The Real IRS Scandal
>>> day, another darrell issa hearing on the irs.
>>> the house oversight and government reform committee is holding another hearing on the irs.
>> we've only had six hearings on the irs. shouldn't we have more?
>> the laws exclusively --
>> exclusively involved in the social welfare.
>> the laws exclusively in the implementing regulation is primary.
>> the regulation says primarily.
>> why don't you have to follow the law?
>> i don't want to presuppose what the interpretation of sclus itivity is. i have a regulation that i have to abide by. that uses the word "primary."
>> it's out of compliance with federal law. nonch political group should get this status.
>> aiming sees must follow the law.
>> this was the targeting of the president's political enemies.
>> the administration is still their paid liar, spokesperson.
>> and lies about it during the election year.
>> he is still making up things.
>> there is some concern that issa may have pushed it too far.
>> congressman darrell issa is grilling irs officials.
>> today he has been more measured.
>> i want to thank you. this is a good start. i don't want to trap anyone. no, you're good? you're good?
>> there seem to be a more tempered darrell issa.
>> i want to thank the president.
>> holy [ bleep ].
>> for appointing you to an acting passion.
>> there seem to be a more tempered darrell issa.
>> another secret surprise.
>> it is vexing, i think, to all of us.
>>> today, darrell issa's house committee on oversight and government reform called in the man whom president obama sent in to fix the irs, and finally, in the testimony of acting commissioner david warfell, the truth came out, the smoking gun was found and we now have proof that federal law was violated.
>> i know the regulation now is more than 50 years old. but do you know why treasury changed it from exclusive to primary?
>> i do not.
>> you do not.
>> and is there any reason why you think we should not use the exclusive test today?
>> i think it's something that i don't -- i want to work with the treasury department and committees in congress to explore. right now i have a regulation that i have to abide by that uses the word "primary." and so that's what i'm working with.
>> regular viewers of this program learned nothing in this exchange today, because you've all known for weeks now that the law written by congress 100 years ago on 501(c)(4) tax status says an organization must be involved exclusively in social welfare in order to qualify for that status and the law has said for years that a social welfare organization is not organized for profit, but operated exclusively for the promotion of social welfare. but in 1959, for reasons no one can figure out, the irs changed the word in the law exclusively to the word "primarily" in guidance that the irs writes for its agents in enforcing the law. in 1959, the irs violated the law by changing the law, without congressional authority. that was all in the hearing today. if the irs hadn't changed that law in 1959, every political organization applying for 501(c)(4) status would have been rejected and there would have been nothing scandalous about that. today, washington is pretending its scandalous that the political organizations applying for the 501(c)(4) status, that they did not deserve, and should have been met -- they should have been rejected. that the scandal is that they got -- they didn't get approved fast enough. they were all approved. they just didn't get approved fast enough. but only a few democrats in washington realize what the irs scandal really is. here's nevada congressman steve horseberg.
>> the laws exclusively -- why don't you have to follow the law?
>> actually, i have to follow the law and regulation.
>> so the law is exclusively.
>> the law is exclusively and the implementing regulation is primary. and that's part of the challenge.
>> so the regulation is not in compliance with federal law.
>> i --
>> correct?
>> i don't know that i can answer that question. i think that's something that we have to review with --
>> well, you said earlier that primary activity is not the same as exclusive.
>> it's not. and --
>> so therefore, it's out of compliance with federal law. and i believe, mr. chairman, that agencies must follow the law. we as congress set the law. we haven't changed the law from exclusively. and it's important that you implement your regulations accordingly. i'm glad to hear that you're reviewing that.
>> i am.
>> with the treasury, and that you have agreed to some bipartisan participation. because the law is exclusively.
>> and i want to be clear. the ambiguity that's created between the law saying exclusive and the regulation saying primary is a problem. and it's, you know, one of the contributing factors.
>> so therefore, the reg needs to be changed to be in compliance with federal law. unless capping changes the law, that's the standard.
>> alex wagner, i rest my case. i rest my case. my work is done here.
>> drop the mic. i'm out ahere.
>> i wish a single cable news host had picked up on this! who -- i should have been educated about this before today.
>> didn't even have to start your own 501 c 4 organization, as i unwisely suggested several weeks ago. but it is actually -- i feel like you deserve at least a golf clap for that, because it is a big deal. and finally congress has clued into it.
>> is there -- did something happen in that hearing today, besides that, that gives the feel of the wind going out of the sails of this thing?
>> yes.
>> the issa politeness, the thank you very much, mr. president for this wonderful new director?
>> we sat at this table a week ago. i think it was a week ago, two weeks ago. and i said, there is no -- there is not the fire -- there are not enough, like, logs in the fire to keep this burning for very long.
>> no page 2.
>> there's not a page 2. and they have -- now, let's be clear. they have tried to, like, turn it over to, like, star trek videos and offsite conferences and stuff.
>> for which we thank them.
>> for which us in cable news like star trek videos, which is why they have been successful. but this specific issue has burned itself out.
>> darrell issa is not going to stop. he, darrell issa, accused the irs of malicious self indulgence. let's unpack that. darrell issa accused someone else of malicious self indulgence. i'm dropping my mic on that.
>> he was a little kind of pot and kettle thing.
>> maybe, just perhaps.
>> so here is the -- what they want to turn it into at minimum, even if it leaves center stage of washington hearing rooms and all of that. and that is what the chairman of the florida republican party put out in a memo, advice to republicans about how to exploit the irs story. i encourage you to use this in your campaigns when you're on the trail. ask your democrat opponents. are you comfortable with the irs overseeing your health care? w why? why would you hold the obama administration for their hand in the irs scandal? how?
>> this is the dangerous part of this, i think. is the republican party is not predicated on any new policy ideas. i mean, mitt romney's campaign was built on obfuscation. it's clear that the gop is built on obfuscation. and what they're going to try and do is use this as a tool to unwind obamacare and undermine the democratic project on hold. and you know what, unfortunately, lies gain traction in modern society and especially within the republican base. michele bachmann's lies about vaccines causing autism are believed by a fifth of this country. and that's where the counter narrative has got to be strong.
>> i would say this --
>> which is the truth, by the way. the counter narrative is actually the truth.
>> on day one, the story this broke, i think it was ted cruz's speech writer tweeted out about like this is the same -- these are the same people who are going to handle obamacare? so from the first day they have had their sights on this. b., that's a pretty good attack. if i were running as a republican candidate, i would absolutely use that. and with all of the stories swirling around and people reading things out of the corner of their eyes, that's absolutely going to be a problematic political attack for democrats, no question. the third thing of this is, republicans hate the irs and they have always hated the irs.
>> everyone hates the irs.
>> what did gingrich congress do after '94? this is just -- they're doing the same thing all over again. a whole other set of issues there. but they just dragged the irs before committees, and they beat them up. they deappropriated them. stripped down their ability to actually do their job. this is a long tradition for republican members of congress to go after this agency.
>> and they have also used -- they tried to use this situation to say, oh, look, this is why there shouldn't be a tax code. and instead of saying, hey, wait, this is why you should use the word that's in the law exclusively, they go, no, no, no. this is why you should erase the entire tax code, get rid of it, get rid of the irs, so that we'll just have a sales tax or something.
>> it's substantive proof they're not actually interested in any kind of reform. this would have been the perfect avenue to say, you know, what let's have a bipartisan conversation about reforming the tax code, which is onerous and confusing. but that hasn't been -- that hasn't been the result of this. it's been let's strike down the tax code, you can't trust government and obamacare is terrible and we're going to repeal it for the 48th time.
>> this is one of the weaknesses of the original mandate in health care. every policy you make, there is some weakness to it, a positive to it. one of the weaknesses always was that it does get, quote, enforced through the tax code. which is to say, as in massachusetts, you just put a little thing on your tax return that says, here's my health insurance. and if you have the health insurance, you in effect get a deduction. if you don't have the health insurance, you don't end up getting that deduction. it's just like your mortgage deduction, same thing. but because it exists in that dreaded irs, you have opened up this little attack window on the health care bill.
>> i mean, the grandest irony in all of this, because of agitation in the legislative process, it's actually in the law, the affordable care act, that essentially cannot actually be enforced. they're actually statutorily barred from reaching in and garnishing the money that they would need to enforce the provision. so actually, at the end of this whole chain of logic, they can't enforce the mandate to begin with, because of precisely those complaints. you're exactly right, which is part of the problem here is, there is a perverse incentive on the part of republicans to make the paying of taxes and everything having to do with the irs as horribly complicated and messy and terrible as possible to create a pavlovian response in the american taxpayer that associates just onerous burden and frustration with the act of paying taxes. and there have been for years and years, as you well know, testimonies and progressives who have proposed all sorts of ways to make paying taxes easier and simpler. the automatic, you know -- the automatic file that would cover up 80% of taxpayers. and republicans and conservatives kill it every time because they want more than anything complexity and they want people to feel frustrated and angry.
>> the finance committee, we used to have hearings every april about how complex filing was. we had experts come in who filled out their own tax returns tell us how long it would take them, 28 hours. and we would say, okay, here's our solution to that. we can do it this weigh. no movement from -- .
>> isn't that sort of the republican project on every aspect of government at this point? that's what's happening with obama care. it's like state governors aren't going to opt into the exchanges.
>> to make them bad.
>> to make them bad. the thing -- the light at the end of the tunnel here is, look at minnesota and wisconsin. okay, minnesota is going to have the exchanges. what if it works? the people of wisconsin will look over and think, oh, i am poor, i am sick, i have no health care. why is it that people a couple miles over have a functioning system, and one will hope that the sort off -- the democratic process will lead to leadership that recognizes the needs of their actually constituents rather than governing by ideology.
>> but the -- the tragedy of this irs story is that it has opened up this -- at the moment when you don't want it, this particular attack angle on the affordable health care act. when you're heading into -- up the implementation hill now going right toward it.
>> yeah, i mean, look, there's some pulling out today that suggests it's a pattern near the bottom of its trajectory in terms of popularity which i wouldn't find surprising, the impending train wreck.
>> and money spent.
>> and money spent. the proof in the put something in the eating. which means a year from now or 18 months from now, what's going to matter is whether it's working or not. and you know what, if it doesn't work -- really, if it doesn't work, democrats will pay a price.
>> we're going to have to stop it there, because i have to finish reading the paper back edition of the twilight of the elites --
>> pocket-ready.
>> christopher hayes, the hard back edition was beautiful. and i love the changes, by the way. beautiful, brilliant --
>> lawrence o'donnell citations in this version.
>> brilliant touches in here. al alex wagner and chris hayes, author of "twilight of the elites." let's see what happens on amazon with that.
>> i'll be clicking refresh.
>> check amazon so we can tell exactly what "the last word" bump was.
>> i'll report back next week.
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