The Note: Scandal Creep
PHOTO: IRS employees exit the US Internal Revenue Service building at the end of the day in Washington, DC, March 20, 2012.

Image credit: Ann Hermes/The Christian Science Monitor/Getty Images

By MICHAEL FALCONE ( @michaelpfalcone )

NOTABLES

  • 'A LACK OF KNOWLEDGE': Ineffective management at the Internal Revenue Service led to certain groups being singled out for more than 18 months based on their names or mission statements, according to a Treasury Inspector General report, ABC's ABBY PHILLIP notes. IRS officials told IG investigators that their actions were not influenced by any outside officials or agencies. The use of inappropriate criteria to screen applicants resulted in significant delays for groups applying for tax exempt status, and also allowed unnecessary requests for information, the report found. "Criteria for selecting applications for the team of specialists should focus on the activities of the organizations and whether they fulfill the requirements of the law," the IG report found. "Using the names or policy positions of organizations is not an appropriate basis for identifying applications for review by the team of specialists." In addition, the report stated, "[T]he criteria developed showed a lack of knowledge in the Determinations Unit of what activities are allowed by I.R.C. § 501(c)(3) and I.R.C. § 501(c)(4) organizations." http://abcn.ws/14nggMw ABC's PIERRE THOMAS reported for "Good Morning America" on the FBI's full-scale investigation of the IRS: http://abcn.ws/181ePoW
  • IRS PUSHES BACK: The IRS said in a statement that it "welcomes" the report and "agrees that aspects of the original approach for handling the influx of tax-exempt applications were inappropriate, but it is important to clarify a few points." "Inappropriate shortcuts" were used to identify groups that might be engaged in political activity, the IRS statement admitted, but said most of the groups would likely have been examined the same way regardless of whether those "shortcuts" were used to identify them. "It is also important to understand that the group of centralized cases included organizations of all political views," the IRS statement said.
  • WHITE HOUSE WEIGHS IN: "The report's findings are intolerable and inexcusable," President Obama said in a statement last night. "The federal government must conduct itself in a way that's worthy of the public's trust, and that's especially true for the IRS. The IRS must apply the law in a fair and impartial way, and its employees must act with utmost integrity. This report shows that some of its employees failed that test."
  • 'A CULTURE OF ROTTENNESS': In an interview with ABC's JEFF ZELENY, Rep. Charles Boustany, R-La., the Ways and Means subcommittee chairman who is leading the first IRS Congressional hearing Friday commented on the Inspector General's report. "At the very least it's ineffective management," Boustany said. "An egregious abuse has occurred…. we're going to get to bottom of this." He added, "This looks like a blatant abuse of power on the part of the IRS and suggests a culture of rottenness."

THE ROUNDTABLE

ABC's RICK KLEIN: Who's in charge here? There's no "there" there in Benghazi talking points, President Obama is assuring the public. But he didn't know about the AP subpoenas until news reports emerged about them this week. Ditto the IRS scandal; the White House didn't know until the last few weeks, Press Secretary Jay Carney said yesterday. That all may wind up being accurate, and there are good reasons for the separation between the White House and the IRS, and the Justice Department. But the White House looks to have mistaken that separation as an excuse for distance. It wasn't until last night that the president began to seriously condemn the IRS activity, and Attorney General Eric Holder will be on the hot seat regarding the subpoenas today. Before these stories are played out, the president and his top aides appear likely to have to own the responses, or the responses will own them.

ABC's DEVIN DWYER: What if the IRS had done things the right way in 2012? Buried in the new Treasury Inspector General report is an interesting answer: 79 of the 96 conservative groups improperly singled out because the words 'Tea Party,' 'patriots' or '9/12' were in their names would have merited extra review anyway. The IG said those groups exhibited "indicators of significant amounts of political campaign intervention," which it says is the appropriate criteria to trigger special IRS scrutiny. Just 17 of the 96 conservative groups targeted were deemed to have shown no overt signs of significant political activity and should never have been submitted for extra review in the first place.

ABC's MATTHEW DOWD: Watching President Obama's most bad awful week, and the flurry of accusations flying back and forth, I am reminded of two opposing sports teams. It seems how wrong someone is or the level of scandal or incompetence involved totally depends on which jersey each team is wearing. Today, if someone has an "R" on their jersey then they see scandal and abuse at every turn in the White House and by Democrats. They are quick to jump to the "Watergate" word for Benghazi and the IRS abuse situation when most rational people know the comparison between what is going on today and what happened with Richard Nixon is extremely thin at best. And on the Democratic side because President Obama is a member of their team, Democrats (and left leaning media) excuse behavior that would have caused them (and did cause them) to go apoplectic under George Bush and Dick Cheney. Can you imagine how Democrats would have reacted if the Bush administration had done the same things the Obama administration seems to have been involved in? I have a suggestion: Maybe we all should take our team jerseys off for a second and see how we might perceive the world today, the policies needed and how we might differently react to the events of today and what we might think the truth is. http://abcn.ws/10y2Vg7

ABC's TOM SHINE: "Congress has been an enabler of sexual assault…" Those were strong words from Rep. Jackie Speier, D-Calif., reacting to reports that a military guy who was supposed to handle sexual assault cases at Fort Hood, Texas is now under criminal investigation for sexual assault and according to the Washington Post, forcing a subordinate into prostitution. "Another sex scandal rocks the military," Speier says. "Is congress really going to stand by and let the military handle this? Congress has been an enabler of sexual assault by not demanding that these cases be taken out of the chain of command." Rep. Speier has a bill that would do precisely that. It is called the "Stop Act." Staff for Speier note that the U.S. capitol police are investigating threats against the congresswoman. They declined to give any details.

WHAT WE'RE WATCHING

IRAN HOSTAGES, LOCKED IN STRUGGLE FOR COMPENSATION, TELL THEIR STORY OF 'COLOSSAL INJUSTICE'. Hollywood portrays the Iran hostage crisis as a thriller story with a triumphant ending in the film "Argo." But the real story of the 52 hostages who were held in captivity for 444 days, 39 of whom are still alive today, didn't end with their homecoming to the U.S. Thirty-two years after their release, two former hostages tell ABC's JONATHAN KARL, host of "Politics Confidential," about their harrowing tales of captivity and their subsequent legal battle to receive compensation for the ordeal they endured. One of the hostages, Rick Kupke, describes their 17-year-long legal struggle, saying "it's almost as if our noses have been rubbed in the dirt." "It's a colossal injustice, what happened to us," says Kupke, who is now retired from the State Department and was repeatedly tortured at the hands of the Iranian captors. "People ask me, do you have nightmares, did you come out of this normal…my nightmare is the Algiers Accord." WATCH: http://yhoo.it/10Xok2n

BUZZ

IRS SCANDAL REACHES FARTHER THAN CINCINNATI. Cincinnati was far from the only IRS office where agents put conservative groups seeking tax exempt status under heightened scrutiny, ABC's SHUSHANNAH WALSHE notes. David French, an attorney with the American Center for Law and Justice representing 27 groups that say they were unfairly scrutinized by the IRS, provided letters from two different agents in Washington, D.C., to tea party groups seeking tax exempt status. Other groups received demands for information from agents in two separate IRS offices in California. The Albuquerque Tea Party, which applied for tax exempt status in 2010, heard from an IRS agent in Washington as recently as last month, who wrote that the "determination is currently being reviewed." In an interview with ABC News, French said they "knew from the beginning that the IRS spin regarding the Cincinnati office was wrong because we had been dealing with California and D.C. as well and what's important to know is that we continue to deal with Washington, D.C." Agents in two locations in California were overseeing tax exempt applications for tea party groups. In February 2012, the OKC PIA Association, also known as the OKC Tea Party, in Oklahoma City, Okla., received a 21 question letter from an agent in El Monte, Calif. http://abcn.ws/18IZtqw

ON THE AGENDA: President Obama heads to the Capitol this morning to deliver remarks at the National Peace Officers Memorial Service at 11 a.m. ET, notes ABC's MARY BRUCE. The annual ceremony honors law enforcement who were killed in the line of duty in the previous year. Later, Obama has lunch privately with Vice President Joe Biden at the White House.

HOLDER ON THE HILL: As ABC's JOHN PARKINSON notes, U.S. Attorney General Holder will testify before the House Judiciary Committee on the DOJ obtaining two months of journalist's records at the Associated Press, among other things. The hearing takes place today at 1:00 p.m.

THE FACES OF SCANDAL: When Marion Bower decided to start her tea party organization in 2010, she didn't know that it would take nearly two years for the Internal Revenue Service to approve her request for tax-exempt status, ABC's ABBY PHILLIP writes. The Ohio woman also did not expect that providing information about the books her group read would be part of the application process. "I was trying to be very cordial, but they wanted copies of unbelievable things," Bower told ABC News. "They wanted to know what materials we had discussed at any of our book studies." She ultimately sent one of the books, "The Five Thousand Year Leap," promoted frequently by Glenn Beck, to the IRS official handling her tax-exempt request in Cincinnati. She also sent a paperback copy of the Constitution. Bower, 68, said she did not want to cause trouble or be argumentative with the IRS, so she patiently responded to their questions about her group, American Patriots against Government Excess (PAGE). She said the group in Fremont, Ohio, about 45 miles from Toledo, was formed as an educational group. Her group's request was granted in March 2012, about two years after they originally applied. http://abcn.ws/1031ieP

IMMIGRATION REFORM BILL: DISNEY AS A MODEL? Sen. John Cornyn yesterday suggested that the federal government should model its biometrics system on the one used by Walt Disney World, saying if the system is "good enough for the Magic Kingdom, they ought to be good enough for the United States," ABC's SERENA MARSHALL reports. The Republican from Texas brought up the theme park at yesterday's Senate Judiciary Committee hearing on the immigration reform bill, during discussion of an amendment proposed by proposed by Sen. Jeff Sessions, R-Ala., on the need for a biometrics for entry/exit system. "[Sen. Marco] Rubio shared with me that Walt Disney World uses a biometric system in Florida to make sure people don't commit ticket fraud," Cornyn said during the hearing. "If they are that easy, affordable and good enough for the Magic Kingdom, they ought to be good enough for the United States. Senator Sessions' amendment would guarantee they would not be eligible for lawful citizenship until there is a biometric entry/exit system." Sen. Dick Durbin, D-Ill., one of the Gang of 8 members who drafted the bill, responded that Disney only has "two ports of entry, one in Florida and one in California. … We have 329 ports of entry in the United States, which include land, sea and air … a more daunting task than it is at Disney World or Disney Land." http://abcn.ws/10MF2Hi

MINNESOTA FREEDOM TO MARRY BILL SIGNED INTO LAW. Minnesota Gov. Mark Dayton signed the Freedom to Marry Bill into law on the steps of the State Capitol yesterday. The bill passed by a vote of 37 to 30 in the state Senate Monday, after more than four hours of passionate yet respectful speeches on both sides. Dayton had expressed support for same-sex marriage before the bill passed, ABC's SARAH PARNASS reports. Minnesota joins 11 other states and the District of Columbia in legalizing gay marriage, meaning that about 18 percent of the country's population has the option to marry regardless of gender. Half of those states approved gay marriage after President Obama expressed support for it in May 2012. http://abcn.ws/10MA2CM

IN THE NOTE'S INBOX

-PLANNED PARENTHOOD TAKES AIM AT KEN CUCCINELLI. Planned Parenthood Action Fund, the political and advocacy arm of Planned Parenthood Federation of America, launched a series of web ads today highlighting what the organization says is Virginia Republican gubernatorial candidate Ken Cuccinelli's "terrible record and agenda for women's health. In the ads, Ken Cuccinelli pops up in places where no politician belongs, including the doctor's office and the bedroom. In one ad, the female narrator warns voters that Cuccinelli is 'trying to put himself in the middle of our most personal decisions.'" According to a spokeswoman for the Planned Parenthood Action Fund, the ads will run during the Virginia Republican Convention in Richmond this weekend. WATCH: http://youtu.be/DZ6tKc3hOSI See the web ads: http://keepkenout.org/cuccinelli-ads/

-LONG-TIME ROMNEY AIDE JOINS GOP FIRM. Former Mitt Romney aide Lou Tavares has joined the Republican direct marketing firm SCM Associates, Inc. as vice president. According to an announcement, "SCM Associates has responded to client demand in recent years by expanding its traditional mail and telemarketing offerings to include email outreach, online advertising and website development. Stephen C. Meyers, President and founder of SCM Associates said, 'I am very excited to welcome Lou Tavares to the SCM Associates team. His years of experience helping to manage complex national operations and cross-channel marketing programs for Mitt Romney will help us offer our clients an even more fully-integrated and consistent marketing program.'"

WHO'S TWEETING?

@gregorykorte: USA TODAY exclusive: IRS gave liberals a pass as Tea Party groups were put on hold http://usat.ly/140HXLy

@marcambinder: Possible that broad scope of DOJ request for AP records is a pre-emptive CYA for not being able to expose leaker but "we covered all bases"?

@CHueyBurnsRCP: Republicans look to extend recent controversies into 2014, but do they risk overplaying their hand? My story on RCP: http://www.realclearpolitics.com/articles/2013/05/15/gop_looks_to_extend_controversies_into_2014_118413.html …

@JohnJHarwood: For those wondering, sequester cuts have NOTHING to do w/$200B drop in CBO deficit forecast since February. Were already baked in then.

@thegarance: Between Quinn and Weiner, all I can say is that NY Dem mayoral primary has a surfeit of candidates running on the TMI platform.

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