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Robert Reich: Keep your eye on THE BIG SCANDAL!

Keep your eye on the big scandal. Although the IRS was wrong to target conservative groups for review based on their names, the bigger wrong was its failure to investigate the major groups -- such as Karl Rove's Grossroads GPS and Priorities USA -- that falsely claimed to be "social welfare organizations" under 501(c)(4) of the Internal Revenue Code in order to hide the names of their donors. And the real scandal of the 2012 election (which will be even worse next year, because they got away with it) is how many corporations and wealthy individuals used this loophole to disguise their identities while pouring hundreds of millions of dollars into campaigns. The Supreme Court in "Citizens United" at least assumed full disclosure, but the "social welfare organization" loophole in the tax laws has allowed corporations to keep political spending secret even from their own shareholders.

The worst outcome of the indignation over the IRS's targeting of conservative groups would be for the under-manned IRS to pull back from investigating all putative "social welfare organizations," thereby turning the scandalous loophole into a giant river of secret money. Our democracy is already being purchased by big corporations and the rich. At the least we should know who the buyers are.



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