Obama Allies See Lax Scandal Response Imperiling Agenda

May 15 (Bloomberg) -- Allies of President Barack Obama are warning the administration that it has been too slow in responding to a cascading set of scandals and risks letting Republicans define his second term and derail his agenda.

Several veterans of the Obama White House and former President Bill Clinton’s administration said Obama and his team are ill-equipped to quickly contain political damage from probes into the handling of the attacks on the U.S. mission in Benghazi, Libya, the Internal Revenue Service targeting of small-government groups seeking tax-exempt status and the Justice Department’s subpoena of telephone records of Associated Press reporters and editors.

Republicans in Congress now plan more than a half-dozen investigations and are seeking to link all three controversies to illustrate what they call a secretive White House that is abusing its power.

“For an administration that promised to be the most transparent in history, the Obama administration has a credibility gap that’s growing at an alarming rate,” Republican Senator John Thune of South Dakota told reporters yesterday. “This is an administration that’s playing fast and loose with the rules.”

The political fallout threatens to make it more difficult for the president to win Republican support for new U.S. immigration laws, raising the government’s borrowing authority without conditions and getting a deal to replace across-the-board budget cuts known as sequestration.

Consulting Group

Before last week’s House hearings on Benghazi, the revelations about IRS scrutiny of groups requesting tax-exempt status and the Justice Department’s collection of AP phone records in a leak probe, White House chief of staff Denis McDonough was contacting officials from Obama’s first term for advice on communications strategy, according to a person familiar with the matter who asked not to be identified to discuss private discussions.

The discussions haven’t been reconvened since.

Scandals and controversy have entangled the second terms of Obama’s recent predecessors. Some of the president’s allies said Obama needs to copy Clinton’s strategy and organize a team focused on addressing crises.

Response Team

“There’s an industrial-scandal complex that exists in Washington, D.C.,” said Chris Lehane, a Democratic consultant who worked as a special assistant counsel to Clinton. “You need to have some kind of entity within the building that’s capable of managing these situations.”

Clinton organized a group of lawyers, communications specialists and legislative affairs experts to manage his administration’s response to investigations into the president’s affair with Monica Lewinsky, the Whitewater real estate deal when he was Arkansas governor and firings in the White House travel office.

The West Wing is now in damage control without the first-term team of political advisers, who include former press secretary Robert Gibbs, political strategists David Axelrod and David Plouffe and former chief of staff turned mayor of Chicago Rahm Emanuel.

Axelrod said today that the president could have been “more vivid” in condemning the IRS actions when he addressed the matter at Monday’s news conference with U.K. Prime Minister David Cameron, adding that “perhaps he should have come out on Saturday” to denounce the disclosures.

‘Firm Action’

“One of the things that is true about the president is that he is cautious and often wants to see what he’s commenting on before he comments on it,” Axelrod said on MSNBC. “No one understood the scope of this, where the responsibility belonged.”

Axelrod said Obama’s next step is to “take firm action to deal with what happened” to ensure that it doesn’t happen again. On Benghazi, he said the White House “would benefit by getting all these e-mails out in the open” -- referring to e-mails related to changes in the administration’s talking points after the attack.

The administration’s response has been mostly left to press secretary Jay Carney.

At a briefing yesterday, Carney sought to separate the Benghazi investigation from those involving the IRS and the Justice Department. He repeated Obama’s assertion from the previous day that Republicans were conducting a “political circus” with their hearings into last year’s deadly attack on a U.S. mission in Benghazi.

Deflected Questions

On the other two matters, Carney deflected questions, saying the White House had no involvement in the decision of IRS personnel targeting Tea Party-affiliated groups for scrutiny or the Justice Department obtaining AP’s phone records.

While calling the IRS action “outrageous” if supported by an inspector general’s report, Carney said the administration would hold off taking any action.

“At this point, we have to wait for the action of an independent investigator, before we can jump to conclusions about what happened,” he told reporters.

The inspector general’s report, released last night, blamed “ineffective” management for the IRS using inappropriate criteria to select nonprofit groups for scrutiny. It said there was no evidence of partisan intent by IRS employees or involvement from outside the agency.

Obama Response

Obama, in a statement last night responding to the report, called the IRS employees’ actions “intolerable” and directed Treasury Secretary Jacob Lew to hold “those responsible for these failures accountable.”

Gibbs said earlier yesterday, before the report’s release, that Obama should have immediately spoken out forcefully on the IRS action.

The administration’s response “sounded exceedingly passive to me,” Gibbs said in an interview on MSNBC. “The tenor of this briefing would be different if the president had spoken about this on Saturday or Sunday and not on Monday.”

The White House is limited in what it can do in response, particularly when it comes to firing those at fault. There are only two political appointees in the IRS: the commissioner, a George W. Bush appointee who left in November, and the general counsel. Yesterday, Attorney General Eric Holder ordered a criminal investigation into the IRS scrutiny of nonprofit organizations.

‘Trouble Defending’

Members of both parties are voicing concern about the IRS action and the Justice Department subpoena of the AP telephone records as part of an investigation into leaks of classified material.

Senate Majority Leader Harry Reid, a Nevada Democrat, said he would “have trouble defending what the Justice Department did.” He also said Senate Democrats would hold hearings “examining what should be done” to prevent IRS abuses.

In the House, where Republicans have a majority, the Oversight and Government Reform and Ways and Means committees plan hearings on whether the IRS was treating Republican-leaning groups unfairly. Five separate House committees have investigations under way related to the Benghazi attacks and the administration’s response.

The Republican Party also is employing the investigations as a fundraising pitch for congressional elections next year.

Benghazi “could be a hinge point for the Obama administration,” John Bolton, U.S. ambassador to the United Nations under President George W. Bush, wrote in an e-mail solicitation from the National Republican Congressional Committee. “Will you give $5 to support the NRCC in their goal to hold the administration accountable for Benghazi?”

To contact the reporters on this story: Lisa Lerer in Washington at llerer@bloomberg.net; Julianna Goldman in Washington at jgoldman6@bloomberg.net

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

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