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Obama Announces IRS Resignation, Promises Safeguards and Oversight Cooperation

May 15, 2013 at 12:00 AM EST
President Barack Obama announced that acting commissioner of the IRS Steven Miller would be stepping down, calling the political targeting scandal "inexcusable." Jeffrey Brown delves into the latest developments and lingering questions with Josh Gerstein for Politico and Paul Streckfus, creator and editor of EO Tax Journal.
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GWEN IFILL: And now we go back to the IRS story.

Just a few minutes ago, President Obama announced the acting director of the IRS has been forced out.

He spoke in the East Room of the White House.

PRESIDENT BARACK OBAMA: First, we’re going to hold the responsible parties accountable.

Yesterday, I directed Secretary Lew to follow up on the I.G. audit to see how this happened and who was responsible and to make sure that we understand all the facts. Today, Secretary Lew took the first step by requesting and accepting the resignation of the acting commissioner of the IRS, because, given the controversy surrounding this audit, it’s important to institute new leadership that can help restore confidence going forward.

Second, we’re going to put in place new safeguards to make sure this kind of behavior cannot happen again. And I have directed Secretary Lew to ensure the IRS begins implementing the I.G.’s recommendations right away.

Third, we will work with Congress as it performs its oversight role. And our administration has to make sure that we are working hand in hand with Congress to get this thing fixed. Congress, Democrats and Republicans, owe it to the American people to treat that authority with the responsibility it deserves and in a way that doesn’t smack of politics or partisan agendas, because I think one thing that you have seen is across the board everybody believes what happened in — as reported in the I.G.’s report is an outrage.

The good news is, it’s fixable, and it’s in everyone’s best interest to work together to fix it.

JEFFREY BROWN: And we pick up on some of the latest developments and lingering questions in this story.

For that, we’re joined by Josh Gerstein of Politico, who covers the White House specializing in legal and national security issues. He was at today’s House hearing. And Paul Streckfus, creator and editor of EO Tax Journal, a weekly newsletter focused on tax-exempt organizations.

Welcome to you both.

Well, Josh, clearly, the president felt he had to come out and do something quickly.

JOSH GERSTEIN, Politico: Yes, Jeff, this is really a White House in firefighting mode today, not just on the IRS story, but on the Benghazi story and as well as this AP leaks investigation.

Just a clear initiative from the White House to try to put some cold water on all these stories and to do it as quickly as possible, so they can turn the page and get back to some of the policy items on their agenda that they’re eager to deal with.

JEFFREY BROWN: He had said the other day he was waiting — and the outrage was there, but he was waiting for the inspector general’s report. We just heard him refer to that. That came yesterday.

JOSH GERSTEIN: Right.

And this has been a very difficult story, the IRS one, for the White House, because it’s not an agency that the White House typically has much control over, for obvious reasons, dating back to the Nixon years. And suddenly they find themselves confronted with a politically volatile controversy at an agency where they stress that they have only two presidential appointees.

So it took them a while to really get into a proactive mode to try to knock this down.

JEFFREY BROWN: Well, Paul Streckfus, tell us a little bit about this independence and who’s who here, first of all, the acting director who’s just left or been resigned, I guess, is the way to look at it.

PAUL STRECKFUS, EO Tax Journal: Yes.

I personally feel that it’s a loss for the American taxpayers and the IRS that Steve Miller has been forced out. He’s a dedicated public servant. There was nothing in the report that said that there was any political favoritism. True, there appeared to be some managerial incompetence, but I’m not sure you force someone out on that basis, especially when that individual might have been — is and — probably is in the best position to make the reforms that are needed.

JEFFREY BROWN: Well, how much independence does the IRS have in making the kinds of decisions about tax-exempt status of the kind that are being — are so much in focus right now?

PAUL STRECKFUS: Well, they are supposed to be independent.

There’s — I believe it’s a law that says the White House cannot contact the IRS commissioner or anyone at the IRS directly. Those contacts have to be done through the treasury secretary, Jack Lew. So it’s possible that the White House could have some impact, but they’d have to do it through treasury secretary. He would then have to talk to the commissioner. He would then have to talk to his employees.

Having worked at the IRS, I know that would get out to the public very quickly if that kind of activity was occurring. So it seems to me that much of the talk is about political favoritism, and yet I see very little evidence that there was an intent to go after the tea party groups and let others have a free pass.

JEFFREY BROWN: Well, what kind of firewalls exist to prevent politics from entering into these kinds of decisions?

PAUL STRECKFUS: Well, just as I said, the White House is isolated.

The IRS is very much nonpartisan. Most folks at the IRS are not involved in politics. It’s — from day one, you’re told not to favor any particular group or individual. If you were so — if you were a new employee and you did, someone would quickly come by and say, you know, we cannot be taking positions.

JEFFREY BROWN: Well, that’s — but that’s the question, because there is this — the question of potential rogue — rogues within the agency. Could it be isolated to a few people, or is there enough oversight that somebody would see this, somebody would step in? Who would that somebody be?

PAUL STRECKFUS: Well, it could be anywhere on the chain.

I recall many years ago when I was at the IRS, there were two individuals who actually were able to sort of put their views into action through their position. But the supervisors and others quickly became aware of what was going on, and stepped in, and basically separated them and said, this is not the way we operate.

I have — I have followed this area, the exempt organizations area, now for about 40 years, and followed the IRS E.O. function very closely. I see no evidence that anyone there is involved in favoring Republicans over Democrats or vice versa.

JEFFREY BROWN: Right, but even with these revelations about looking at the names of organizations with “tea party,” with other such names?

PAUL STRECKFUS: Well, that was a mistake.

But the idea was, in 2010, or whenever these — that was when the tea party movement started springing up. They then all started sending in these applications. The reality is, tea parties seem to be a lot like many political parties. If that’s the case, they belong under Section 527 of the code, not 501(c)(4), but the only reason they’re all coming in for (c)(4) is because you don’t to disclose your donors.

JEFFREY BROWN: Well, clearly, the Republicans — you were at the Hill today. They see it quite differently, that this was clearly targeting one side, and others were not — others were essentially getting a pass.

JOSH GERSTEIN: Yes, they view it as intentional targeting.

And they’re angry not only about that, but they believe that the senior IRS officials lied to them. We had a Republican member say that Lois Lerner, who is the head of the Exempt Organizations Division at the IRS, lied to him specifically and lied to his staff.

And obviously with Holder talking about a criminal investigation into all this, he mentioned that false statement charges are among the criminal statutes that they’re looking at in this investigation. So, they’re very eager to get to the bottom of it. And I was kind of surprised that Republicans said — seemed to be satisfied with the notion of a criminal investigation by the Justice Department.

We didn’t hear talk of a special counsel, not today anyway.

JEFFREY BROWN: But they are looking at the chain, right, of — because, again, we’re looking at people in a Cincinnati office or in a Washington office. What’s the chain? How far does it go?

JOSH GERSTEIN: Right.

I mean, the Cincinnati thing I think is a little bit of a canard, because that handled, as far as I know, all these exempt organizations. So, it just happened to be in Cincinnati. It seems to downplay it as a regional problem. It was really a national problem.

And they don’t believe corrective action was taken promptly enough here. And with something of this sensitivity, that may be why Mr. Miller’s resignation was called for. It wasn’t his fault that was this was done. In fact, most of it happened on his predecessor’s watch, but maybe he didn’t act quickly enough and wasn’t candid enough with Congress about what was going on.

JEFFREY BROWN: And I heard in some of the hearing today when I was listening, there was this question of, is the IRS really independent or not? That’s still out there, right? They report to Jack Lew, the treasury secretary. He reports to the president. These are all the questions around it.

JOSH GERSTEIN: It’s officially a Treasury agency, so it’s not completely independent. You do have an unusual I think five-year term for the IRS commissioner.

But these the questions that are swirling, and the Republicans were suggesting, this is not a problem that the president can completely divest himself and wash his hands of. It appears the president and his advisers agree, given the prominence of this announcement tonight, going on national television to announce that he’s dismissed the acting IRS commissioner.

JEFFREY BROWN: It’s not an end, though, because more hearings.

JOSH GERSTEIN: No. I mean, it’s an effort to throw water on all of this.

And you will have the ongoing criminal investigation into what happened here. But it’s an effort to maybe move this to the inside pages of the newspaper, instead of the front page.

JEFFREY BROWN: All right, Josh Gerstein, Paul Streckfus, thank you both very much.

JOSH GERSTEIN: Thank you.