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Monday, December 9, 2013

Tax-Exempt Political Groups Scrutinize New Rules

The Internal Revenue Service building in Washington is shown, March 22, 2013. (Susan Walsh/AP)

The Internal Revenue Service building in Washington is shown, March 22, 2013. (Susan Walsh/AP)

Tax-exempt groups, which can spend big money in politics, are reassessing what to do in the next election, now that the Treasury Department and the Internal Revenue Service have proposed new rules to limit the political activity of groups that qualify as 501(c)4 tax-exempt status under the tax code.

To influence the 2012 election, groups such as the conservative Crossroads GPS and the liberal Priorities USA raised tens of millions of dollars from donors whose names they weren’t required to disclose. The IRS has been under investigation for inappropriately scrutinizing Tea Party groups in the last election.

Here & Now’s Jeremy Hobson speaks with Dean Clancy, who leads the public policy team of FreedomWorks, the tea-party aligned 501(c)4 that advocates for small government, and to Fred Wertheimer, founder and president of Democracy 21, the campaign finance watchdog group.

Interview Highlights

Fred Wertheimer on political donations in 2012 

“We had more than $250 million spent in campaigns by 501(c)4 groups in the 2012 elections without a single dollar being disclosed of the people who were putting up the money to pay for those ads and expenditures. That’s wrong in our view; the American people are entitled to know who is financing campaign activity.”

Dean Clancy on why political donors should be anonymous

“Donor anonymity is part of our democratic process, similar to the secret ballot. And it’s true that the Supreme Court declined to knock down the disclosure provisions of McCain-Feingold in the Citizens United case, but we at Freedom Works would agree with Justice Thomas that they should have done so. Donor anonymity is an important principal for preventing intimidation of political speech.”

Clancy on what Freedom Works will do next to fight the proposed rules

“We are going to educate our members across the country that this is a direct threat and a continuation of the intimidation tactics that were used in the last election. This is not simply sunlight legislation; this is about suppressing the free speech rights of kitchen table patriots.”

Guest

Transcript

JEREMY HOBSON, HOST:

It's HERE AND NOW.

We're still about a year away from the midterm congressional elections, but a new rule proposal from the IRS and the Treasury Department is already causing some angst among nonprofit groups that will try to influence the outcome of those elections. The groups are called 501(c)(4)s. They are tax-exempt social welfare organizations, and they don't have to disclose their donors.

They include groups which raise tens of millions of dollars in the last election cycle, including the liberal group Priorities USA, the conservative group Crossroads GPS, which ran this ad last year.

(SOUNDBITE OF POLITICAL ADVERTISEMENT)

UNIDENTIFIED MAN: Every second, growing our debt faster than our economy. Tell Obama: stop the spending. Support the new majority agenda...

HOBSON: Well, the new rules would, among other things, block ads that expressly advocate for a political candidate within 60 days of an election. It would also limit voter registration efforts. We're going to hear two perspectives now; one from Dean Clancy, who leads the public policy team of FreedomWorks. That's the Tea party-aligned 501(c)(4). And the other view from Fred Wertheimer, the founder and president of Democracy 21, the campaign finance watchdog group. And, Dean Clancy, let me go to you first. What's your reaction to this proposal?

DEAN CLANCY: Well, it's really just a continuation of the scandalous targeting by the IRS of conservative political groups that we saw in the lead-up to the 2012 election, except now the IRS wants to go one step further and institutionalize the intimidation and punishment of nonprofit groups, you know, kitchen table patriots, who want to hold their elected officials accountable and candidates for office, kind of suppress their First Amendment free speech rights. So we're very disturbed by these new rules.

FRED WERTHEIMER: If I could respond to that. Democracy 21, along with the Campaign Legal Center, filed a petition more than two years ago with the IRS asking them to adopt new rules. This occurred way before any issues arose about targeting conservative groups. Secondly, for 40 years now, the Supreme Court has made very clear that disclosure requirements for groups that are spending money on campaigns is constitutional and more than appropriate.

The latest time it was upheld was in the Citizens United decision in January of 2010, where the court said that it was constitutional to apply disclosure to nonprofit groups making expenditures to influence campaigns. We had more than $250 million spent in campaigns by 501(c)(4) groups in the 2012 elections without a single dollar being disclosed of the people who were putting up the money to pay for those ads and expenditures. That's just wrong in our view. The American people are entitled to know who is financing campaign activity.

HOBSON: Well, Dean Clancy, what about that? Shouldn't the people know who is spending money on these elections?

CLANCY: Well, you know, donor anonymity is an important part of our democratic process similar to the secret ballot. And it's true that the Supreme Court declined to knock down the disclosure provisions of McCain-Feingold in the Citizens United case, but we at FreedomWorks would agree with Justice Thomas that they should have done so. Donor anonymity is an important principle for preventing intimidation of political speech.

WERTHEIMER: Justice Thomas was the single vote against disclosure. There were eight other justices who voted in support of disclosure. Let me give you the view of a justice who no one would consider on the liberal side of the equation. This is what Justice Scalia had to say about disclosure in a concurring opinion in a case called Doe v. Reed: Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed.

HOBSON: Fred, this would also impact mainstream groups like the NAACP, the AARP, the League of Women Voters. These are also social welfare organizations. How would this affect their operations, do you think?

WERTHEIMER: Well, it depends on whether they're doing campaign finance activities or not. Now, certainly a number of those groups don't do campaign finance activities, and it would be irrelevant to them. Our view is there is a section in the tax code that's designed for people who want to do campaign finance activity. It's called Section 527, and we think that any (c)(4) organizations that want to do campaign finance activity should go ahead and do it. They should just do it under the proper section of the tax code, which requires that these groups disclose their contributions and expenditures.

HOBSON: Well, Dean Clancy, why not do that then? Why not just do things with FreedomWorks for America, which is your 527 group?

CLANCY: Well, here's my question for Fred Wertheimer and the advocates of centralized control of political speech. What about someone like Becky Gerritson? She is a home schooling mom in Wetumpka, Alabama who decided to get together with some of her fellow citizens to form a Tea Party group to educate themselves about public issues and to do things like voter education, voter registration, voter comparison, you know, comparing the records of candidates for office?

And all of that would be impacted by these new rules which, for example, say you can't mention the name of a candidate in a communication within 60 days of an election. And even including something you've mentioned on your website from the past, which you will now have to scrub off of your website during the run up to an election, where in the First Amendment does it say that 60 days before an election your free speech rights are diminished? And what are these kitchen table patriots doing that's worthy of all this regulation from Washington?

WERTHEIMER: Well, no one is prohibited from doing anything by these rules. But if they do want to engage in campaign activities, they ought to be willing, as Justice Scalia said, to stand up and be publicly identified.

HOBSON: Dean Clancy, what are you going to do next? What is FreedomWorks going to do next, it sounds like, to fight these new rule proposals?

CLANCY: Well, we're going to educate our members across the country that this is a direct threat and a continuation of the intimidation tactics that were used in the last election. This is not simply sunlight legislation. This is about suppressing the free speech rights of kitchen table patriots.

HOBSON: Dean Clancy leads the public policy team of FreedomWorks, the Tea Party-aligned 501(c)(4) that advocates for small government. And Fred Wertheimer is founder and president of the campaign finance watchdog group Democracy 21. Thanks to both of you.

WERTHEIMER: Thank you.

CLANCY: Thank you.

HOBSON: So two very different views. You can let us know what you think about this at our website, hereandnow.org. This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.


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  • mmacbear

    Mr Clancy, in defending the need for anonymity by donors, specifically names an individual as a example of those persons harmed by the proposed rules. Seems a little inconsistent.

    • Doug

      Why is that inconsistent? The whole misbegotten purpose of the IRS’s attack on collective political activity is to force the disclosure of the names of individual donors so that leftist groups can then harass, boycott, and intimidate those donors.

  • Peter Van Erp

    Perhaps Mr. Clancy can explain why I should tax subsidize the political activities of those whose views I find repugnant.

  • Whitesauce

    In typical FreedomWorks fashion, the small, grassroots organization is being used to protect the rights of billionaires and corporations. The proposed rule has everything to do with the effects of big money. The idea that the anonymity of donors should be protected as it is for voters is disingenuous. We all get one vote. Unlimited funding of elections distorts that process.

  • Bob

    I laughed every time I heard the phrase “kitchen table patriots” in the interview, as I can only imagine what the actual “patriots” that gave up so much for this country would think about those people that think they are even close to being on the same level as those that lost life, limb, property or family.

    We live in such a strange time where hiding behind anonymity is considered as valiant as publicly identifying and standing up for your beliefs.

    • Doug

      That’s because no one ever tried to have you fired for supporting the wrong political party.

    • jonathanpulliam

      “We live in such a strange time where hiding behind anonymity is considered as valiant as publicly identifying and standing up for your beliefs.” If you feel this way, um, “Bob”, then why don’t you post under your full name?

  • al gee

    Dean Clancy is a comedian? Funnier than Colbert.

  • nonyabizzz

    LOL@KitchenTablePatriots.

  • billtmore

    so it was the Democrats that employed heavy handed tactics in 2012…LOL I would posit making changes to voting laws by state Republicans was way more heavy handed..ah the right always twisting the truth

  • MonaLS

    These political fake-educational ads need to have donor transparency. If a group is going to advocate for or against particular candidates, we need to know who is sponsoring the ads.

  • Marscrumbs

    Please enjoy your first ammendment rights. But don’t expect to get a tax free ride as a nonprofit organization.

  • Marc Vitone

    Here’s what I think. I think Dean Clancy is a nut-job
    representing a miniscule portion of the far-right electorate, and shame on you
    for putting him on equal footing with sane people. This crazy habit of false equivalency
    when concerning the Tea-Party only serves to divide the country even further.
    Bear in mind that by definition 50% of the population is of below average intelligence
    and many people in this category are unable to discern the difference between
    facts and downright propaganda.

    • nutsinavice

      He’s not a nutjob, he’s a well paid propagandist. Those who agree with him who aren’t billionaires might be nut jobs, but he has a job to do and he knows how to do it. I agree with your reprimand to NPR, though. It’s only by putting organizations like FreedomWorks on the media as responsible commentators that the real harm is done. If NRP is just going to become a platform for corrupt mouthpieces of big money, then maybe it is time for it to go.

  • RAOUL

    I will make it short in sweet. Dean Clancy is out to lunch! As far as the as the comment we live in strange times, this statement is a fallacy. We have lived in strange times since man walked the planet. People like Dean Clancy have always existed which regardless of the times. The problem is when they become wealthy or are well paid to create false ideas concerning big government because these people have the same elitist ideas which is: If we have a smaller government the wealthy should not have to pay taxes and should have special tax exemptions because they belong to some phony group with with phony labels that don’t believe in democracy which equates to B.S. ideas.

    • nutsinavice

      He’s not out to lunch, he’s making a very good paycheck shilling for the Koch Bros, the Chamber of Commerce and other big money interests in politics. He’s shameless and audacious, but he is in no way out to lunch. NPR is out to lunch by presenting him as a reasonable, disinterested commentator who has a fair point of view.

  • James

    Enforcing stricter limits on political expenditures by 501c groups is not an infringement of free speech. Members of these groups are still free to speak all they want. The groups are still free to make statements. The 501c may no longer qualifiy for a tax deduction, but they are still free to speak on political issues all they want.
    I would rather see tax deductions for 501c groups (including groups I support) eliminated, than to continue with the leniency of the present and recent past as far as permitting tax deductions.

  • Michael Brassell

    Ok Mr. Defending the kitchen table little guy.. If this branding isn’t just a shameless attempt to appeal to the working class interests you violently harm by opposing snap food assistance, or arguing against water aid in disasters like Katrina why would you hide the amounts and names of your donors? After all I don’t know any “patriots” that have a 250 million$ kitchen table, or even a million dallor one, heck I don’t know a single person that has a 25,000$ table. Do you?

  • Leslie Hinderyckx

    I think the conservative guest, in using the phrase “kitchen table” groups is obviouly trying to appeal by sounding like they are all small, Norman Rockwell-like patriotic sewing circles. A blatant attempt to have us overlook the huge, heavily monied organizations that are clearly political activists and trying to avoid showing their faces to the public at large. I think it is shamefully dishonest — they should follow a good law.

  • Judy Harrison

    At the end of the interview Mr. Hobson gives even weight to the comments made by Mr. Clancy and those of Mr. Werthiemer even though Mr. Clancy claims were misleading and several time just not true. Does this kind of interview really help the public understand the issue?

    • nutsinavice

      No, it is an outrage that NPR does this. I expect it of Fox and even CBS, NBC and the other corporate networks, but NPR should be exposing the mendacity, not enabling it.

  • hartwilliams

    What is particularly disturbing is that Mr. Clancy continually asserts that the IRS “targeted” right wing/conservative groups. This is not true. This has been refuted by actual evidence and hearings, and, as the late Sen. Moynihan famously noted, “you are entitled to your own opinions; but not your own facts.”

    The Freedomworks argument is based ENTIRELY on their own “facts.’ Without them, their ‘argument’ falls apart, as does their assertion that “political anonymity” a fundamental right in political contributions. SCOTUS has ruled repeatedly that it is not.

    There is something Orwellian about Mr. Clancy’s refusal to accept a rhetorical universe in which his “facts” are not facts at all, but are the backbone of his attempts to paint an entire agency (the IRS) as targeting those ‘brave and noble’ housewives at their kitchen tables, who, by his very assertion are NOT anonymous.

  • Mike Little

    When I hear that the tea party fears retribution for their views two thoughts come to mind. To hide your views sounds like being ashamed of your views. And, I have yet to hear of an example of a tea party member being intimidated due to their beliefs. Tea party people, the ones I have seen, are folks who thump their chests and claim to have no fear and to be proud of their beliefs.
    We all know that the tea party was not originally grass roots. Instead it’s a way for the powerful to recruit average Americans to front for their moneyed interests in the guise of patriotism.

    • nutsinavice

      It goes hand in hand with the claims of persecution by Christians in this country. Interestingly, the two groups are related.

  • jsmetz

    I just caught the tail end of this discussion, but I start losing my cool when some of the richest corporations in America, and all of their paid-for agencies, spokesmen, spokeswomen, and politicians start talking about losing their “free” speech. Though it is a tiny part of their wealth, these corporations pay out a huge amount of money to buy up every media outlet and PR firm in the country to produce and place their anti-government rants. They are able to guarantee that there is no platform left for individuals to speak on any subject with any hope of getting a fair hearing on any subject the rich guys don’t want to hear. What a joke to hear about their latest meme: “Kitchen table patriots.” “Kitchen table patriots” won’t get a dimes worth of organizational help until they agree to read and perform the corporate PR scripts given to them. If they do agree, I expect I will see them on my TV and hear them on my radio several times a day. I will never know which individual in the corporate front organization sponsoring the ad has the courage to attach his or her name to the ad, or tell me how much the PR campaign is costing their organization..

  • Groundwater

    As a Kitchen Table Patriot (not to be confused with a Tea Party Patriot), I think the most patriotic thing I can do is push to get lobby money out of the political process. Mr. Clancy is free to enjoy his free speech, but shouldn’t expect tax-free status for trying to buy influence. His positions and rhetoric were laughable, and the paranoia he exhibited would be laughable as well if it wasn’t typical of a lot of people I know at both ends of the political spectrum (but seemingly more on the right). I say this as a right-leaning independent. Representative government will suffer as long as political contributions are equated with “free” speech, rendering that phrase an oxymoron.

  • Art

    Dean Clancy is nothing but a puppet for the big donors who want to remain anonymous. Assuming that the reason he was invited to be on the show was to show his lack of intelligence, mission accomplished.

  • nutsinavice

    If anyone thinks that FreedomWorks is representing “kitchen table patriots”, I have a bridge to sell them in Brooklyn. These guys are a barely disguised front group for billionaires like the Koch Bros. I am appalled that these guys are given airtime on NPR for their propaganda. This methodology of presenting a view that supposedly on the left and supposedly on the right and then letting the audience sort it out is an abdication of journalistic responsibility. Responsible journalism is digging into the issue, finding out the truth and reporting it. It involves calling out people and groups on their lies. It takes work and it takes standing up to moneyed interests who can call the shots in government and media but it is also the only way in which we will have any hope of a real democracy. The truth here is that big money has taken over politics due to decisions like Citizens United and the ability for corporations and billionaires to influence voters while staying hidden in the shadows. I expect this kind of lame journalism from Fox and the networks, but NPR should be held to a higher standard.

  • 14hei

    We have to remember that politicians govern over all of us, not just there supporters. There has to be complete disclosure of contributions to candidates, because there must be no sign of undue influence by supporters if they are elected to office. The elected official governs over us all. There decisions must be even, balanced and fair for all. Not just those that supported them.

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