Obama Aims to Take Control of Three Scandals

May 20 (Bloomberg) -- Bloomberg's Hans Nichols previews this week's hearings on the IRS scandal and highlights the other issues on tap in Washington this week. He speaks on Bloomberg Television's "In The Loop."

President Barack Obama is facing a make-or-break week as he tries to seize control of three scandal story lines that could upend one of the top priorities of his second term: revising the nation’s immigration laws.

Obama won’t cooperate in a “partisan fishing expedition” over who knew what and when about revelations that the Internal Revenue Service was applying added scrutiny to Republican-leaning groups seeking tax-exempt status, Dan Pfeiffer, a senior adviser to the president, said yesterday on ABC’s “This Week With George Stephanopoulos” program.

“We are going to work with Congress, as the president said, in legitimate oversight,” Pfeiffer said. “What we’re not going to participate in is a partisan fishing expedition designed to distract from the real issues at hand.”

Congressional committees have begun probes into allegations that the IRS targeted anti-tax Tea Party groups, that the Justice Department improperly collected phone records from the Associated Press in search of a government national-security leak, and that the administration glossed over terrorist connections after the attack that killed four Americans at a diplomatic outpost in Benghazi, Libya.

The White House has said it was unaware of the first two incidents as they were happening -- and were legally blocked from being informed. The third was the product of a hastily-prepared response while the facts were still being sorted out on the ground, according to official explanations.

Photographer: Andrew Harrer/Bloomberg

Steven Miller, who was forced out as acting commissioner of the Internal Revenue Service, listens during a House Ways and Means Committee hearing in Washington, D.C. on May 17, 2013. Close

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Photographer: Andrew Harrer/Bloomberg

Steven Miller, who was forced out as acting commissioner of the Internal Revenue Service, listens during a House Ways and Means Committee hearing in Washington, D.C. on May 17, 2013.

Winning the Public

The success of Obama’s second term may be determined by which side wins over an American public that is only marginally interested in at least two of the three showdowns. That is particularly so given that the Senate in two weeks is expected to begin debate on immigration law changes, which Obama’s opponents are trying to undermine by raising doubts about the administration’s ability to implement any new laws fairly.

According to a May 14-15 Gallup Poll, 54 percent of the public is closely watching the IRS investigations and 53 percent are monitoring the Benghazi investigation. In both cases, the total percentage is boosted by higher interest from Republicans -- 67 percent in the case of the IRS and 66 percent in the Libya attack -- than from independents and Democrats, the survey showed.

“The amount of attention Americans are paying to the IRS and the Benghazi situations is well below the average for news stories Gallup has tracked over the years,” the survey reported. “This overall lack of attention is due in part to Democrats’ and, to a lesser degree, independents’ lack of interest, which stands in sharp contrast to the significantly above-average attention among Republicans.”

Photographer: Susan Walsh/AP Photo

President Barack Obama walks on the South Lawn after returning to the White House in Washington, on May 19, 2013. Close

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Photographer: Susan Walsh/AP Photo

President Barack Obama walks on the South Lawn after returning to the White House in Washington, on May 19, 2013.

IRS Scandal

White House officials have treated the IRS scandal as the most potentially damaging, and Obama has joined the chorus of Capitol Hill Republicans condemning the notion that any political group should become a target because of their partisan view. That jibes with the Gallup survey that found 57 percent of independents joining 71 percent of Republicans in saying the matter deserves more scrutiny.

Two congressional committees will hold hearings this week on the matter, pushing it above the others in the public view.

“There’s still a lot of outstanding questions here yet to resolve,” said David Winston, a Republican pollster and adviser to House Speaker John Boehner of Ohio. “Until those questions are still there it’s not going to end.”

Not Political

For Republicans, it’s important to frame it as “not a political problem. It’s potentially an ethics problem. If you push too hard and that line gets crossed then you find yourself in the same difficulty in terms of taking a situation that should be focused on ethics first and trying to turn it into a political strategy, which will not be viewed well by the public,” said Winston.

Steve McMahon, a Democratic strategist, describes the same balance and argues that White House demands for two IRS resignations last week gives it an advantage on that issue. The same strategy of playing offense helps on the others, he said.

“They stay on offense on these three things,” said McMahon. “Every time the Republicans swing, the administration swings back and in swinging back they remind people that the focus on these things that have already been dealt with takes our attention away from the problems this country faces.”

Four congressional committees and the Justice Department are investigating the IRS matter. Hearings are scheduled to be held this week, including one by the House Oversight and Government Reform Committee with testimony from Douglas Shulman, an appointee by President George W. Bush and the IRS commissioner from March 2008 to November 2012.

Scandal Start

The scandal erupted May 10 when Lois Lerner, the IRS’s director of exempt organizations, apologized at a tax conference for singling out certain groups for further examination of their tax-exempt applications. The IRS wrote and planted the question that led to Lerner’s disclosure, Washington lawyer Celia Roady, who asked the question, said in a statement May 17.

The IRS, beginning in 2010, used “inappropriate criteria” to identify groups for further review based on their names or policy positions, according to an inspector general’s report released May 14. The Tea Party organizations that advocate reducing government spending and regulation were among those, although they ultimately were a minority -- one third -- of those that got extra attention by the tax agency.

‘Foolish Mistakes’

IRS employees made “foolish mistakes” and provided “horrible customer service,” Steven Miller, who has resigned as the agency’s acting commissioner, said at a House Ways and Means Committee hearing May 17. Miller insisted that agency employees weren’t driven by partisan motivations.

Obama said May 16 that he’d chosen Danny Werfel, the controller of the White House budget office, to replace Miller as acting IRS commissioner effective May 22.

The IRS turmoil comes as the Justice Department is being forced to answer questions about the secret collection of telephone records of some Associated Press reporters and editors and the administration handling of the September 2012 assault on the U.S. diplomatic outpost in Benghazi, Libya that claimed the lives of four Americans.

Speaking on NBC’s “Meet the Press,” Senate Minority Leader Mitch McConnell, a Republican from Kentucky, said ‘there is a culture of intimidation throughout this administration. The IRS is just the most recent example. It’s no wonder that the agents in the IRS sort of get the message. The president demonizes his opponents.’’

In the News

In response to a question about when Obama knew of the IRS investigation, Pfeiffer said the White House counsel’s office was notified in late April that there was an independent investigation by the Inspector General of the IRS coming to a conclusion. Pfeiffer said Obama learned about it when the IG report was leaked a few days before it was released last week, he said.

“The cardinal rule in situations like these, not just for this White House but for all White Houses, is you do not interfere in an independent investigation and you do not do anything to give the appearance of interference in an investigation,” he said.

He also said Republican Representative Darrell Issa of California, who heads the House oversight committee, “was informed during the presidential campaign, and he didn’t say anything. And he talked the other day about why he didn’t say anything, because when you’re dealing with a non-partisan entity like the IRS, you want to look -- to have an actual independent investigation before you make allegations.”

Issa Informed

Issa requested the inspector general audit after the IRS made “false and misleading statements denying inappropriate targeting of groups,” Ali Ahmad, a spokesman for Issa, said in an e-mail.

“This whole narrative the White House is trying to push about anyone other than their own officials who were in charge being at fault is shameful,” Ahmad said.

Republican lawmakers interviewed on Sunday talk shows made it clear that the inquiry will continue. “I can’t believe that one rogue agent started this, because it seems to be too widespread,” said Senator Rand Paul of Kentucky on CNN.

Senator Rob Portman, an Ohio Republican, said more investigation needs to occur to understand any White House role in the matter.

“I just find it hard to believe here that lower-level employees in Cincinnati, Ohio, took this on themselves, and that it went on for a couple of years without anybody knowing about it,” Portman said to Stephanopoulos on ABC.

To contact the reporters on this story: Jeanne Cummings in Washington at jcummings21@bloomberg.net; Lisa Lerer in Washington at llerer@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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