Power Grab - Jason Chaffetz Page 0,22

virtue—as they funnel dark money into charities while pretending to eschew dark money from Super PACs?

Those questions raise even more questions. Does the IRS have the necessary tools and data to figure any of this out? If so, are they even willing to do so? Are there any enterprising journalists brave enough to take on the pillars of the nonprofit community to investigate? And what is the opportunity cost of all of this political activity? Are charities even focused on the social welfare priorities upon which they were founded? Does the use of both a 501(c)(3) and a 501(c)(4) within the same organization ultimately politicize the whole endeavor? How far does the politicization extend? Are organizations with no explicit political bias somehow engaging in a clandestine way?

Domestic Spending as a Conduit to Nonprofits

These questions shed new light on the federal budget battles of the last ten years. The Democratic push for more domestic spending actually results in more spending on nonprofits. In fiscal year 2018, the federal government allocated $59 billion for nonprofit contracts and grants, according to USAspending.gov. Does any of that money directly or indirectly fund political activities?

I remember when Republicans gained control of the House of Representatives after the 2010 midterms and made a concerted effort to cut federal spending. Democrats had been increasing domestic spending, which includes heavy spending on government grants and contracts to nonprofit organizations, for years. Having been demoted from Speaker to House minority leader, Pelosi went to the mat to protect domestic spending.

Because we had not yet won back control of the Senate and did not have support for Republican budgets there, we kept funding the government with continuing resolutions. These just extended the inflated funding levels previously set by Democrats. In 2011, Republicans used the debt ceiling vote as leverage to pass the Budget Control Act, which ultimately imposed automatic spending cuts. I didn’t vote for sequestration—I think tailored budget cuts are preferable to across-the-board cuts—but more important, I worried about defense spending.

We were engaged in two foreign wars and President Obama wanted to cut defense spending by $100 billion a year annually. It had a huge impact on military readiness. Republicans were fighting to restore the massive cuts in military spending, with tens of billions of dollars needed to rebuild military infrastructure and modernize our weapons. Democrats were reluctant to increase military spending, but seemingly went along as long as there was an equivalent increase in domestic spending, from which the many grants and contracts to nonprofit entities flow.

We had a strong and legitimate rationale for funding the military. Democrats had no corresponding rationale for increasing domestic spending. Pelosi even went so far as to tell CNN’s State of the Union, “The cupboard is bare. There’s no more cuts to make. It’s really important that people understand that.”

Hogwash. They just want more government. We were already spending at the time more than $1 trillion a year on more than eighty federal welfare programs, according to a December 2012 Senate Budget Committee report. The people living at or below the poverty level already qualify for these programs.

Bypassing Congress to Fund Nonprofit Allies

The cuts to domestic spending during those years may have given rise to what the Wall Street Journal called “one of the Obama Administration’s worst practices”—the misuse of settlement slush funds. Unbeknownst to Congress, the Eric Holder–led Justice Department initiated a program in which federal prosecutors could require big companies to settle federal fines by giving money to nonprofit organizations. These mandatory settlements often involved large financial institutions giving money to politically favored causes completely unrelated to their industry.

According to internal Justice Department documents exposed by former Judiciary Committee chairman Bob Goodlatte, government officials were directly involved in choosing which organizations would receive settlement money, and even intervened at times to prevent money from going to politically disfavored nonprofits.

In what Goodlatte called a “smoking gun” email, one senior Justice Department official appeared to intervene in a settlement with Citigroup, expressing concerns that a conservative group might be a beneficiary. The email provides proof of political bias. In it, the senior official outlines political objections to a proposed settlement agreement. “Concerns include: a) not allowing Citi to pick a statewide intermediary like the Pacific Legal Foundation (does conservative property-rights legal services).” Writing under the title of “Acting Senior Counselor for Access to Justice,” the official added that “we are more likely to get the right result from a state bar association affiliated entity.” The right result? Exactly what results are DOJ