG trying to overthrow Gaddafi so they able stall this, until the embassies in the Kenya and Tanzania in 98.

          Marcy Wheeler has some information.


          1. 3CPO

            correction: The Brits were able to stall the listing of OBL with Interpol, until the US embassy bombings in Kenya and Tanzania.
            The US also didn’t list him even though the FBI investigation found that OBL likely did Kobar Towers bombing, in deference to the Saudis who didn’t believe that he was an actual risk to them. Later FBI political fixer Louis J Freeh stepped in and declared it wuz eyeran!

        4. Thor's Hammer

          My apologies for wandering afield from a critique of Timmy the Tax Dodger—

          But re Benghazi,

          As always when you start to go to the roots of the foreign policy of an Imperial Power you find the goal of dominating and controlling energy. In this case (Lybia) there apparently is a grand scheme to pipe natural gas from Quatar through Lybia and thus break the monopoly power over natural gas delivery to Europe held by Russia. The fact that the US and its allies choose to side with radical Islamists and al-Qaeda elements to foment a civil war is a minor consideration.

          I’m certainly no expert on this situation, but the following citations certainly paint a different picture than the idea that the US involvement stems from our desire to bring freedom and democracy to a benighted region of the world.


    1. LucyLulu

      Of the three scandals, I’d say the AP scandal is by far the biggest. If there wasn’t already a chill out on whistleblowers before, you can be sure there’s a chill out now that anonymity can no longer be ensured.

      These 501(c)(4)’s were all in the process of applying for tax-exempt status and were sent through some extra hoops and asked some bizarre questions, but in the end all were finally approved (unlike at least one progressive group). In reality, if tax law were followed none would be granted tax exempt status as political organizations are not eligible for 501(c)(4) status. They must be organizations dedicated “exclusively” for the promotion of social welfare. For whatever reason, the IRS has decided to interpret the word “exclusively” as “primarily” for decades now.

      Nixon was also well-known for using the IRS against his enemies. Liberal 501(c)(4) organizations were targeted during Bush II’s administration, with the Democrats ignored when they cried foul. The IRS came under a lot of heat during the late 80’s for having harassed the same individuals with audits year after year. While the IRS should never be allowed to be used as a weapon against enemies, and having the orders coming from top administrative officials would be unusual, it seems to be a common ploy.

      They need to start enforcing the statute as it was written.

      1. Bridget

        The problem isn’t that they were sent through hoops and asked bizarre questions, it’s that they weren’t all sent through the same hoops and asked the same set of bizarre questions.

        And on the issue of the bizarre questions….who drafted them, proofed them, printed them? Are they official IRS forms?

        1. be'emet

          say hey! weren’t all these 504 c applicants outlaw groups misrepresenting their activities and intentions? IRS failed to nail them, that’s all. now crocodile tears to create a false trail…

      2. jrs

        Oh I agree the AP scandal is the big scandal, the ability to even have any news that’s not the official government story. Of course this is not new (Wikileaks etc., but it’s getting worse and worse).

        The IRS scandal seems mostly organizations that probably shouldn’t be tax exempt anyway but are not judged by the same rules as other similar organizations that probably shouldn’t be tax exempt.

        The Benghazi thing is just: U.S. foreign policy is all screwed up. But really who doesn’t know that? Who doesn’t expect hidden and malevolent agendas out of U.S. military involvement.

    2. LucyLulu

      One distraction they are providing is that nothing is being done about jobs or the economy, or any meaningful legislation at all. The projected deficit has again been reduced, taking all pressure off any need for entitlement cuts, but this is getting no press or mention by our deficit-obsessed lawmakers.

    3. scott

      Is blowing up a bunch of children with a drone-launched missle “poor customer service”?

      Since when were taxpayers “customers” of the IRS? They have been targets, and nothing else.

    4. NotTimothyGeithner

      Benghazi is largely a distraction from the general nuttiness and cruelty of U.S. foreign policy while playing the partisan game which may not motivate the Democratic elite who despise their base but does motivate the GOP elite who is recruited from their most active members.

      The IRS investigation is part of the incumbency protection racket. Remember the IRS investigations wasn’t limited to right wing groups but non-Democratic liberal groups, and lets not forget the surveillance and spying by the DHS of Occupy/anti-war groups and so forth.

      1. jrs

        The attempts to assisinate by either some kind of government agency or some nutter out there who the government didn’t seem to care about publically pursuing. Left radicals get killed?

  4. Middle Seaman

    Organizations such as the Tea Party either right or left, the left has it’s disgusting fascists too, have zero social value. They serve to advance a political agenda usually for a larger political operator. (Tea’s for the GOP and MoveOn for Obama, and therefore, for Citibank and JPM.)

    They all should pay income tax.

    1. banger

      I agree. There should be no tax-exempt status for any organization–all organizations including churches are political. But I would go further and just no have income tax. The income tax is way too intrusive. We should have the VAT and property and luxury taxes only. Income tax takes too much time an energy and is wasteful in the extreme. Everybody hates doing taxes why do people support it? I say it’s out of habit and the idea that, as usual, “there is no alternative.”

      1. LucyLulu

        The income tax is a progressive tax, unlike property and VAT (and a luxury tax would be insufficient). It’s a means, along with estate taxes (at least in theory, it’s been subverted in the US with reduced taxes on unearned income, avoidance of estate taxes, use of tax havens, etc.), of preventing the massive wealth disparity we’re seeing now. Excessive wealth disparity has a harmful effect on our economic health, reduces ability of majority to provide necessary demand, and contributes to moneyed interests’ control of the legislative process.

        1. be'emet

          From MMT perspective, it can be suggested that the main value of federal taxes is Redistribution. Debt forgiveness will create nothing but confusion, money distribution will put still more debt in the hands of the moneylenders – but capital confiscation, there’s the rub. start with the corporate offshore accounts…

    2. nonclassical

      …in “Wall $treet-A History”, by Geisst, we find corporate sponsored “tea party”
      like political opportunism also…

      and we find this:


      a true historical, documenting twice decorated Medal of Honor General Smedley Butler, (Bradley Manning parallel) who foiled fascism, 30’s depression era…

  5. Mcmike

    Conservatives are outraged that the IRS used profiling to identify suspicious applications?

    Tea Party groups are quite open about their jihad against taxes, against tax exempt groups, against campaign disclosures, and about their desire to enact political change.

    Why shouldnt the IRS use their self described label as cause for suspicion?

    Heck, the agents should have a name for it: “applying while angry white right wing.”

    1. JGordon

      Well, at least on the plus side you are open about your indifference enemies lists and political persecution. As most Americans are. Now if only those in power would come clean about it, they’d realize that most people really don’t give a crap about all the corruption and injustice, just like you (and me–I support the Obama Regime and the Police State just as you do), and we’d have a lot more honest society.

      1. McMike

        Not at all.

        I am completely opposed to fascist misuse of powers – in particular the misuse of justice and regulatory systems to crush peaceful protests, crush civil disobedience, and crush small businesses that seek to disrupt corporate monopolies and malfeasance.

        I am merely enjoying some schadenfreude here at the expense of the incoherent right, which has no problem with profiling and preemptive harassment when the target is muslims. Or, for that matter, could not have cared less back when the IRS spent more time policing miniscule EITC claims than investigating the massive tax abuses of the wealthy and corporations.

        As it happens, I believe this particular issue is nearly entirely a manufactured affair, fabricated and trumped up for the hysterical wingnuts by the right wing outrage machine, which is not above making up scandals from cherry picked and misrepresetnted nuggets, if not out of whole cloth entirely.

        Further, in this case, as a matter of fact, I happen to back the IRS, at least based on the actual information available. Our tax exempt provisions are heavily abused by political groups and other scams such as with many private family foundations, and in my view that abuse should be in fact policed much more aggessively. If we are going to grant tax exemptions to organizations, we should agressively make sure they are qualifying and continue to qualigy, based on whatever the criteria is. In that vein, much of the tea party, as far as I can see, ought to be put through an intense proctological evaluation before being awarded tax exempt status.

        As to your other point, the elites have of course long ago figured out that the only important question for public outrage is whose ox is being gored.

    2. nonclassical

      ..conservatives, when confronted, are also exposed as anti-democracy, anti-government, anti-the people’s representative process, entirely…

      to put it nicely, they have no idea what they want…at least dems espouse “the people’s representative government”, and there ARE decent representatives of,
      right here in Washington State-Senator Patty Murray, who took bushit Medicare Part D to her constituents in small local meetings all over state, and Governor Jay Inslee, who stood solidly (on C-Span, for all to view) against bushit internationally illegal invasion of Iraq…

      1. McMike

        So-called conservatives, when exposed, come off mainly as incoherent, excitable, needy, and easily swayed by authority figures.

        Having watched closely now since the end of the Reagan adminstration – across the decades, as administrations, power, and practices swung from party to party – I can say with complete honestly that I have not the slightest idea what conservatives actually stand for. Aside meaningless vague platitudes and mindless memes.

        I have watched as they swing with childlike lack of self-awarness from screeching, for instance, that filibusters are the cause of the end of the Republic, to veiwing them as the sole obstacle between us and tyrany, all within a two-year span. I have watched conservatives argue with veins popping out of thier skulls against states enacting their own legislation on matters of labor, medicinal pot or the environment, and then argue that states rights are the primary issue of our nation’s founding on matters of voting or gays or health care – all in the same breath. I have listened to conservatives try and impeach a president for lying about sex, and then invoke national security as a reason to lie about war. I have listened to them defend selling missiles ot Iran. The list goes on and on.

        So, to listent to them whine becuase the IRS gave their tax exempt applications extra scrutiny fits perfectly in a wingnut world where muslims should be under 24/7 surveilance, and welfare recipients should take drug tests to qualify for food stamps for thier kids.

        1. McMike

          … and before someone tries to say “the left does it too.” Balderdash, the left does not do it too.

          Not with the same invective, hysteria, myopia, rage – at least not equally in opposite directions.

          I have sat across the table from tea party types that with veins bulging will regale the rest of us by insisting on a dozen self-contradictory things and bulldoze forward on the topic without a care to facts or consistency, THEN reverse themselves and argue with equal fervor in the opposite direction.

          Most (not all of course) but most liberals do not display this Newtonian forcefullness.

          Oh sure, many on the left will participate in partisan hall passes for thier own, but this is mainly in the form of sitting on their hands and looking embarassed when thir own guys act up.

          There is no liberal equaivalent to the right wing self-opposing passion machine.

          1. LucyLulu


            It’s part of the “fair and balanced” meme. Anything one side does MUST be attributed equally to the other side to avoid the appearance of partisanship.

            I was a lifelong Republican until about five years ago. Guess why I left the party disgusted, or at least one of the major reasons? I may have issues with Democrats, and even more with Obama (particularly trampling constitutional rights), but that doesn’t mean all are created equal. Means-testing Medicare premiums (somebody with $50K income pays extra $30/mo.) hardly equals Medicare vouchers in terms of bankrupting seniors.

          2. Thor's Hammer

            In what universe does the Democratic party of 2013 represent a leftist organization? Granted there are differences between deluded or cynical neoliberals and the clinical insanity that prevails in the policies and ideology of the Repugnuts. But make no mistake— both are right wing parties dedicated to the preservation of wealth and privilege of a small ruling elite. Both subscribe to totally intellectually bankrupt ideas about economics. Both have total disrespect for the concept of the rule of law. And both unconditionally support the role of the US as the world’s dominant Imperial Power and chief arms merchant.

        2. LifelongLib

          The conservatives I know think they’re part of a virtuous, hard-working minority who is being robbed (with government help) by an immoral, lazy majority.

          1. McMike

            I have had this conversation with a conservative friend recently; true story:

            Con: my hometown was full of welfare cheats, lazing around and having babies and sucking off taxpayers.

            Me: we spend about $350 billion on federal welfare per year. If half of that is fraud and waste, half, then what we waste on welfare is just a little more than 10% of what we spend in total on defense.

            Con: I don’t care; I hate it.

            Me: Meanwhile, we devoted as much as $20 trillion, trillion with a T, on bailing out the bankers.

            Con: yeah…

            Me: so, it bothers you more that some lazy ass trailer trash is getting three hundred dollars a month from welfare, because you think he should go get a job at WalMart, than it bothers you that the Wall Street bankers who wrecked the economy take $20 trillion from taxpayers and then pay themselves multi-multi-million dollar bonuses with the money?

            Con: yes

            Me: really?

            Con: yes, really. It just does.

          2. AbyNormal

            sorrie McMike…me thinks i got you beat. hauled a family member to the grocery store today, where they rambled ‘what a great idea it would be to load up on more powerball tickets, being as them were foreigners behind the ticket desk…and everyone knows foreigners get everything and id win 100s of millions!’ i asked if they ever considered the fact our rating agencies rubber stamped our trash so our houses of the holy could unloaded it ALL on every neighborhood worldwide…their response was ‘Aby you see nothing but bad in everyone’.

            I have learned that to be with those I like is enough.

          3. AbyNormal

            btw…said family member swears ‘we wouldn’t be in this sh!t had GW been allowed to run 8 more years!’


          4. AbyNormal

            btw…said family member swears ‘we wouldn’t be in this sheet had gw been allowed to run 8 more years!’


          5. AbyNormal

            man im having issues posting today…wordpress wouldn’t let any of my lily pad links thru

  6. Ep3

    Go steps farther. Who is geithner’s paymaster? Larry ‘woman-hating’ summers. Who does Larry love? Bob ‘break the bank’ rubin. Who does rubin love? Clinton. Who does Clinton love? Greenspan, who loves ayn rand.
    Blame it on Rand!

  7. Doug Terpstra

    This kerfuffle ensures that bribe-laundering is now and forever unfettered. All of the Kochs’ electioneering investment is now tax free, and even better, the IRS, the bane of plutocrats, has finally been defanged, captured and penned with all other federal deregulators. Question a Koch-funded, Citizens-divided front Group like the TP, fabricate a theatrical scandal with faux bipartisan outrage all around; add the steely glare of the president who only found out about this yesterday, and Presto! — No more sticky questions, no more pesky audits, and the TP is now as sacred and untouchable as the 700 Club. Couldn’t have done it better if Timmy had actually planned it.

    Now’s the perfect time to submit your application for the Society for the Preservation of Greek Islands and the yachters’ welfare fund. No questions asked.

    And no, Timmy will never be held accountable for this. We’re still not cynical enough.

    1. docG

      I agree. The whole issue with the IRS has that distinctive red herring smell all over it. Why wouldn’t the IRS be leery when suddenly all these right wing groups are coming out of the woodwork, demanding special treament but refusing to identify the real powers behind the facade? Looks to me like the IRS was trying to do its job.

      The big disappointment, as always these days, is Obama, who’s biggest fear seems to be losing that “bipartisan spirit” that’s done so much for him over the years. We thought we were getting a fighter, and we wound up with a sad, sorry, wimp.

      1. psychohistorian

        We got a fighter docG but the traitor in chief to humanity is against us, not for us.

      2. Eric

        I completely agree. This has cemented Obama as gutless. When your beliefs on social welfare are political, you should receive extra scrutiny. If advocating not paying taxes is social welfare rather than political, than there is nothing that has not corssed the line. Throwing civil servants under the bus with false outrage rather than an explanation of why the scrutiny was appropriate, how the screens were an effort to streamline government would have been wholly appropriate. Just spineless.

    2. LucyLulu

      While the 501(c)(4)’s are tax-exempt, donations to them are not. In fact, donors should fall under gift tax rules, with limits of $13K/yr and $5M lifetime. Most of us here would never reach those kinds of limits but folks like the Kochs certainly will. Is the IRS looking at donors and enforcing gift tax rules? I’d bet not. But they audit folks like me. I’ve read that the IRS now prefers to go after folks like me, seen as easy targets, as we don’t show up with fancy tax attorneys and CPA’s to defend us. (BTW, I got a clean preliminary report from auditor in January, was supposed to receive final confirmation from supervisor, but never did.)

      Apparently it’s very easy indeed to use the IRS against somebody else. My ex has turned me in four times now in the last 10 years (talk about grudges), despite submitting letters with returns to warn them along with following statutes and anticipated docs down to the letter. When asked this time about why I had to resubmit material, the auditor said they only receive the return itself, no attached docs. My complaints to IRS about being vindictively targeted have been ignored. The kicker is that while I’ve always been honest, my ex DOES cheat on HIS taxes.

  8. ohmyheck

    From a link provided by sd today, ala Jesse’s Cafe:

    “But even the guys who would ordinarily be in the know at least to some extent do not know what is going on. And they are getting concerned. And that bothers me. There is something out of the ordinary going on…I think the shit hit the fan late last year, and everything that has happened since then has been a reaction to that. I DO THINK THERE WILL BE A BANK/MARKET HOLIDAY OF PERHAPS THREE DAYS,(my bold) and I am looking for any little things that suggest when that might be.”

    Interesting charts, concerning gold and silver. Savings heist? Bank Bail-in?

    full link:http://jessescrossroadscafe.blogspot.com/2013/05/gold-daily-and-silver-weekly-charts_17.html

    1. psychohistorian

      My take is that they are trying to scare folks out of gold before the big run up that will occur when the reality of value that all the countries put on it reaches the American conscious.

      When most of he wealth is held in few hands, manipulation like this is just a part of the overall propaganda narrative……the emerging Shock Doctrine event…..brought to you by inheritance and accumulating private ownership of everything.

    2. Lambert Strether Post author

      Dunno about the bank holiday or the charts. But the sense of “not knowing what is going on” (more than normally, that is) isn’t confined to Jesse.

  9. Kim Kaufman

    If right wing groups were actually targeted, it was because there were so many more of them seeking 501(c)4s. And I’m not sure left wing groups didn’t also get a hard time with their applications but their stories haven’t risen to the top yet. Plus, the IRS didn’t go after any of the really big ones it seems.

  10. nonclassical

    bushbama, had he been involved, certainly would have “gone after” the “professional left”…you know-those educated enough to comprehend bushbama LIES…and unlike dimwit conservatives, NOT “follow” anti-Constitutional authoritarianism…

  11. Paul Tioxon

    Here is a link for some analysis based upon the IRS audit by the Inspector General who actually looked into the inappropriate criteria used by the IRS review process for non profit applications.

    Of course, the fact the the system produced this audit and investigated itself is a function of bureaucracy to manage itself, before Fox News or the AP has to get involved. Without reporting on itself, how long would this have gone unknown?


    In this blog, a link to actual 54 page report on pdf format is available. One of the key points brought out in the blog, from a table within the report is the dramatic rise in the applications for 501c4 status, an increase of approx 40%. And this coinciding with the Citizens United ruling of the Supreme Court. As you may recall, Stephen Colbert formed his own political slush fund on TV and signed the documents of the two necessary applications in which he could receive anonymous donations, tax free and use them to endorse candidates.

    2009 1,751
    2010 1,735
    2011 2,265
    2012 3,357

    You can see the rise in applications for c4 status in the aftermath of the 2010 Citizens United Decision. This is the GOP slush fund network being established to receive cash donations for political activity permitted by the c4 status, including the legal right to endorse candidates, NOT allowed by 501c3 status.

    Furthermore, some of the biggest GOP spenders, specifically used this political funding conduit (PFC) under the aegis of Citizens United immediately after it was decided and received IRS approval for c4 status with little, if any scrutiny. From OPEN SECRETS:

    “Of the 21 organizations that received rulings from the IRS after January 1, 2010, and filed FEC reports in 2010 or 2012, 13 were conservative. They outspent the liberal groups in that category by a factor of nearly 34-to-1, the Center for Responsive Politics analysis shows.

    By far the largest driver of the disparity was American Action Network, whose $30.6 million in spending reported to the FEC in 2010 and 2012 mades up 94 percent of the conservative total. However, even without American Action Network, spending by conservative groups approved after 2010 was nearly quadruple that of liberal groups receiving exempt status in the same period.

    American Action Network, whose co-founder and chairman is former GOP Sen. Norm Coleman, received exempt status in April of 2010 — two months after originally filing its application — according to IRS records. Its application was filed just weeks after the Supreme Court’s Citizens United v. FEC decision, which loosened political spending rules for corporations, including nonprofits.

    Groups don’t need to have their status approved by the IRS in order to operate. But they must report to the FEC any spending on communications that urge a vote for or a vote against a candidate, and any spending on “issue ads” — slightly less overt political messages — that occurs in the weeks just before an election.

    The biggest-spending 501(c)(4) group in the FEC’s records, the Karl Rove-affiliated Crossroads GPS, is still waiting for its status to be officially approved by the tax authorities, so it isn’t included in this tally, nor are some of the other top spenders. Crossroads reported spending more than $87.9 million to the FEC since 2010.

    The highest-spending liberal group was BlueGreen Alliance, which reported paying out $473,000 in 2010, FEC records show. It didn’t receive exempt status until March 2012.

    Another prominent liberal group, America Votes, spent nearly $300,000 combined in 2010 and 2012. It was also a major funder of other politically active nonprofits, giving hundreds of thousands of dollars to liberal dark money groups like VoteVets.org and Advancing Wisconsin. America Votes was also involved in a flurry of financial transactions between Patriot Majority USA’s 501(c)(4) and its 527, first reported by OpenSecrets Blog last year.”


    1. Paul Tioxon

      It has come to my attention that nobody has jumped down my throat over my clearly one sided political analysis. Let me cure that defect. Just to clarify what a 501c4 does for a Super Pac, let me refer once again to the Colbert Report and the Super Pac he set up. Facing daunting challenges of getting money from those who have, Stephen was given sage counsel by those that know:

      “Troubled by the fact that large corporations were not donating to his SuperPAC, on September 29, 2011, Potter explained that corporations prefer to remain anonymous when supporting political causes. Therefore, he helped Colbert set up in Delaware a 501(c)(4) shell corporation to which donations can be given anonymously without limit and used for political purposes, similar to American Crossroads.[16] It was initially named the “Anonymous Shell Corporation”,[17] but according to the Delaware Secretary of State’s Office the official name was changed to “Colbert Super PAC SHH Institute” on the same day.

      Donations made to the shell corporation could be funneled to ColbertPAC without disclosure of the ultimate source of the donation. When Colbert asked what the difference is between this and money laundering, Potter answered, “It’s hard to say.” [18]

      Colbert was the sole board member of the shell corporation and initially served as president, secretary, and treasurer of his organization, whose stated purpose was to educate the public.[16] However, the organization could legally donate to his Super PAC, lobby for legislation, and participate in political campaigns and elections, as long as campaigning is not the organization’s primary purpose. Colbert’s organization could legally accept unlimited funds which may be donated by anonymous donors. Since the FEC doesn’t require full disclosure, Colbert likened his 501 (c)(4) to a “Campaign finance glory hole”: “You stick your money in the hole, the other person accepts your donation, and because it’s happening anonymously, no one feels dirty!” Colbert said in September, 2011 that he was looking for a billionaire donor, or in the language of Colbert, a “sugar daddy.”[19]

      According to experts, Colbert’s actions were perfectly legal and shine a light on how the financing of elections has dramatically changed since the Citizens United ruling.[16][17]

      The Colbert Super PAC’s treasurer, Salvatore Purpura, resigned on August 11, 2011 to work as campaign treasurer for Rick Perry. Shauna Polk took over treasurer duties for Colbert’s PAC.[20]


    2. Borsabil

      Oh long winded justification for the inexcusable. There is no ‘debate’ here, the IRS has admitted inappropriately targeting right wing political groups, the only controversy exists in your own mind. I like seeing two faced liberal douchehounds expelling verbal excreta in justifying a quasi fascistic government using civil service agents to harass and stymie political opponents, your time will come.

      Meanwhile we should all sit back and watch the show. The threat of spending time behind bars as a plaything of Bubba tends to concentrate the mind. Dem ‘low ranking officials’ in the Cincinnati office, who apparently just decided one day to start harassing tea baggers, as a distraction from their excel spreadsheets no doubt, will even as we speak be consulting their attorneys, they’ll squeal like day old piglets.

      1. jrs

        “There is no ‘debate’ here, the IRS has admitted inappropriately targeting right wing political groups, the only controversy exists in your own mind.”

        People admit all kinds of things to get out of a “scandal”, admitting it proves absolutely nothing by itself.

        “I like seeing two faced liberal douchehounds expelling verbal excreta in justifying a quasi fascistic government using civil service agents to harass and stymie political opponents, your time will come”

        Actually it’s always the left’s time for persecution. Assasination attempts on Occupy, persecution of Oregon anarchists, etc. etc. Assasination = even scarier than a tax audit, wowza.

      2. Eric

        Political opponents? I thought they were merely advocating social change and therefore extra scrutiny was inappropriate.

  12. Dan Kervick

    Oh, come on. “Enemies list”? These right wing Tea Party groups probably came under greater scrutiny because there is every reason to suspect that a bunch of them were just been tax evasion scams, as tax evasion is a beloved pastime of the far right.

    None of these “scandals” deserves the attention it is getting.

    What does deserve attention is the US Treasury Department, US Justice Department and the US Congress are wholly owned subsidiaries of corporate America and Wall Street, and that as a result they have been permitted to loot, cheat, defraud, disemploy and abandon half of America, without anybody going to jail over it.

    1. Anonymous

      I agree. The tea party and conservative groups are most likely being used by the rich to evade taxes, hence, the extra scrutiny from the IRS. This IRS “scandal” is no scandal at all. What’s the big fucking deal? It’s not like these conservative groups were audited and all thrown in jail. They just received extra scrutiny which sounds more like a precautionary measure on the part of the IRS to try to clamp down on tax evasion because of all of the “deficit hysteria” fanned by (guess who?) the same conservative groups who are now whining and bitching about being examined by the IRS. The additional scrutiny seems like sweet justice to me more than a headline news story. It’s hypocrisy for one to bitch about debt and deficit in public while privately exploiting tax havens and tax shelters. I’m so sick of seeing this faux-scandal as the lead story on every TV news program, I feel like throwing my TV out of the window. The bigger scandal is the scandal that no one is hearing about and that scandal is the shift of the tax burden from corporations and the rich to people who work 8 to 5 every damn day even though worker wages have stagnated for 40 fucking years. Ask any naive dumbass American about the latest news and he or she will tell you about the IRS scandal and may even talk about that brain-damaged football player who pissed on an IRS building. Meanwhile these same Americans have no clue that they’re all being underpaid. If these people don’t like paying taxes, why don’t these assholes just get rid of the IRS completely so we can all experience life with no military, no police, no firefighters, no public hospitals, no public colleges and universities, no roads, no highways, and no fucking government and no law and order? Let’s see how everyone would like that kind of freedom.

      1. jrs

        No military, the rest of the world will like that kind of freedom (from imperailistic U.S. domination) just fine. Best thing ever to happen to the rest of the world.

  13. mac

    It should make no difference whether you are Liberal or Conservative. The actions of the IRS in this case should make you angry. It is wrong wrong wrong.

    1. The Rage

      lol, you don’t get it. The donors are the key. The fact the international financiers were setting up so many “political groups” was the reason why they were audited. The fact the “progressive” had far less thus was not as obvious amazes me people can’t get that.

      Notice the cross checking with Israeli finanicers who then can be connected to the European Rothschilds investment houses is why this will die. Lets just say, the “right wing” groups don’t want that out.

  14. MB

    The thing that struck me as code, was Obama’s comment that he would go all “Bullworth” on them. (the politician who tells the truth, which turns it all upside down”. Seemingly, code to shut the _____ up or get ready to eat some of your own cooking. I LOVED that. Rent that movie!

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