September 12,2018

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Rachel McCleery (202) 224-4515

Wyden Statement on IRS Commissioner Vote and Trump’s Treasury, IRS Dark Money Crisis

As Prepared for Delivery

M. President, this week the Senate is considering the nomination of Charles Rettig to lead the Internal Revenue Service. And let’s be clear, this isn’t a typical IRS Commissioner debate.

Over the last several months, the Trump administration has weaponized the tax code to punish its political adversaries and benefit shadowy far-right groups that seek to buy elections.  Two months ago, just hours after Maria Butina was outed as an alleged Russian spy who sought to influence our elections, the Trump administration announced a new rule opening the floodgates to more dark money and foreign money in our politics. Dark money groups used to be required to disclose their donors to the IRS. With this new rule, they won’t be required to disclose at all.

So over the next two months, while political ads flood the airwaves, millions of Americans are going to wonder how much of this stuff is paid for by lawbreaking foreigners and special interests. Because of the new rule, the IRS and law enforcers are going to be in the dark, too.

There are a few key reasons why this new rule is an unjustifiable, undemocratic mistake. First, this change got no debate in the Finance Committee, where we have jurisdiction over the tax code. It got no debate here on the Senate floor. I do recall my Republican colleagues bemoaning what they believed was anti-conservative political interference by the IRS, even when there was none to be found. But now, with a Republican administration in office, they’re changing tax rules to allow more political interference by secretive outside groups and foreigners.

Second, the timing of the announcement couldn’t have better underscored the rotten corruption at the heart of this policy. The new dark money rule was announced on a Monday night, the same day it was revealed that Maria Butina had been indicted for using the NRA as a conduit to influence our democracy with personal and financial ties.

Another administration, seeing that kind of news come down, might have decided to hold off making such a drastic change. They might have said, hey, let’s put a little more space between the indictment of an alleged Russian spy and the rollout of our dark money rule that would have made the spy’s job even easier.

Not the Trump administration. They were undeterred. They obviously decided they couldn’t wait to get this new rule on the books, making it easier for foreign actors and special interests to hide in the shadows while their dollars influence our elections.

Here’s the third problem -- the tax rules and election laws regarding who has to disclose political spending were already badly broken, especially after Citizens United. Now the administration is taking a problem and making it worse.

This Trump dark money rule is only going to mean that individual Americans have even less faith that they’re in control of our democracy. This takes us even further away from the true meaning of one person one vote. It puts even more power and influence in the hands of special interests.

And fourth, the arguments in favor of this change simply don’t add up. I’ve heard members of the administration, including Secretary Mnuchin, say that none of this information was public before, so there’s no reason to collect it. They say it’s no big deal.

Colleagues, the overwhelming majority of the American people want more disclosure, not less. The administration, in effect, is admitting that they weren’t using the information that political donors used to have to turn over. So it sounds to me like the Trump argument for this dark money rule goes like this: We weren’t going to enforce the campaign spending laws anyway, so we decided not to bother collecting this donor information at all.

In my view, that’ll be cold comfort to the millions of Americans who are going to get clobbered by anonymously-funded political ads for the next two months before the election. Bottom line, this dark money rule is anti-law enforcement, anti-disclosure, and undemocratic. It puts a blindfold on law enforcement at the exact moment when the Congress ought to be finding ways to shed more light on political spending and defending our democracy from foreign influence.

Now, the Finance Committee vote on Mr. Rettig’s nomination was coincidentally scheduled to take place the same week the rule came down. Obviously this issue was a focal point in the discussion. I raised this issue during the markup. I gave him an opportunity to tell the committee he’d try to fix it, but he did not. He wouldn’t even acknowledge that there is a real problem here for the cause of transparency and openness in our democracy. 

Furthermore, in my view, this rule ought to be put up to the same standard of scrutiny that the majority has applied to several other rules that were put in place by the previous administration. The Senate ought to use the powers granted to us by the Congressional Review Act, and we ought to vote on whether this rule should stand.

But now, the Trump administration is taking unprecedented steps to hide their dark-money policy from that kind of scrutiny. Trump officials are keeping their rule off the official books for as long as they can to prevent us from holding their dark money rule to the same standard they’ve applied to Obama administration rules.

When they either publish the rule in the federal register, or they confirm that it won't be published there but will be published elsewhere, the rule becomes eligible for a challenge under the Congressional Review Act.

But so far, they haven’t taken either step, even though I asked them to give me a response three weeks ago.  As a result, here in the Senate, we’ve been unable to get a straight answer as to when it’s coming -- or whether they plan to publish it at all.

It looks to me like the administration has a policy on their hands that they know is corrupt -- that they know is undemocratic. And so they’re playing hide the ball. Because the more the public hears about this dark money rule, the less they like it. The end effect is, the Senate is stuck in limbo with respect to dark money.  But in the meantime, Democrats are going to keep pressing on this issue -- and on the Trump tax agenda overall.

As I said a few minutes ago, the Trump administration has, in effect, weaponized the tax code against Americans. And it’s not just dark money -- it’s also the new Trump tax law punishing taxpayers in blue states. My colleague Senator Menendez spoke about this at length a moment ago.

From the very beginning, the Trump tax law was all about giving the biggest possible handout to corporations and the mega-wealthy. And in the process, to hide the massive scale of those handouts, the Trump administration and their Republican allies in Congress hit blue states like Oregon, California, New Jersey and others with a gut punch, capping the state and local tax deduction.

To target people in Oregon and elsewhere in this way is wrong. It reveals the rotten core of the Trump tax law. It is a far cry from the kind of reforms Americans want us to make to our tax code -- changes that create new opportunities for people to get ahead. And it’s a clear sign that Republicans have brought on a world of instability to our tax laws that will need to be resolved in the future.

As for this week, I urge my colleagues to oppose the Rettig nomination. And I look forward to working with my colleagues to fix this dark money crisis and undo the damage the Trump tax law has brought on.