Tilting at Windmills

July/ August 2013 Launch pad follies … Roger and Rupert … How to refuel your private jet

By Charles Peters

More scrutiny, not less

For the Internal Revenue Service and tax-exempt groups, the real scandal lies not with the few that have been over-investigated, but with the many that continue to function with too little scrutiny. As of 2012, there were 1,616,053 organizations in this country that were tax exempt—supposedly on the basis that, among other things, they are nonprofit. Time’s Michael Grunwald, a journalist with a gift for raising questions that seldom occur to other reporters, asks why an organization that doesn’t make a profit should need to be tax exempt. After all, income taxes don’t have to be paid if an organization doesn’t have a profit.

Grunwald proceeds to inquire how it is that Harvard has salted away $31 billion over the years if it hasn’t had a little left over each year. And I would add if the National Football League is truly nonprofit, how can it afford to pay its CEO, Roger Goodell, $29.5 million a year? You can argue that Harvard deserves a pass because it’s educational, but what is educational about the NFL?

Ailes calls the shots

An interesting tidbit was buried at the end of a long article in the New York Times by Brian Stelter about the coverage of the gun control debate by Fox News, and about how, to the limited extent it was covered, it was to defend gun rights. At one point, Sean Hannity called Sandy Hook families “props for [Obama’s] agenda.” Gun control is one of the few liberal issues embraced by Fox’s owner, Rupert Murdoch, so why haven’t the folks at Fox given it a hug? Here’s where the tidbit comes in: “The chief executive of Fox News, Roger Ailes, has almost complete autonomy. Mr. Ailes reportedly has a license to carry a concealed handgun in New York City, where Fox News is based.”

What to do if your butler is sick

Recent examples of how the Wall Street Journal provides its readers with news it can use: for mansion owners, the Mansions section describes how an 8,300-square-foot dwelling complete with a bowling alley can be moved back 275 feet from the water’s edge on Martha’s Vineyard, in case of beach erosion. For private jet owners, who have been faced with “opaque and jumbled” refueling costs, Dennis K. Berman provides the glad tidings that an app, known as FuelerLinx, lists the best prices for jet fuel at airports around the world.

“Sorry, he won’t be in until next week …”

That embarrassing IRS conference actually took place in 2010, not last week as so much of the recent indignant reporting implied. The IRS and other government agencies have slowly reformed since the General Services Administration fiasco. The continuing scandal is that almost every other organization in America from beauticians to embalmers has one of these meetings at least once a year. They are supposedly held for educational purposes and are thus tax deductible, but more often, they are devoted to sports, entertainment, and other recreations.

The Monthly’s first comment on this came in a 1977 article by Walter Shapiro and Aleta Kaufman, “Conferences and Conventions: The $20 Billion Industry That Keeps America from Working.” The absurdities of these get-togethers—dozens of which have been attended by almost every single member of Congress—have subsequently been a staple of this column.

I first learned about the fun and games when I was a lawyer in West Virginia in the 1950s. The Bar Association held an annual convention at the Greenbrier Hotel, where a dutiful minority of members spent a minority of hours in meetings, before they joined the majority who were already playing golf and consuming alcoholic beverages. Most conferences and conventions are held in places like Miami, Honolulu, or Las Vegas. My solution is to require them to be held in Buffalo.

Missing-the-point-gate

As a caution against the media’s tendency to overreact, let us not forget the firestorm of journalist indignation aroused by the Justice Department’s recent investigations of the Associated Press and Fox News. You would have thought that reporters had been arrested or jailed, or actually shot, as they are in many other countries. In fact, of course, none of these terrible things happened and, as these stories prove, we still have a press remarkably free to criticize the government.

It can be argued that the Justice Department’s investigations have not been conducted wisely, but not that they were unwarranted. Genuine national security issues were at stake. Both stories tipped off our enemies—North Korea and terrorists in Yemen—that our intelligence agencies had obtained a window into their secrets.

In the case of North Korea, the Fox News story by James Rosen, based on a leak from a State Department contract employee, reported that the North Koreans planned to conduct another nuclear test. Since that decision had only just been made and was tightly held within a small circle of top North Korean leaders, the story in effect revealed that we had a way of penetrating doors they thought were closed. As for the Yemen leak, the AP story exposed a CIA plot that had placed an agent inside an al-Qaeda affiliate and managed to obtain one of its bombs, but had not yet been able to find the bomb maker. The AP story meant nothing less than that a promising intelligence effort had to be abandoned.

Dana Milbank, by keeping his tongue planted firmly in his cheek, usually manages to resist joining the crowd, but this time he was typical of his colleagues in describing the AP investigation as the “Justice Department’s trampling of press freedom.”

Oh, please

In the indignation over the IRS’s investigation of the Tea Party groups’ applications for tax-exempt status, my favorite example comes from the Journal’s Peggy Noonan, who writes that the only purpose of the right-wing Texas group True the Vote was to “keep dead people off the [voter] rolls.” Noonan is not stupid—she wrote some of the more eloquent of Ronald Reagan’s speeches—so it’s hard to believe that she didn’t know that True the Vote was trying to keep not only dead people from voting, but also every black, Hispanic, and any other voter who happens to favor Obama.

The real stories

The IRS story, like the Benghazi talking points story, is not a political scandal, but a bureaucratic one. The Washington Post’s David Ignatius explains: “What you find [in the Benghazi emails between the State Department and the CIA] is a 100-page novella of turf-battling and backside-covering.”

The question to ask about the IRS is not whether too many of its employees are politicized, but whether enough of them are competent and dedicated to public service, not to positioning themselves for lucrative jobs in the private sector.

Dazed and confused

The best coverage of the IRS scandal comes from two articles in the Times by our alumnus Nicholas Confessore and his colleagues, David Kocieniewski and Michael Luo. The first headline reads “Confusion and Staff Troubles Rife at I.R.S. Office in Ohio.”

It should be noted that there is reason for the people in Cincinnati to be confused. In the late 1950s, as I believe MSNBC’s Lawrence O’Donnell was the first to point out, the IRS adopted a regulation interpreting the law governing the tax-exempt status of 501(c)(4)s. Instead of requiring that an organization be “exclusively” involved in social welfare, as the law had done, it now required that the organization be only “primarily” involved in such activities. And “primarily” is not as easy a standard to apply as “exclusively.”

As the Times story points out, the bureaucrats in Cincinnati charged with carrying out this murky mandate—and processing roughly 70,000 applications for tax exemption each year—were performing a task considered “unglamorous” and avoided by other IRS employees. The Times quotes a former lawyer in the IRS’s Washington office saying, “Nobody wants to be a determination agent. It’s a job that just about everybody would be anxious to get out of.” This means that this difficult task was likely to have been left to those not astute enough to avoid it, while the people who were needed to advise them were back in Washington.

The situation that arose was rife with the potential for misunderstanding—the kind of misunderstanding that seems to explain the delay by the Cincinnati office in carrying out Lois Lerner’s 2011 order to stop using the Tea Party test. What I find most maddening about all this is that it is so predictable. You don’t have to study bureaucracy for long to become aware of certain probabilities. When a job is shunned by the clever, it’s likely to be left to the less clever. When the headquarters is in Washington and offices are in the field, miscommunication and misunderstanding are not only possible, but probable, with a resulting tendency to blame the fellows in the other place for anything that goes wrong.

The blame game

Who should be accountable in this case? More than any other official, Douglas Shulman, who was appointed by George W. Bush and was the head of the IRS during the entire period in question, should have been responsible for avoiding these predictable problems. And those of his subordinates who came up with the outrageous questions, like the ones about religious belief and practices, should be held accountable too.

But accountability should not end with Shulman and a few IRS employees. The White House, Congress, and the media all need to be accountable for preventing the predictable. What they have usually done instead is to act only after a predictable problem has led to a scandal or disaster. Barack Obama says that Robert Gates told him shortly after he took office that “someone, somewhere in the government was screwing up every day.” Yet despite that warning, Obama has too often seen his job not as preventing problems but as fixing them only after they have become obvious to the public.
Members of Congress have long neglected the prevention side of their responsibility, too, instead focusing on trying to impress voters and get reelected by conducting investigations with the potential to make headlines. Similarly, members of the media, most of whose eyes glaze at the mere mention of the word “bureaucracy,” view reporting on scandals, disasters, and the political horse race as the best way to maintain and expand their audiences. Even the political scientists who are supposed to teach us about government focus primarily on policy and the electoral process, and not on how Washington really works.

Scylla and Charybdis

Obama deserves blame for his disinterest in fixing problems before they become scandals, but in a couple of cases, he may deserve a pass. If he had fired the Bush-appointed commissioner, Shulman, can you imagine the headlines that would have resulted? “Obama tampers with IRS.” “Obama politicizing the IRS.”

The Post’s Ruth Marcus makes a similar “damned if you do, damned if you don’t” point about the Justice Department’s investigation of the AP. Suppose the White House, having decided the investigation had gone too far in getting phone records for roughly 100 journalists, had tried to rein in the investigation. It would have been a political disaster. “The political people need to stay away from meddling or appearing to meddle in criminal probes,” Marcus wrote.

Ironically, she also points out that the administration began the investigation because it would have been accused of a cover-up if it hadn’t investigated the leak.

Telltale words

If there are people at the IRS who need to be fired, as I’m sure there are, I pray that the smart ones who are just trying to do a good job are left alone. I’m especially concerned about those whose sole mistake
was originally grouping the Tea Party applicants for a careful look. Can you think of two words that suggest a greater propensity for political activity than Tea Party? For those who contend that the left wasn’t similarly targeted, can you think of any words used by liberal organizations with similar import and frequency?

Yikes

Speaking of national security concerns, there’s a lot going on that seems more suited to the front page than some of the “scandals” the press has been featuring lately. Both the Times and the Post buried this story on an inside page: seventeen Air Force officers who launch nuclear missiles have been stripped of their duties because of what one of their commanders described as “rot in the crew.” The Air Force’s disciplinary action did not become known until the AP discovered an email from Lieutenant Colonel Jay Folds that, in addition to making the rot comment, said, “We are, in fact, in a crisis right now.”

The seventeen are part of a group of 150 officers in the launching unit in North Dakota. Precisely what they did to get themselves in hot water is not clear from the email, but Bruce G. Blair, a former missile launch officer, offered this explanation to Michael Gordon of the Times: “The missile crews know that there is no career future for them in their field. And that has led to low morale, some loss of discipline, and sloppier performance, including the intentional violation of nuclear rules.”

As I read the email, I remembered a movie from three decades ago called War Games. In it, Matthew Broderick plays a teenager who, fooling around with his computer, almost caused a nuclear launch that would have brought about World War III. Oops, we just took out Shanghai.

That’s forty-seven subsidiaries per regulator

Seventy regulators from the Office of the Comptroller for the Currency and forty examiners from the Federal Reserve are stationed inside JPMorgan Chase. They have been blamed for not catching on sooner to the fact that the bank was hiding losses from the London Whale’s trading operation. Clearly, they deserve some of the blame. According to Danielle Douglas of the Post, one OCC regulator admitted that he didn’t realize what was going on until the Journal first reported the scandal. But I began to sympathize with the regulators when I discovered, from another article in the Journal, that JPMorgan Chase has 5,132 subsidiaries—more than half of which are overseas.

Devoid of feeling for your fellow humans? Worry not

Business schools are now trying to find out, through personality tests and standardized questions in personal interviews, if their applicants are sufficiently empathetic, reports Melissa Korn of the Journal. You may recall that in our last issue I cited another of Korn’s articles about business schools’ efforts to get their applicants to be “genuine.” She found that Kaplan-type consultants quickly offered applicants practice on how to appear genuine. This time, Korn does not mention the possibility of consultants, but she does note that “star students tend to provide the same responses.” Which leads me to confidently predict that the consultants will soon supply those answers—for the right fee, of course.

Lessons from the other side

The people we disagree with often have a good point worth acknowledging. For me this has been the case in recent books by William Bennett, the secretary of education under George H. W. Bush, and Donald Rumsfeld, the secretary of defense under George W. Bush.

Bennett’s Is College Worth It?, which he wrote with David Wilezol, finds the federal government to be the principal villain behind the problems of higher education. That point I did not find compelling. But you have to admit that he has a legitimate concern when he writes that of all the college courses across the country that give letter grades, 43 percent of the grades are As.

Too many of today’s college courses are simply too easy and enable students to glide through to graduation without having their minds disturbed by the intrusion of a single new thought. The first time I ran into this was in the course catalog for the Teachers College at Columbia University, where one of the offerings was “How to Teach Listening to the Radio.”

On taking your own advice

In Rumsfeld’s Rules: Leadership Lessons in Business, Politics, War, and Life, he proposes a sensible rule: “Encourage everyone to give their views, even if it will ruffle some feathers.” I only wish that in the run-up to the invasion of Iraq, he and W. had followed that advice. To the contrary, Rumsfeld reportedly lost respect and patience for General Eric Shinseki, who is now the head of Veterans Affairs, after Shinseki disagreed with him about the troop strength required for the war.

Cutting off your nose to spite Obama

One of the worse aspects of the Republican plot to subvert Obamacare is the refusal of Republicans in state legislatures in Texas, Florida, Kansas, Alabama, Louisiana, Mississippi, and Georgia to expand Medicaid to help people below the poverty line get Obamacare. Sandy Praeger, the Kansas insurance commissioner, tells Robert Pear of the Times that the “‚ÄČ‘poorest of the poor’ will fall into a gap in which no assistance is available.” Pear adds, “More than half of all people without health insurance live in states that are not planning to expand Medicaid.”

And those states have more bad news for the poor. “Of the 40 states that offer state-subsidized preschool, 27 have reduced per-child funds in 2011-12,” according to Motoko Rich of the Times. Rich also notes that, according to a Department of Education report, “quality standards for preschool programs had slipped over the past year.” This is especially alarming because quality standards have been too low in the past.

Many Head Start programs began as offshoots of the War on Poverty’s community action programs in which teachers were hired as part of a jobs program for the needy. Applicants were required to be members of the “community” regardless of whether the community contained an unemployed person with the aptitude and knowledge to be a good teacher.

How do I love me? Let me count the ways

There is new evidence of how the trend toward self-absorption has grown over the last fifty years or so. “Between 1960 and 2008, individualistic words or phrases increasingly overshadow communal words or phrases,” writes David Brooks, reporting on a study by Jean M. Twenge, W. Keith Campbell, and Brittany Gentile. Words like “self” and phrases like “I come first” have become more common, while words like “share” and phrases like “common good” appear less often.

Political bones

If I haven’t convinced you about the carelessness of the reporting on these recent “scandals,” try these examples. The Post’s Chris Cillizza described Lois Lerner, the IRS official who first made public that agency’s scrutiny of Tea Party groups, as “living up to every negative stereotype of a federal worker.” Ms. Lerner may not be blameless, but when Elizabeth Williamson of the Journal took the trouble to ask people who had worked with Lerner about her, they described her as “smart, talented,” and “without a political bone in her body.”

As for the Rosen and AP investigations, Nicholas Kristof, as a guest on CNN’s Fareed Zakaria show, spoke of the chilling effect on whistle-blowers, echoing dozens of commentators on other programs. Yet, neither case involved a whistle-blower. They both involved disclosing secrets that had nothing to do with agency malfeasance. In fact, they’re about agency successes.

Kelly O’Donnell of NBC Nightly News sympathetically reported and commented on testimony by a Wetumpka (Alabama) Tea Party worker complaining about the questions the IRS asked her. So far so good—the woman deserves sympathy for answering those bizarre questions. But shouldn’t O’Donnell have at least mentioned that at the time the IRS application was pending, the Wetumpka Tea Party was, according to the Times, dedicated to “the defeat of President Obama”?

Guilt and reporting

I want to congratulate the Post’s Rajiv Chandrasekaran for a courageous, fact-filled report about how generously compensated, through a combination of pay and benefits, the members of the American military are. This is a story that has largely gone untold, I suspect because only a handful of reporters and editors have served in the military and either don’t know the facts or feel guilty about criticizing the people who are serving while they aren’t. They’re right to feel guilty—this country would be a lot better if more people like them performed military service—but that shouldn’t keep them from facing and reporting the facts as Chandrasekaran has done.

Charles Peters is the founding editor of the Washington Monthly and the author of a new book on Lyndon B. Johnson published by Times Books.

Comments

  • David Merkowitz on July 29, 2013 10:34 PM:

    Re: The July/August Tilting at Windmills
    Charles Peters praises Time's Michael Grunwald for questioning why nonprofit organizations need to be tax exempt. I haven't read Grunwald's piece (who does read Time anymore?), but maybe other reporters don't raise that question because the answers are so patently obvious.

    The main reason most nonprofits seek tax exemption is to achieve formal recognition as a charitable organization under Section 501(c)(3) of the Internal Revenue Code, which in turn makes donations deductible on contributors' income tax returns. In probably all states, it also exempts the organizations from paying sales taxes on their purchases and property taxes on land and buildings they might own. Whatever your view of the value of nonprofits--be they Harvard University, the Metropolitan Opera, the local Boys and Girls Club, or the Little Sisters of the Poor--many of them live or die on their ability to solicit tax-deductible charitable contributions.

    Another reason we should want charitable organizations to file for tax exemption: It's the only way we (via the IRS) can determine whether they are indeed operating as nonprofits, and fulfilling their charitable mission, rather than sheltering profit-making activities from federal, state, and local taxation. Under the IRS Code, charities' unrelated business income is subject to taxation.

    Certainly, a number of nonprofits, including the NFL and some universities, hospitals, and other charities, pay outrageous salaries to their top officials and spend a lot of money on activities not directly related to their main purpose. Curbing those kinds of abuses should be a worthy goal for members of Congress and federal and state regulators, but it's one that pays few political dividends and is not easily achieved.