Implications of IRS Scandal

BHO’s approval ratings have not gone down in the wake of the IRS scandal (and other scandals).  It seems people don’t hold him responsible for the failure of government under his watch.  Government failure under Bush led people to blame Bush, and indeed coincided in a seeming increase in people’s trust and expectations for government as an idea (if Bush is dumb, maybe we can get someone smart in and make government do great things.)  Now that government has failed even under Obama, it begins to look like there are inherent limits to how much we can trust and expect from it.

Progressive Peter Beinart is concerned about this perception taking hold.  While it’s in Obama’s interest to throw the IRS under the bus, Beinart believes, he should instead come to its defense for the sake of progressive ideology. 

For Beinart, America’s problem isn’t a powerful government abusing citizens, but a powerful private sector overwhelming the government.  For Beinart, the IRS case illustrates this.  An understaffed IRS faced a deluge of 501(c)4 applications, resulting from the Citizens United decision.  There’s too many civil society groups, and not enough government officials to monitor them all.  (He does not say there was a deluge of illegitimate 501(c)4s, who had electioneering as their primary purpose, in violation of 501(c)4 rules.  Just a deluge of applicants, period.)  A government thus victimized had to find a shortcut, and it was common sense to target political-seeming organizations like Tea Party groups or Constitutional education groups.

Beinart is playing with fire here.  To the extent that a practice that is abusive on its face (targeting groups based on politics) stems naturally from the task we give the IRS (decide where the line is for having electioneering as a “primary purpose,” and stop people from crossing it), to that very extent we are no longer dealing with a problem isolated to rogue actors.  We are dealing with a systemic problem resulting from assigning the IRS inappropriate discretion. 

Beinart’s out is that understaffing and poor training are the problem, but is the answer for the IRS to have enough staff to harass every garden club or volunteer firefighter group with highly intrusive information requests?  Just how much more staff would the IRS need to handle the full inundation?  The problem is not that we give the government insufficient resources to fully monitor civil society.  The problem is that we task it with doing so.

In considering whether government is too powerful in relation to the private sector, it will not do to consider only its resources.  These amount to a meager $3.5 trillion or so, and we have, let’s say, a $10 trillion GDP, so the private sector has the government beat 6.5 to 3.5 in a contest of resources.  But who cares?  The government still has more than enough to harass people, to impose a chilling effect on speech and action, to do any number of things to you without legal accountability.

Let’s consider in another light Beinart’s thesis that our problem is not a government that overpowers citizens, but a private sector that overpowers government.  There’s no reason private power and abusive government are mutually exclusive, but he only really defends the second part of his thesis; he doesn’t demonstrate that we ought to trust government.  Indeed, he acknowledges that government is generally abusive in the national security realm, but it isn’t obvious why we should bracket off that realm.  So how should the IRS scandal affect our trust in government?

Tyler Cowen noted: “What’s remarkable about the IRS tax scandal is that it was admitted, keep that in mind when revising your Bayesian priors.”  In other words, we don’t really know what the government is doing, but have assumptions about how likely it is to abuse power.  Empirical evidence should influence these assumptions (I know the IRS abused its power in dealing with 501(c)3s, so now there’s a 10% chance instead of 5% that it gets FISA warrants for no real reason.)  But abuse like what the IRS did is hard to detect and get the government to admit to.  There’s maybe a 1% chance that government will admit to something like this, which suggests we need to revise our expectations about government more radically than would otherwise be the case.

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