Lawrence O’Donnell Claims to Know More About the Law Than the Supreme Court

As Obama is buffeted by wave after wave of scandal, some in the liberal media have been spinning to hilarious lengths.  In the IRS scandal the spinning is particularly hilarious.  As I have said online repeatedly, it takes a special breed of hack to say that the IRS did nothing wrong when their spokesperson admitted they had done something wrong and apologized for it (thus inviting them to be sued several times over).  So to any rational person, there is no question there is a scandal.  The only question is how bad it is.

Which is not to say we are anywhere near certain at this point in time that Obama did anything worse than improper oversight.  But as I have said, if Obama is involved, impeach him.  If he is not involved, “impeach” the IRS (that is abolish it or so limit it so that it can never do this sort of thing again).

Martin Bashir of course has gone to the tried and true claim of raaaacism:

But the good news there is probably not even Bashir takes that seriously.  What is more disturbing is how Lawrence O’Donnell managed to convince members of Congress that his defense is correct.  Here, let me present it, and then let me tear it apart:

Visit NBCNews.com for breaking news, world news, and news about the economy

If you have trouble seeing it, here’s a link.  Nbc news can be wonky about this sort of thing.

So… oh my God!  Clearly the law in question is not being followed!  The IRS had been letting political organizations get away with murder since 1959!  How can they get the law so wrong?

Except they aren’t.  How do we know?  Because the Supreme Court says so, unanimously.  But let me take a moment to explain.

First, let’s get very basic.  The rule is that corporations ordinarily have to pay taxes.  But certain non-profit corporations do not have to, if they fit into the various statutes, rules and regulations required in the law.  The statute setting up many of these charities is 26 U.S.C. §501, and you most often hear of §501(c)(3)’s and less often of §501(c)(4).  But there are many other categories of tax free non-profits.

The issue is primarily about (c)(4) organizations, so let’s look at the (relevant) statutory language.  It says that one of the categories of non-profits exempt from taxation are:

Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare...

There’s more about a wholly different category of exempt organizations but that isn’t relevant here, but that is the key language.

Now first, let’s ask a simple question.  What is “social welfare?”  How is that term defined?  Often the trick in law isn’t to know everything, but to recognize what you don’t know and examine that.

Well, with law it never hurts to start with a little common sense.  Let’s imagine that we saw the formation of an organization devoted to stopping child rape.  Call it the Jessica Barton House .  Okay that seems to be off to a good start in terms of being a social welfare organization, right?  Say they build shelters for children who are the victim of rape.  That seems obviously a matter of social welfare right?

Okay, how about ads on television, encouraging victims to reach out to them or law enforcement, encouraging adults who see signs of abuse to report it and so on.  That still seems pretty obviously a matter of social welfare, right?  That sounds like really good work.

Okay, and say they decide that in certain states they need tougher laws on the subject.  For instance, they might feel the age of consent in a certain state is too low.  Or they might feel that the federal laws pertaining to the kidnapping and rape of children isn’t harsh enough.  So they send some people to congress to advocate for such laws.

Isn’t that still promoting the social welfare?  I think it obviously is.

Let’s take another example.  The Sierra Club.  And notice, I am saying the Sierra Club and not the Sierra Club Foundation.  They are closely affiliated, but the Sierra Club is a §501(c)(4) and the Sierra Club Foundation is a §501(c)(3).  Now I have deep disagreements with these hippy tree huggers (I kid!), but that doesn’t stop me from generally crediting that they are good people trying to make America and indeed the world better.  And some of that is probably like drum circles or some hippy crap.  And some of it is promoting their agenda in the political sphere.  Here’s how they describe some of the Sierra Club’s activities:

In 2013, the Sierra Club will promote leaders who take bold action on climate and clean energy, and expose those who still choose toxic money over human health. Building on the credibility developed through our 2012 political work, we will support candidates and policies that:

* work to replace dirty, unhealthy coal plants with cleaner, safer wind and solar energy;

* fight to protect drinking water from fracking; and

* defend wildlands and wildlife from expanded oil and gas development.

That comes from here, and seriously you need to read the whole thing.  It starts with a quote from Obama and includes this map of the gubernatorial races in 2014:

I guess gray indicates states where there is no race.  They don’t go out and say, “vote Democrat” but they are creeping up to the line.

And while I don’t agree with their agenda, that is the promotion of social welfare.  They are trying to make America a better place.  However misguided, they have been doing it for years.

So we establish by simple logic an obvious principle: political activity is one of the ways a group can promote social welfare.

And what do these Tea Party groups stand for?  Well, the two most common threads among the Tea Partiers is they want to reduce the debt and reduce taxes.  They also seem to skew kind of libertarian on most other policies, but those are the two issues they unite on: smaller debt, smaller taxes.  And you might not like those goals, but they think this is what is best for America—or more precisely they think going past $17 Trillion in debt is profoundly bad for America—and so likewise that is social welfare.

See that is where O’Donnell is going the most wrong in his analysis.  He thinks the issue is the term "exclusivity."  But no, the issue is the definition of “social welfare.”  And some political activity can be social welfare.

That’s not just my opinion.  It is also the opinion of the IRS.  Here’s what their regulations, specifically 26 C.F.R. §1.501(c)(4)-1(a)(2), says on the subject:

(2) Promotion of social welfare— (i) In general. An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community. An organization embraced within this section is one which is operated primarily for the purpose of bringing about civic betterments and social improvements. A social welfare organization will qualify for exemption as a charitable organization if it falls within the definition of charitable set forth in paragraph (d)(2) of § 1.501(c)(3)-1 and is not an action organization as set forth in paragraph (c)(3) of § 1.501(c)(3)-1.

(ii) Political or social activities. The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. Nor is an organization operated primarily for the promotion of social welfare if its primary activity is operating a social club for the benefit, pleasure, or recreation of its members, or is carrying on a business with the general public in a manner similar to organizations which are operated for profit. See, however, section 501(c)(6) and § 1.501(c)(6)-1, relating to business leagues and similar organizations. A social welfare organization that is not, at any time after October 4, 1976, exempt from taxation as an organization described in section 501(c)(3) may qualify under section 501(c)(4) even though it is an action organization described in § 1.501(c)(3)-1(c)(3)(ii) or (iv), if it otherwise qualifies under this section. For rules relating to an organization that is, after October 4, 1976, exempt from taxation as an organization described in section 501(c)(3), see section 504 and § 1.504-1.

Now in all that mess, you can pull out several indicators of the definition of “social welfare.”  First, that it is “engaged in promoting in some way the common good and general welfare of the people of the community” or it is “operated primarily for the purpose of bringing about civic betterments and social improvements.”  There is reference to the categories enumerated in 26 C.F.R. §1.501(c)(3)-1(d)(2) but those examples are not exhaustive and are not treated as such.

And then it says one more thing that is very, very important:

The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office.

So advocating for a specific candidate is not social welfare.  So by implication, everything else you can call “political activity” is.  That might not seem obvious to lay persons, but we are talking the language of law and one of the more important rules in interpreting the language of law is the principle of expressio unius.

I explain the concept here (minor language warning) in which I point out the foibles of another MSNBC host, but the short version is that by saying this is not included, they implied that everything else is.

As for O’Donnell’s primary v. exclusive thing... in all bluntness, “exclusively” cannot be “absolutely exclusive.”  It’s not workable.  For instance, if the Sierra Club sells a T-shirt, is that serving the general good?  Arguably not.  Likewise, if Jann in accounting has a birthday and they throw her a party, is that serving the general good?  It would seem to be serving Jann’s good, truly.  This is one of the cases where Congress wrote a law that I think if taken too far is just unworkable.  So the IRS, at worst, gave a narrowing interpretation of the term to give such charities some reasonable breathing room to go a little off mission as long as they were primarily concerned with their charitable mission.

And while the Supreme Court has not gone into great deal discussing the matter, the Supreme Court has agreed with the IRS’ interpretation that §501(c)(4) corporations can engage in some political activity.  In Regan v. Taxation with Representation of Washington 461 U.S. 540 (1983), the Court was faced with a §501(c)(3) that wished to engaged in more political speech than they were allowed back then.  The Supreme Court said they couldn’t, and pointed out that they could do so under §501(c)(4) as follows:

TWR [Taxation with Representation] was formed to take over the operations of two other nonprofit corporations. One, Taxation With Representation Fund, was organized to promote TWR's goals by publishing a journal and engaging in litigation; it had tax-exempt status under § 501(c)(3). The other, Taxation With Representation, attempted to promote the same goals by influencing legislation; it had tax-exempt status under § 501(c)(4).^[4] For purposes of our analysis, there are two principal differences between § 501(c)(3) organizations and § 501(c)(4) organizations. Taxpayers who contribute to § 501(c)(3) organizations are permitted by § 170(c)(2) to deduct the amount of their contributions on their federal income tax returns, while contributions to § 501(c)(4) organizations are not deductible. Section 501(c)(4) organizations, but not § 501(c)(3) organizations, are permitted to engage in substantial lobbying to advance their exempt purposes.

So in short TWR was once two organizations, a §501(c)(3) and a §501(c)(4) devoted to lobbying for some cause or another.  And please note that the Supreme Court basically agrees with the IRS on this.  And this was a unanimous decision.

Oh, but there was a concurrence by Blackmun, which was joined by the uber-liberal Brennan and Marshall.  I am sure they took the majority to the woodshed on this point, right?  Right?

Well, no.  Quite the opposite, in fact.  From his opinion:

I write separately to make clear that in my view the result under the First Amendment depends entirely upon the Court's necessary assumption — which I share — about the manner in which the Internal Revenue Service administers § 501.

If viewed in isolation, the lobbying restriction contained in § 501(c)(3) violates the principle, reaffirmed today, ante, at 545, "that the government may not deny a benefit to a person because he exercises a constitutional right." Section 501(c)(3) does not merely deny a subsidy for lobbying activities, see Cammarano v. United States, 358 U. S. 498 (1959); it deprives an otherwise eligible organization of its tax-exempt status and its eligibility to receive tax-deductible contributions for all its activities, whenever one of those activities is "substantial lobbying." Because lobbying is protected by the First Amendment, Eastern Railroad Presidents Conf. v. Noerr Motor Freight, Inc., 365 U. S. 127, 137-138 (1961), § 501(c)(3) therefore denies a significant benefit to organizations choosing to exercise their constitutional rights.^[*]

The constitutional defect that would inhere in § 501(c)(3) alone is avoided by § 501(c)(4). As the Court notes, ante, at 544, TWR may use its present § 501(c)(3) organization for its nonlobbying activities and may create a § 501(c)(4) affiliate to pursue its charitable goals through lobbying.

So in other words, according to these three judicial musketeers, §501(c)(3) would be unconstitutional if was not for the ability to create § 501(c)(4) which can lobby.  This was vitally important to Blackmun, stating that

A § 501(c)(3) organization's right to speak is not infringed, because it is free to make known its views on legislation through its § 501(c)(4) affiliate without losing tax benefits for its nonlobbying activities.

In other words, if there is a proposal to bulldoze Yosemite National Park and put up a megamall, the Sierra Club foundation, a §501(c)(3), has a right to let its opinion about such a thing be known.  And the way it lets its opinions be known is through the Sierra Club, which is a §501(c)(4).  Blackmun even goes as far as to say that if the IRS should ever forbid the §501(c)(3) from exercising a great deal of control over a §501(c)(4) that it would violate the §501(c)(3)’s freedom of speech.  Indeed the concurrence correctly points out that “the Court finds that Congress’ purpose in imposing the lobbying restriction [on §501(c)(3)’s] was merely to ensure that "no tax-deductible contributions are used to pay for substantial lobbying.’”

Now let’s say that you read all of that, and say, “I don’t care for your lawyerly analysis, Aaron, and I don’t care that nine Supreme Court justices agreed with your analysis.  The Supreme Court was wrong, the IRS is wrong, you are wrong, and we should read the statute from now on prohibiting any political activity by §501(c)(4).  You jerk.”

Well, that last part was uncalled for, but I will let it slide.  But here’s the thing.  Even if you convince the Supreme Court they were wrong in the Regan decision in 1983, they will say, “even if our interpretation was wrong back then, we will continue to follow it.”  You see the courts are uniquely unwilling to overturn erroneous statutory interpretations.  Let me illustrate with an example.

In 1979, the Supreme Court heard the case of United Steelworkers v. Weber.  In that case, the Supreme Court was confronted with a Union that had instituted an affirmative action program, basically screwing young white workers to make up for the discrimination practiced in favor of old white workers.  Those young white workers felt it was unfair for them to be out of a job because of the sins of the past and sued, claiming this violated Title VII of the Civil Rights Act of 1964.  The Supreme Court held, 5-2 (two justices sat out for one reason or another), that bona fide affirmative action plans did not violate this statute.

Then eight years later, in Johnson v. Transportation Agency, the court looked at the issue of affirmative action, again.  This time it was affirmative action by gender in construction work.  They were asked in that case to overturn Weber, but refused.  In doing so they borrowed an idea from one of my professors: the idea that there is a kind of dialogue between the legislature and the courts in the interpretation of statutes.

As one scholar has put it, "When a court says to a legislature: `You (or your predecessor) meant X,' it almost invites the legislature to answer: `We did not.' " G. Calabresi, A Common Law for the Age of Statutes 31-32 (1982). Any belief in the notion of a dialogue between the judiciary and the legislature must acknowledge that on occasion an invitation declined is as significant as one accepted.

So the attitude the court took was that if they had gotten it wrong the first time, then Congress would have corrected them and the fact that Congress didn’t do so meant that at least the present Congress was fine with that interpretation.

So as O’Donnell noted, this interpretation had been on the books for decades, and yet the law hadn’t been changed by Congress in order to rebut this interpretation.  By comparison when the ADA was passed, the courts gave increasingly narrowing interpretations of the law until finally they said that disabilities would be measured using any “mitigating measures” creating a requirement out of thin air.  And then Congress acted and passed amendments to the ADA explicitly reversing those decisions and pretty forcefully rebuking the Supreme Court.

Or in another instance, when the Obama administration came into office they quickly announced a radical interpretation of identity theft legislation that would force every doctor’s office and every lawyer’s office to institute an expensive identity theft protection program.  And the howling from the ABA and the AMA led to Congress passing a law limiting this new interpretation.

So over fifty years of legislative silence on the topic means that the Supreme Court is likely to interpret this as acquiescence, and therefore decide that even if miraculously all nine justices on the Supreme Court got it wrong in the Regan decision, they would not overturn that precedent.

Which means in turn if the IRS suddenly decided to stop the §501(c)(4)’s from engaging in lobbying, they would have a large number of suits and the Supreme Court would be likely to overturn that change.

No, if these Congresspersons want to change the rule now, they need to propose and pass a law the rebukes this approach.

And even then they face a real danger of such a law being struck down as unconstitutional.  While only three justices made this point, not a single justice disagreed with them.  Which means that in the eyes of the court, this is an open question.  And let’s not forget that all five justices that ruled in favor of free speech in Citizens United are still on the bench today.  And that is assuming that the §501(c)(4)s don’t make enough of a ruckus to stop such legislation before it is passed.  If the Sierra Club told those Congressmen that they had to be free to speak, I suspect they would take that seriously.

What this is, instead, is the sad story of a man playing lawyer without consulting any actual, you know, lawyers.  Yes, O’Donnell has some experience working in Congress, and he might have even thought that he knows a lot about law, but there are things we learn in law school that you don’t get anywhere else.

(Well, besides my blog, I mean.)

I don’t’ say this to be snotty.  The very fact I am taking the time to explain this to you is because the law should not be something this impenetrable to regular folks.  Scalia once promoted the idea that a regular person should be able to open a statute book and have a reasonable chance of figuring out what the law requires of you.  The fact most people can’t but I can, doesn’t make me better than you.  It just means I was told the secret code.

But it should not be secret and explaining these things is my way of trying to work against this “secret code” aspect of the law.  Bit by bit, I will give you the cypher.

After all, as I often say at this site, this discussion of the law is not in order to give you legal advice.  It is partly to point out that Lawrence O’Donnell, in his insufferable smugness, is in fact clueless and thus enjoy a little schadenfreude at his expense.  But the more noble purpose is to help you, dear reader, understand the law because as citizens of this republic you have a right to shape the law and you cannot shape the law intelligently without understanding it.  Now you understand it, you might decide that the law stinks and you want to change it and that is your right as a citizen.  Or you might decide on balance it is good.  But the most important thing is that you decide and you do so with a full understanding of the law.

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My wife and I have lost our jobs due to the harassment of convicted terrorist Brett Kimberlin, including an attempt to get us killed and to frame me for a crime carrying a sentence of up to ten years.  I know that claim sounds fantastic, but if you read starting here, you will see absolute proof of these claims using documentary and video evidence.  If you would like to help in the fight to hold Mr. Kimberlin accountable, please hit the Blogger’s Defense Team button on the right.  And thank you.

Follow me at Twitter @aaronworthing, mostly for snark and site updates.  And you can purchase my book (or borrow it for free if you have Amazon Prime), Archangel: A Novel of Alternate, Recent History here.  And you can read a little more about my novel, here.

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Disclaimer:

I have accused some people, particularly Brett Kimberlin, of reprehensible conduct.  In some cases, the conduct is even criminal.  In all cases, the only justice I want is through the appropriate legal process—such as the criminal justice system.  I do not want to see vigilante violence against any person or any threat of such violence.  This kind of conduct is not only morally wrong, but it is counter-productive.

In the particular case of Brett Kimberlin, I do not want you to even contact him.  Do not call him.  Do not write him a letter.  Do not write him an email.  Do not text-message him.  Do not engage in any kind of directed communication.  I say this in part because under Maryland law, that can quickly become harassment and I don’t want that to happen to him.

And for that matter, don’t go on his property.  Don’t sneak around and try to photograph him.  Frankly try not to even be within his field of vision.  Your behavior could quickly cross the line into harassment in that way too (not to mention trespass and other concerns).

And do not contact his organizations, either.  And most of all, leave his family alone.

The only exception to all that is that if you are reporting on this, there is of course nothing wrong with contacting him for things like his official response to any stories you might report.  And even then if he tells you to stop contacting him, obey that request.  That this is a key element in making out a harassment claim under Maryland law—that a person asks you to stop and you refuse.

And let me say something else.  In my heart of hearts, I don’t believe that any person supporting me has done any of the above.  But if any of you have, stop it, and if you haven’t don’t start.