In my most recent Verdict column, I described the cynical game that congressional Republicans have been playing with the Internal Revenue Service for at least the last two decades. The Republicans stoke public hatred of the IRS by making people believe that their bad experiences with the tax system are the IRS’s fault, even though Republican-inspired budget cuts (and impenetrable tax laws) are the real cause. When the public is sufficiently angry, Republicans then use that anger to justify further cuts to the IRS’s budget, which then makes people’s interactions with the IRS even more frustrating, paving the way for still more budget cuts.
I certainly would not have claimed to be the first person to have noticed this grim cycle. Anyone who pays attention to taxes in America knows that people in Congress, and especially Republicans, are very good at blaming the IRS for the bad laws that Congress passes. I was thus only mildly surprised when I discovered, shortly after that column was published, that a business journalist had previously written an article using almost exactly the same phrasing that I had used to describe the Republicans’ game. (Compare these four sentences from that article—“Give the agency more and more work. Cut its budget. Blame it for failing to do its job. Repeat.”—with the title of my column—“The Republicans’ Cynical Tax Game: Undercut the IRS, Blame the IRS, Repeat.” Shampoo makers everywhere must be smiling.)
What I did not expect was that, as I was finalizing that Verdict column, the Republicans would be opening a new front in their war on the IRS. The majority staff on the tax-writing Ways & Means Committee issued a report, dated April 22, 2015, in which they claim that the IRS “deliberately” made taxpayers’ experiences with the IRS frustrating and unpleasant.
If this were not such an important subject, that report would be merely amusing. The analysis, such as it is, simply identifies a few line items in the IRS budget—items that are most likely to stir up the anti-IRS Republican base—and then suggests that all would have been well, if only the IRS had prioritized customer service rather than doing anything else that it is required to do by law.
Even on those terms, the analysis fails. But the report is interesting, if that is the word for it, for the way in which the Republican staff of one of the most important committees in Congress has decided to take on a purely partisan task and carry it forward, at taxpayer expense, without any sign of embarrassment.
The reality, however, remains that the IRS is being punished with a severely shrunken budget, even while it is being given expanded responsibilities. Every agency—public and private—will of course make some mistakes, but the Republicans are now trying to claim not only that the IRS’s mistakes are entirely unconnected to its shrinking budget, but also that the IRS is consciously trying to make matters worse. That is an outrageous distortion.
The Republicans’ Analysis Hides, But Cannot Deny, That Republicans’ Decisions Are the Real Problem
Before discussing some of the more absurd aspects of the Republican staff’s report, it is worth noting what even they could not bring themselves to say. The report is, as I noted above, a list of complaints about the way that the IRS has allocated funds among its many responsibilities, from providing taxpayer assistance to upgrading its antiquated computer systems to retaining its workforce to dealing with new responsibilities that Congress has added to the IRS’s portfolio.
The central conclusion of the report is that the IRS’s recent reduction in its ability to do one of its many jobs—answer telephone calls from taxpayers—was not really caused by Republican-initiated budget cuts for the agency. No, the claim is that the IRS “deliberately” moved money and resources from that important line item to other budgetary items, leaving taxpayers unhappy and frustrated.
What is the scope of the problem? On page 4 of the report, we are told that the IRS has reallocated resources from having employees answer taxpayers’ phone calls, assigning some employees instead to answer taxpayers’ letters. Other than quoting a snippet from a GAO report that suggests that this could “potentially increas[e] IRS’s costs,” the report’s author(s) provides no explanation for why this decision somehow amounts to a decision—“deliberate” or otherwise—to make taxpayers worse off. Certainly, the taxpayers who have written to the IRS have benefited from having their letters answered. There is no hint of an argument that this decision struck the wrong balance, in the context of the overall budget, between different types of taxpayer service.
Beyond that, however, the report notes that “[t]he IRS estimated that for filing season 2015, it would receive 48.8 million calls seeking live assistance, but only answer 16.8 million. This would leave 32 million taxpayer calls unanswered.” Thirty-two million calls is a lot of calls. How much of that is supposedly the IRS’s fault?
By the end of the report, the reader has been led through a laundry list of complaints about ways that the IRS could supposedly have redirected resources from other priorities to answering phone calls. (I will discuss a few of those below.) On page 12 of the report, we see a helpful table, showing the total number of calls that the IRS could have answered: 25.9 million.
In other words, not only can the report not say that the failure to answer all phone calls was itself proof that the IRS was not helping taxpayers in other ways, but it could not even cook the books enough to say that the IRS has enough money in its budget to answer all of the phone calls that it received.
Even taking on faith the inflated numbers in the report regarding supposed diversions of funds away from phone-answering services, the report tells us that the IRS still could not have answered all 48.8 million calls from taxpayers, even if it had done everything that the Republican staff says that it should have done. In addition to the 16.8 million calls that IRS workers did answer, the report claims that it would have been possible to answer 25.9 million out of the unanswered 32 million calls. That still leaves 6.1 million taxpayers without service.
One might still argue that what we could call “Congress’s fault” is less than 20 percent of the 32 million unanswered calls. Again, the numbers that the report provides should not be taken at face value, so that there is actually no basis on which to conclude that any of the IRS leadership’s decisions somehow make the other 80 percent of the unanswered calls the IRS’s fault. In any event, it is important to note that this is not a report that says, “Hey, we understand that the IRS does not have a large enough budget, but we are only going to increase the budget to the level that would allow it to do its job at the lowest possible cost.” Instead, the report suggests that, because the IRS could have made decisions that could have reduced this particular problem, then Republican budget-cutters bear no responsibility for the IRS’s difficulties at all.
To put it differently, if the IRS had made decisions that resulted in six million phone calls not being answered, surely a Republican staff report would have excoriated the agency for its bad decisions. Yet, having indirectly determined that the budget cuts that the Republicans have insisted upon are responsible for at least 6.1 million unanswered phone calls, the report instead says, “See, the IRS makes bad decisions! We’re right to take money away from them.”
The Republicans Are Openly and Deliberately Punishing the IRS
Beyond the strange inability to perceive the implications of its own distorted numbers, the Republican staff’s report is notable for its entirely politicized bill of particulars. The problems with the IRS, to read the report, are entirely caused by the agency’s stubborn commitment to doing things that Republicans do not like.
But before it even gets to those specifics, the report begins with an explicit statement that the Republicans have insisted on budget cuts over the last few years as a means to punish the IRS for what I have come to call the “IRS non-scandal scandal.” Reminding readers of an inspector general’s report in 2013 that some low-level IRS staff had engaged in inappropriate screening of some applications from nonprofit political groups for tax-exempt status—even though there is still nothing to support claims that the IRS’s errors were politically motivated—the report makes this rather astonishing statement on its very first page of text:
As a result of the IRS’s blatant misconduct, Congress significantly reduced the agency’s budget. Since its funding peak in 2010, the IRS’s budget has been cut by $1.2 billion. The intent of these cuts was to force the IRS to manage its resources more effectively and immediately stop inappropriate activities. House Financial Services and General Government Appropriations Subcommittee Chairman Ander Crenshaw told the IRS that Congress ‘deliberately lowered IRS funding to a level that will make the IRS think twice about what you’re doing and why you’re doing it.’
Make no mistake about it. Rather than trying to figure out ways to make it possible for the IRS—one of the key agencies of our government—to do its job better, the Republicans’ response to the non-scandalous mistakes that the IRS made was to punish the agency, and to talk as if Congress were disciplining an elementary school class: “You shouldn’t have allowed a tiny number of your employees to do something wrong, so now you’re all going to pay.”
Consider, by contrast, the response to a different law enforcement problem. Recent months have seen the emergence of a series of controversies over the activities of police forces in cities across the country. The defenders of the police have indicated that the real problem is that the officers feel that they are under siege, while even the most angry accusers of the police have indicated that the best response is to improve officers’ training, to add cameras to officers’ uniforms and weapons, and to initiate programs to improve the relations between the police and people in poor, minority communities.
In other words, the consensus response to this law enforcement problem, despite the lack of consensus about blame, has been to call for increases in the budgets of the agencies that have been accused of wrongdoing. Yet the response to inflated claims of IRS “scandals” has been to punish its employees, which indirectly punishes the taxpaying public. But that, as I noted in my column last week, is entirely the political goal for Republicans. They do not appear to want to make things better, because they are so busy making it harder for the IRS to do its job.
Recall that the inappropriate acts that led to the pseudo-scandal at the IRS were themselves driven by budget cuts. The agency had lost senior staff to guide non-lawyer employees in administering an especially opaque part of the tax law, resulting in a small unit being created within the IRS where overwhelmed and under-trained staff used politicized search terms to cut through the backlog of applications for tax exemptions.
The Real Complaints: Republicans Do Not Like the Affordable Care Act, Unions, or Poor People
Beyond the invocation of the non-scandal scandal, the report’s central complaint is that the IRS has, in fact, obeyed its statutory duty to administer the Affordable Care Act (ACA)—the bête noire of the Republican Party ever since its passage in 2010. The tendentious nature of the complaint is comical, including this nugget from page 9 of the report: “[T]he IRS increased the number of full-time-equivalent (FTE) employees dedicated to ACA from approximately 30 in fiscal year 2010 to over 1,200 in fiscal year 2015, despite a hiring freeze during this period that reduced the agency’s workforce by 13,000 FTEs.”
While one must give the report credit for using the acronym ACA rather than the Republicans’ preferred “Obamacare” (although the report pointedly describes the ACA as “the President’s health care law”), what could this complaint mean? The ACA was signed into law on March 23, 2010. The law fully took effect in 2014, and the first year that the IRS was required to administer the tax-related aspects of the ACA was in the 2015 filing season. The number of employees assigned to administering the ACA would obviously have to increase between 2010 and now. Especially given the constraints that the report itself notes, that the IRS was able to find the resources to deploy 1,200 employees to administering the law is nothing short of a miracle.
But a “miracle” is not what the Republicans are seeing. Once again, they see a conspiracy where none exists. After an especially silly list of complaints about failed technology upgrades (and the insistence that those failures were entirely the result of the IRS’s “refusal” to do things correctly), the report says: “Despite these failures, the IRS successfully implemented a comprehensive IT system to implement the ACA” (bold print in the original).
The complaint, therefore, is that the IRS has actually done something well. The insinuation, of course, is that the IRS did that particular thing well, because it likes the substance of the policy—not because, say, this is one of the most important changes in health care in the history of the country, and the IRS understood that this was a large project that it had an opportunity to get right from the beginning.
The report also complains about the use of IRS resources for “union activities,” which is simply another way to say that this federal agency, like any unionized workplace, uses some of its employees’ time to deal with union-connected human resources issues. And it does this “on the taxpayers’ dime.” But that complaint, such as it is, is ultimately not a complaint about the IRS, but about the fact that these employees belong to a union, and the agency follows the law in dealing with this duly authorized union. Republicans, of course, would like all employees (public and private) to be non-unionized. That desire, however, does not transform an agency’s use of resources to handle union issues into a misuse of public funds.
Surely the strangest aspect of the report’s griping, however, is a paragraph and accompanying table complaining about the IRS’s supposed shortcomings in administering the Earned-Income Tax Credit (EITC). A policy designed to reward work, which enjoyed the enthusiastic support of former President Reagan, the EITC has now become a target of Republicans, who have focused on the supposedly high error rate of the program.
Led by Republicans who are sure that the EITC is a giveaway to poor people, Congress has re-written the EITC in such a complicated way that it has guaranteed a high error rate. But the more pertinent question here is why a report that was supposedly designed to explain how the IRS had “deliberately” reduced taxpayer services somehow ended up including a complaint that the IRS was not cracking down on EITC errors. Surely, dedicating more resources to that problem would have diverted still more resources from other taxpayer services. The report’s author(s) apparently could not resist once again airing irrelevant and baseless complaints about this highly effective anti-poverty program for the working poor.
In the end, the Republicans’ report is nothing but a rank political document, not a budgetary analysis. It was a waste of everyone’s time—and, by the logic of the report itself, thus a waste of taxpayers’ money. Even on its own terms, the report does not say that the IRS has an adequate budget. It merely says that, because the IRS tries to implement laws that Republicans do not like, it uses some resources that otherwise could have been used to answer the phones.
Republicans continually fail to change many laws, which is a good thing for the country. Now, however, they are blaming the IRS because it lives in the real world and deals with the laws that Congress passed, not the world in which Republicans wish we lived.