The Intimidation Game (19 page)

By the end of 2015, Obama had taken to blaming Congress for the IRS targeting of conservatives. In an appearance on
The Daily Show
, he explained, “You've got this back office, and they're going after the Tea Party. Well, it turned out, no, Congress had passed a crummy law that didn't give people guidance in terms of what it was they were trying to do. They did it poorly and stupidly. The truth of the matter is that there was not some big conspiracy there. They were trying to sort out conflicting demands.” So much for presidential outrage.

All stories have endings, but the IRS scandal hasn't yet reached its last chapters. In many ways, that's depressing. It's been three years since Lerner's admission. We know the contours of the assault, but the details may well already be lost to destroyed IRS hard drives.

Then again, the lack of an ending is also inspiring. Because if there is one noteworthy American quality, it is tenacity. The players in this drama aren't giving up.

Jordan feels he knows generally what happened. “They saw this coming. The context is 2010. They'd done a bazillion dollars of crazy spending, stimulus, they were doing Obamacare, they saw the wave coming. They realized these groups are organized and focused and ready to vote. Democrats are hounding the IRS after
Citizens United
to act; Lerner gives a speech at Duke acknowledging she knows they are asking for just that; we have e-mails showing they were working on a (c)(4) project. It was all driven by raw politics and liberal ideology. No mystery there.” While Jordan has changed subcommitees in Congress, he's still investigating the IRS.

Fitton and his colleagues at Judicial Watch have done more than anyone to pry out damning information here and damning information there, and they're still doing it. He's still sitting on a mess of FOIA lawsuits, and still playing cat and mouse with the government. Judicial Watch has recently been attempting to get hold of Justice Department documents that expose the political nature of the Bosserman nonprobe. Justice continues to conveniently say that turning over any documents would compromise its investigation. Fitton's team of attorneys keep filing.

Mitchell still has clients dealing with the IRS. She's still involved in the movement, and still just as ripshit. She dialed in not long ago to a Tea Party conference call to answer questions about the IRS regulation. The call also featured a Tea Party member who had been tasked with explaining to the group the ins and outs of interstate health compacts. “And that's what pisses me off,” says Mitchell. “Here are these American citizens, calling in on a Sunday night, when they might be watching a movie, because they want to understand interstate health compacts. I'd love to know how many officials at the IRS, the ones holding the power to delay and deceive and make everyone jump, understand interstate health compacts.” Mitchell is still litigating.

Engelbrecht finally received her determination approval for True the Vote in September 2013, three years after filing. She received approval for King Street Patriots in December 2013, three and a half years after she first set out on that journey. Jordan calls her the “real hero” of the scandal, “a woman who suffered every form of government assault, and kept pushing to the end.” He remembers saying to her in a committee hearing, “You do know why they were coming after you, right? They were coming after you because you were doing a good job, and making a difference.”

Her voter-rights group work matters more to her now than ever. “I've realized this is no longer about Republican or Democrat,” she says. “This is about government versus the people. And at the end of the day, government will not correct itself. And so it has fallen on us, all of us, to speak out. It is on our watch. Otherwise, we are complicit and far worse will fall on our children. Whether or not you feel that the government has dealt you a short straw, you put that aside. You engage. You keep engaging. You be a part of this country.”

Jenny Beth Martin keeps growing the Tea Party movement. The IRS didn't kill that spirit. At the end of 2014, she had 599 active groups in her network. By the end of 2015, she had more than 700. Hundreds of volunteers every Sunday night call in to webinars to talk about policy and politics and the direction of the country. Hundreds more volunteers call in every Monday to talk about what's happening on Capitol Hill, and upcoming action. And she notes that the level of involvement these days “is just so much more sophisticated. We have people showing up in big numbers at events. We have people getting involved in campaigns—sometimes even running for office themselves. The level of engagement is maturing. People understand more than ever that they have to stand up.”

She's still demanding that someone be held accountable. “I to this day have people come up to me across the country. They are holding some letter from the government—maybe from the IRS, maybe from the Census Bureau, maybe something else—and they are shaking,” she says. “They think they are being targeted. Why wouldn't they? This goes to the foundation of our government, to the trust. There is a crack, it is deep, and it will only widen if someone isn't held responsible.”

Karen Kenney gave up on her application in 2012. But she too has never wavered in her belief that her group matters and needs to keep on. “There are reasons why each of us are here,” she says, “and even if I don't know the exact purpose, I'm going to have some meaning. And they can't stop millions of Americans who feel the same way.” After withdrawing her application to become tax-exempt, Kenney went through the process of filing to pay IRS taxes. It was at that point that she experienced the ultimate eye-opener. “Turns out we make so little money that we don't owe federal taxes anyway. We don't make enough. So we did all this. We went through this whole process to be tax-exempt, and we have zero liability to the feds. Can you believe that?”

(
One of God's little jokes. God, I do love your little jokes. Really, I do
.)

The Albuquerque Tea Party—the organization started by a West Point grad and Army Cavalry veteran, the group the IRS funneled aside as the “test case” in 2010—it hasn't given up on obtaining tax-exempt status.

It's been six years.

In the summer
of 2008, Don McGahn arrived at his first day of work, and the security guard nodded a familiar hello. McGahn had been coming to this little building for years, always as a visitor. Now the guard scanned McGahn's new ID and gave him a look. “Wait, you're one of the new ones,” the confused guard mumbled. McGahn shrugged: “Guess I'm official now,” he said. “Do you have any idea where I'm supposed to go?” The guard shrugged himself, and offered, “Guessing you go straight to the top floor.”

McGahn did go straight to the top floor, because that's where the chairman of the Federal Election Commission sits, and McGahn was now that guy. The political lawyer had visited the FEC's nondescript headquarters on E Street hundreds of times, always to defend a conservative politician or political group that had been dragged in front of the commissioners on some charge or another. He'd been a frequent witness in front of Congress and the FEC—usually along with Bob Bauer—testifying about McCain-Feingold rulemakings, trying to preserve free speech. George W. Bush had noticed, and the administration finally convinced McGahn to work from the inside. So back he went to the building, only this time with an office.

And a weird place it was. “It was such a different culture; it had an entirely different point of reference,” says McGahn, who at the time had just turned forty years old. A fraternity-like feel permeated the bureaucracy, complete with its own language, and a smug belief in purpose. When McGahn was appointed, the FEC hadn't had enough confirmed commissioners to function in months, and the staff had taken over the joint. “All these people kept coming up and saying, ‘We're so happy to have you join us,'” he remembers. “And I'd tilt my head and think, ‘I'm not sure what you mean. I'm not
joining you
. That's not how it works. I was appointed to be a commissioner. And I don't own a rubber stamp.'”

McGahn would serve what FEC observers say was one of the more consequential tenures in the agency's forty-year history. He'd reform procedures, drag FEC proceedings into the daylight, and help put the accountable people back in charge. And in the process, he'd realize—and expose—that the IRS wasn't the only part of the Obama administration that was going after conservatives. The intimidation was happening government-wide, including at an independent, bipartisan agency that had been purposefully designed to stay above politics.

The Federal Election Commission is one of the Watergate reforms, created in 1975. It exists to enforce campaign finance laws: the Federal Election Campaign Act, McCain-Feingold, and plenty more. Most “independent” agencies in Washington have five board members, a majority (three) of which belong to the president's party. Congress, in a rare moment of wisdom, realized that the FEC needed strict political balance. The agency sits six commissioners—three Republicans and three Democrats. And the law requires that at least four members vote affirmatively to take any action.

This frustrates the left and campaign finance believers, who feel that the FEC ought to begin from the assumption that money in politics is a bad thing. They have long been frustrated that some Republican FEC commissioners stand up for free speech and often do not approve action against election players. That's one reason why this community turned to the IRS—out of frustration with the FEC. Lerner had referenced that in her speech at Duke in October 2010: “Everybody is up in arms [about the flood of money to 501(c)(4) groups].” The “Federal Election Commission can't do anything about it; they want the IRS to fix the problem,” she said candidly.

The left also hates that the law puts all the power of the agency in the commissioners' hands. The FEC is, after all, staffed with bunches of lawyers and bureaucrats who were all drawn to the agency out of a desire to get money out of politics. They are primed to make new regulations, go after political actors, and tamp down on speech.

Yet what good are those bunches of bureaucrats when Congress really did put the commissioners in charge? When the FEC receives a complaint, for instance, it falls to the general counsel's office to first issue a report on the merits of any alleged finance violation. The commissioners then look, and vote on whether there is “reason to believe” a violation occurred. Staff is barred from conducting investigations or proceeding further without this green light. Staff is barred from liaising with law enforcement. Staff is barred from digging into or harassing the accused in complaints.

The FEC bureaucracy chafes under these restrictions, and over the years its response was to begin ignoring the law and slowly take over the agency. An early ringleader in this effort was none other than Lerner, who in her time at the FEC had pursued groups like the Christian Coalition. Lerner kept her ties to her old FEC haunt even when she moved to the tax agency. She remained a key contact for an FEC bureaucracy that shared her desire to stomp out speech.

The Lerner link would play a part in the FEC's own harassment of conservative groups. That link began in mid-2008, as the Obama-McCain presidential race raged and Democrats filed complaints with the FEC against all and sundry. One of these came from Bauer, as part of his unprecedented campaign against the American Issues Project (AIP) over its ads highlighting ties between Obama and Bill Ayers. Democracy 21, Fred Wertheimer's speech police outfit, also filed an FEC complaint against AIP.

The commission tends to work at a slug's pace, and it wasn't until February 2009 that an FEC general counsel's office attorney, William Powers, went sniffing to the IRS about AIP. He found Lerner. FEC documents (dug up by Judicial Watch) show that the bureaucrats were frustrated. They wanted to know what percentage of AIP's money it was spending on politics, but all it had were figures on the one Obama ad, and AIP hadn't yet filed any tax forms. Powers wondered to Lerner whether the IRS had issued an exemption letter to AIP? He also requested that the IRS Exempt Organizations chief share “any information” about the conservative group. He appeared to be fishing for Lerner's opinion on whether the group was out of bounds. He also put in a request about another conservative organization that had been singled out in a complaint, the American Future Fund. Nine minutes after Lerner received this request, she directed IRS attorneys to get on it.

Lerner shipped back information in March, and Powers happily exclaimed in an e-mail that it “looks as if it will be very useful.” One of Lerner's deputies would send another 150 pages about the two organizations later that month. By April, the FEC general counsel's office had recommended that the commission pursue AIP. In total, the general counsel's office issued three separate reports—each arguing a different legal theory for prosecution—as part of a four-and-a-half-year effort by FEC staff to bring down a group that had been singled out by Bauer for having criticized Obama.

Political operatives are a quirky breed. Maybe it's because they spend days trying to elect people who should be by any measure unelectable. Maybe it's because they spend too much time worrying about the FEC. Whatever the reason, some of them have fascinating alter egos. When McGahn came in search of his office that 2008 day, he sported shaggy longish hair, in keeping with his off-time persona as an accomplished lead guitarist for a band that covered Guns N' Roses classics at mid-Atlantic venues. He owns thirty guitars and once told
Wall Street Journal
reporter Brody Mullins that he'd strum on one as he read election-law filings and complaints.

McGahn was born into political savvy. He grew up in Atlantic City, and his uncle Joe McGahn in 1971 beat in an election Hap Farley, a thirty-four-year state legislator and the “boss” of the city's infamous Republican machine. The whole extended family was steeped in politics, and the future FEC chairman stepped into his first campaign headquarters when he was three. His first memories of Thanksgiving were dinner discussions about how to get the senior vote.

He went to Notre Dame, starting as a “delusional pre-med.” He remembers “dumping Calculus 2 and finding a sudden passion for history.” He ended up at a regional law school, Widener, and after a judicial clerkship landed at the powerhouse D.C. law firm of Patton Boggs. Unlike so many political attorneys, McGahn practiced what he called “real law”—litigation, antitrust, copyright, trademark—but when a senior lawyer asked for some help with a few campaign finance briefs, he jumped at the chance. Given his family background, representing politicians came naturally.

By 1999 he was the general counsel to the National Republican Congressional Committee, and he kept assisting that operation even when he began his own law practice. He made a name for himself, and is credited with developing many of the techniques still employed by party committees. There were always rumors that McGahn was about to be appointed to the FEC. But the stars didn't align until 2008, by which point nobody took the rumors seriously anymore. When his nomination finally came through, it sent a little bolt of outrage through some Democratic circles, egged on by the campaign finance “reform” lobbyists, who viewed him as a die-hard partisan Republican. (In reality he's a die-hard reformer, and a precursor to the more recent and more vocal variants of libertarian-leaning Republicans.) After a fairly brutal confirmation process, he got that office.

McGahn's a crack lawyer, and would have known that the American Issues Project complaint was nonsense. His political side would have told him the first general counsel's report against the group was fishy. But he never had to deal with most of it. The Supreme Court's
Citizens United
ruling made most of Bauer's complaint irrelevant, and the staff withdrew its proposal.

McGahn nonetheless noted that the level of “chatter” within the FEC about
Citizens United
increased dramatically. Maybe the FEC needed more coordinated investigations with other agencies? Maybe it could force more disclosure? McGahn noticed, too, that the “commissioners on the other side of the aisle became much more vocal about these nonprofit groups, and started mirroring the talking points that were being circulated by self-styled ‘reform' lobbyists at Public Citizen and similar groups.” The chatter increased in the early part of 2011, when House Democrat Chris Van Hollen, smarting over his DISCLOSE Act loss, filed a lawsuit to try to force the FEC to require more donor disclosure. “I call it ‘disclosure-mania,' where Democrats and the leftists decided to use the pretext of disclosure to undo
Citizens United
and intimidate and silence opponents,” says McGahn.

McGahn would only later find out about the staff's early, unauthorized dealings with the IRS about AIP. The staff hadn't received permission to commence an investigation, and shouldn't have had that contact. And he'd only later discover that this was just the start of the staff's behind-the-scenes efforts to get conservative groups.

Citizens United
should have ended the whole AIP affair; Bauer's complaint was no longer valid. Instead, the general counsel's office went digging. E-mails show that only a few weeks after Obama started complaining about
Citizens United
, in early 2010, Powers got back in touch with Lerner to see if she had any new AIP information. She responded the next day that the group hadn't filed anything more. More digging. It took the staff eighteen months, but it concocted a new rationale for prosecuting the group, circulated in a second report in September 2011.

Further changes in the law made
that
report moot. It too was withdrawn. The general counsel nonetheless made one last, novel attempt to nail AIP. Its third report, another eighteen months on, in March 2013, contained an entirely new theory about how such nonprofits should be judged. Taking cues from the disclosure-mania Democrats, it declared that AIP should have filed voluminous disclosure reports.

The FEC, for the purpose of measuring nonprofit spending, looks at the overall spending of a group. That makes sense. An organization might spend $50,000 during an election year on direct campaign activity, but $100,000 the following, nonelection year on education. Looked at over the span, the group is only spending 33 percent of its money on direct campaigning, well below half. Looked at in a single year, it's spending 100 percent of its money on campaigning.

And yet that's precisely the standard the FEC staff now wanted to impose on AIP. The nonprofit clearly had spent the majority of its money from 2007 to 2010 on its primary purpose of “educating and informing the public of conservative principles.” It poured money into an online advocacy project designed to promote grassroots outreach, and on a national education program on taxes, national defense, and climate change. Over two years, it spent less than one-third of its money on direct campaign expenditures—well below the bar. Even the staff couldn't argue otherwise. So instead they invented the brand-new “calendar year” theory, under which AIP broke the caps. The FEC staff really wanted to get this group.

The Republican commissioners were appalled. McGahn wrote for all three in their statement opposing prosecution in July 2013, in a scathing takedown of the staff's reasoning. He essentially accused them of malpractice and political bias. McGahn pointed out that the FEC staff had always taken a multiyear view, especially when it came to evaluating liberal groups such as the League of Conservation Voters or the MoveOn.org Voter Fund. “Here,” he wrote in the statement, FEC staff “could be seen as manipulating the timeline to reach the conclusion that AIP is a political committee.…Such after-the-fact determinations create the appearance of impropriety, whether or not such impropriety exists.”

He also shellacked the staff for attempting to impose this standard after the fact. “Due process ought to prevent such shenanigans,” he railed. Had AIP thought or known it would be subject to a different standard than the rest of the universe, it would undoubtedly have operated differently. And McGahn excoriated the staff for thinking it could implement such a dramatic change without asking any input from its bosses, the commissioners.