My article from the April 25, 2014 issue of FrontPage magazine:
Hillary, the Left-Wing Money Machine and a New IRS Crackdown
By Matthew Vadum
The Internal Revenue Service has revoked the charitable status of a conservative nonprofit group that disseminated statements critical of Democrats Hillary Clinton and John Kerry a decade ago.
This is President Obama’s unambiguous warning shot calculated to intimidate conservative activists ready to work against Hillary Clinton if she decides to seek the presidency.
And it is the latest outrage committed by an administration that has been on a vindictive rampage in recent years, using the feared tax collection agency to vex and persecute its political enemies, especially those associated with the Tea Party movement. And yet, absurdly enough, President Obama claimed in a Super Bowl weekend interview that there has not been even “a smidgen of corruption” at the IRS under his watch.
All of this is a sobering reminder of how the scales are tipped in favor of the Left. Left-wing nonprofit groups, many of which rely on radical billionaires for funding, vastly outspend conservative groups, which tend to rely more on grassroots donations. Leftist organizations operate with almost complete impunity nowadays, unimpeded as they influence and pervert American politics in an effort to fundamentally transform our republic.
The conservative organization with a bulls-eye painted on it is the Manassas, VA-based Patrick Henry Center for Individual Liberty. The Center “has shown a pattern of deliberate and consistent intervention in political campaigns” and issued “repeated statements supporting or opposing various candidates by expressing its opinion of the respective candidate’s character and qualifications,” according to a ruling released a few days ago by the IRS.
On its website, the Patrick Henry Center describes its mission as “fostering, promoting, and advocating the restoration of Liberty as the primary object of American society.” The Center “has committed itself to eight core principles that define the ideals of liberty and freedom as exemplified by our Founding Fathers, and articulated in our Constitution.”
Those core principles are listed as: “Individual Liberty”; “Limited Government”; “Personal Responsibility”; “Constitutional Rule of Law”; “States’ Rights”; “Free Market Economy”; “Provide for the Common Defense”; and “Protection of National Sovereignty.”
The IRS ruled that the group functioned as an “action organization” by publishing alerts on its website for columns written by its president, former FBI agent Gary Aldrich.
The agency reached back in history to provide several examples of supposedly over-the-line behavior. It cited a 2004 column in which Aldrich wrote, “if John Kerry promises otherwise ill-informed swing-voters lower gas prices at the pump, more than a few greedy, registered ignoramuses will follow him anywhere.” A 2005 item cited by the IRS was titled “Stop Hillary Now” and was aimed at “Clinton haters” to inform voters of Mrs. Clinton’s “atrocious conduct.”
Let us examine the legal test that was applied in this case.
The IRS determined that the Patrick Henry Center had ceased to qualify for an exemption from federal income tax under section 501(c)(3) of the Internal Revenue Code.
In a letter to the Center, the IRS explained that a 501(c)(3) “organization must ‘not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.’”
An organization that engages in this conduct “is classified as an ‘action organization,’ which is an organization deemed to not have operated exclusively for tax-exempt purposes” and is not eligible for tax-exempt treatment.
You operated as an action organization because you participated or intervened in political campaigns on behalf of and in opposition to candidates for public office by publishing and distributing statements.
The revocation of the tax exemption is to take effect this July 1 unless appealed by the group.
Left-wing groups nearly always get treated gently by the IRS and this is especially true in the Obama era.
Incendiary racial demagogue Al Sharpton’s 501(c)(4) nonprofit, National Action Network (NAN), has a habit of not paying taxes owed to the federal government. In 2010 the group owed at least $1,556,059 in federal taxes and $108,489 in New York taxes. Instead of taking aggressive action against the group, the IRS merely filed tax liens against the group.
Although MSNBC host Sharpton, one of the most polarizing figures in America, relentlessly attacks Republican elected officials using harsh, vitriolic language and promotes the most radical Democratic politicians and policies, there is no indication his group has been audited by the IRS or has had its tax-exempt status placed under official review. Sharpton is a close ally of President Obama and is prone to using his organization to advocate for the president and the Democratic Party, including during election cycles.
For instance, two months before the presidential election of 2012, well after Mitt Romney had accepted the nomination for GOP presidential candidate, the NAN website featured an endorsement of President Obama written by Sharpton. The article, titled “Latest Poverty Numbers a Wake-Up Call: We Must Continue to Support This President” and published by the Huffington Post, was featured at Sharpton’s NAN blog.
“For anyone who mistakenly thinks a Romney/Ryan ticket would somehow serve the middle-class and poor better in this country, let me give you a quick wake-up call,” the article stated. Sharpton warned voters,
[I]t’s vital that we not forget what we stand to lose in this election. … If Romney were elected as President, and Ryan the Vice President, we can bet that their interests would not be with the people, but rather with the wealthy 1%[.]
Sharpton concluded with promoting Obama for president:
As we fast approach the November elections, it’s imperative that we understand what we stand to lose. … While there is much work that remains in improving this economy and further reducing these poverty numbers, there’s no question in my mind that this President is the one who will continue fighting for us and not for the status quo.
Media Matters for America, the 501(c)(3) nonprofit corporation that even the New York Times describes as a “highly partisan” organization, has been mysteriously immune from IRS audits. Every working day the lavishly funded outfit churns out political propaganda calculated to pressure journalists into unquestioningly backing the Democratic Party line. It has absurdly characterized Chris Matthews and former New York Times editor Bill Keller as sellouts to the left-wing cause.
The organization’s CEO, the emotionally unstable former journalist and self-described “hit man” David Brock, declares that MMfA’s mission is to wage “war on Fox (News)” as well as “to disrupt [News Corp. CEO Rupert Murdoch’s] commercial interests” and to turn regulators against his media outlets. MMfA claims to combat “conservative misinformation,” but concentrates its fire on Fox because it dares to air political viewpoints that sometimes overlap with the views of Republicans. The ultimate purpose of Media Matters is to silence opposition to the Left.
C. Boyden Gray, White House counsel to President George H.W. Bush, has complained to the IRS about MMfA, which he accurately describes as a “Democratic training camp.”
Giving Media Matters tax-exempt status affords it an advantage not enjoyed by its victim, Fox News. That tax-exemption in effect legitimizes MMfA “by having the government affirm that the organization’s operations are truly ‘charitable’ and therefore consistent with the nation’s public policies,” according to Gray.
And don’t forget the infamous Association of Community Organizations for Reform Now (ACORN), which used to employ Barack Obama and filed for bankruptcy in 2010, is the poster child for left-wing nonprofit abuses for the 40-year reign of terror it perpetrated against American taxpayers.
For decades ACORN, with its intricate network of hundreds of nonprofit entities, defrauded taxpayers by spending government grants and tax-privileged dollars on partisan campaigns and voter drives that benefited Democrats exclusively. Every election cycle Project Vote, the ACORN affiliate President Obama worked for in 1992 and that Obama White House officials remain in close contact with to the present day, spends millions of tax-exempt dollars getting Democrats, dead or alive, to the polls.
Attorney General Eric Holder’s Justice Department never lifted a finger to investigate a nearly $1 million misappropriation from ACORN by Dale Rathke, the socialite brother of ACORN founder Wade Rathke, as I detailed in my book Subversion Inc.
President Obama’s 501(c)(4) goon platoon, Organizing for Action, also enjoys tax-exempt status. The Saul Alinsky-inspired, in-your-face group grew out of Obama’s election campaign and was previously called Organizing for America when it was an unincorporated project of the Democratic National Committee.
Meanwhile, in light of the Patrick Henry Center decision, IRS Commissioner John Koskinen was surprisingly defensive in an interview with the Washington Post. He said that the IRS and the U.S. Department of the Treasury will probably rewrite controversial proposed guidelines to better define “candidate-related political activities.” Conservatives say the draft rules will allow the Obama administration to escalate its abuse of right-of-center groups.
“My bottom line is that it’s in everyone’s interest to have clarification,” Koskinen said. “My position since I started more than four months ago is that we ought to have clarity, and that any rule that comes out ought to be fair and easy to administer.”
Of course, this is the same Obama-controlled agency whose tax exempt organizations division, then headed by hyper-partisan Democrat Lois Lerner, singled out for harassment the heroic Catherine Engelbrecht, leader of the Houston-based good government group True the Vote, for special treatment.
Engelbrecht, whose group aggressively combats election fraud, told a congressional panel in February that she believed she had been “targeted because of my political beliefs.” She received 15 visits from four federal agencies for two years after True the Vote sought tax-exempt status under section 501(c)(3) of the tax code in 2010. Her family business, Engelbrecht Manufacturing Inc, of Rosenberg, Texas, which does precision machining, was also audited by government agencies.
Conservative groups have been swimming against the tide for decades but the Obama era has made things far worse.
The activist Right is severely outgunned by the activist Left, as David Horowitz and Jacob Laksin exhaustively documented in their 2012 book, The New Leviathan: How the Left-Wing Money Machine Shapes American Politics and Threatens America’s Future.
This vast network of left-wing funders and activist groups dwarfs anything the activist Right has to offer. It is “self-sufficient and self-perpetuating … an aristocracy of wealth whose dimensions exceed any previous accumulations of financial power, whose influence already represents a massive disenfranchisement of the American people and whose agendas pose a disturbing prospect for the American future,” according to the authors.
Unlike organizations on the Right, left-wing activist groups can count on a seemingly endless supply of cash from radical, deep-pocketed philanthropists such as anti-American hedge fund manager George Soros, predatory lender Herb Sandler, Taco Bell heir Rob McKay, Facebook co-founder Chris Hughes, singer Barbra Streisand, and Teresa Heinz Kerry, wife of U.S. Secretary of State John Kerry.
As Horowitz and Laksin reported, the collective assets of liberal-progressive grant-making foundations are in fact 10 times the size of the assets of conservative foundations.
The Left, they wrote, thoroughly dominates two huge areas of interest-group warfare today: immigration and environmentalist activism.
In immigration, there are nine major conservative groups “that support traditional immigration policies” and 117 progressive groups “that support radical departures from traditional immigration policies and notions of sovereignty.”
The conservative groups (e.g. Federation for American Immigration Reform, NumbersUSA Foundation) have net assets of $15.05 million (based on annual revenues of $13.8 million), compared to the $194.67 million in net assets (based on annual revenues of $306.11 million) held by progressive groups (e.g. National Council of La Raza, Redlands Christian Migrant Association).
In other words, progressive immigration groups have 22 times the revenues that their conservative counterparts have.
In the world of environmental activism, there are 32 major conservative groups that “promote market-friendly solutions” and 552 progressive groups that “promote radical views that are anti-business.”
Collectively, the conservative groups have net assets of $38.24 million, a figure that seems insignificant compared to the $9.31 billion figure representing the progressive groups’ combined net assets.
The progressive environmental groups enjoy a 37 to 1 advantage over conservative environmental groups in revenues ($3.56 billion compared to $96.17 million).
Left-wing groups almost never face the kind of heightened IRS scrutiny to which conservative groups are subjected. In fact, abuse of the IRS that rises to the level of political persecution is almost exclusively the province of left-wingers.
Although Republican President Richard Nixon considered using the IRS as a weapon against perceived enemies — he reportedly backed off when the IRS chief refused to play ball — IRS abuse is generally a tool of Democratic administrations.
President Franklin Roosevelt directed the IRS to target newspaper publishers opposed to the New Deal and John F. Kennedy “raised the political exploitation of the IRS to an art form,” according to author James Bovard.
It is fairly clear that the Obama administration goes to great lengths to leave its friends in the nonprofit community alone.
News of the Patrick Henry Center’s tax status change comes as the public learns that the IRS has rewarded more than 1,000 of its employees with bonus pay even though they failed to pay their taxes to Uncle Sam, their employer.
A Treasury Department inspector general’s report stated that the IRS lavished $2.8 million in bonuses upon staffers with disciplinary problems, including more than $1 million funneled to 1,146 employees who didn’t bother to get around to paying their own federal taxes.
According to USA Today:
The bonuses weren’t just monetary. Employees with tax problems received a total of 10,582 hours of paid time off — valued at about $250,000 — and 69 received permanent raises through a step increase, the report said. The report looked at bonuses in 2011 and 2012.
The dishonest IRS employees committed what would probably be deemed tax fraud if any ordinary citizen did the same thing. The deadbeat feds’ wrongdoing included “willful understatement of tax liabilities over multiple tax years, late payment of tax liabilities, and under-reporting of income,” the internal watchdog report said.
Some of these workers are the same people enforcing the widely despised Obamacare law that imposes monetary penalties on the uninsured.
Defaulting bureaucrats are everywhere in the federal government, which doesn’t take the problem seriously. According to the IRS, 311,536 federal employees were tax delinquents in 2011, having failed to pay a total of $3.5 billion owing.
Republicans have introduced legislation in the current Congress to fire federal workers whose taxes are seriously delinquent.
President Obama and congressional Democrats will see to it that the bills go nowhere. That’s the Chicago way.
Conservative groups have now been put on notice with the revocation of tax-exempt status of the Patrick Henry Center for Individual Liberty. The IRS has made clear it will not only prevent new organizations from forming, but that established organizations are not safe either.
The question is: who’s next?