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"An Independent Son of a Bitch"
Nixon, Johnnie Walters, and the IRS
"Mr. Secretary, I'm sick and tired," said Johnnie Walters, commissioner of the IRS, to Treasury Secretary George Shultz on August 29, 1972. "You can have this fucking job anytime you want it." That threat to resign followed a tense telephone conversation with John Ehrlichman, who had said he was "very impatient" with Walters over the IRS investigation of Larry O'Brien, chairman of the Democratic National Committee (DNC). Led by the president's repeated demands and leaks to the White House from the commissioner's assistant Roger Barth, Ehrlichman increasingly pressured Shultz and Walters for more information about O'Brien throughout that summer. Stationed at three different posts in Shultz's office, Barth, Shultz, and Walters each played very different roles in their August 29 conversation with Ehrlichman. Barth mostly remained silent, Walters clashed with Nixon's domestic affairs adviser, and Shultz attempted to act as the peacemaker. After Shultz spent some time carefully going over the details of the investigation, Ehrlichman set his sights on the commissioner. "I think there's been foot dragging, I think you've been way too lenient with this guy." Just in case there was any confusion he said, "That's directly to Johnnie and not anybody else!"
Walters was irritated and countered Ehrlichman's attack: "I'm busting my gut ... to do everything to protect the president. ... especially when we're playing with fire!" Unsurprisingly, Ehrlichman disagreed. "We've been protecting the president for years and years at the IRS and that's an excuse not to do something!" Barth did not say a word throughout the entire exchange. Sensing that the meeting was spiraling out of control, the secretary took over the final few minutes of the discussion and insisted that they would find an appropriate way to look at the returns. It was the last conversation between Ehrlichman and Walters. Shultz never raised the O'Brien issue again with Walters, and the commissioner backed down from his threat to resign.
Walters's threat to resign from his post was the culmination of more than a year of heated battles with the White House over their attempts to politicize the IRS. Even though the O'Brien issue was never brought up again, Nixon did not give up on his efforts to control the IRS. The O'Brien investigation was only one part of a full frontal assault on the IRS in the summer and fall of 1972. Shultz and Walters's tense conversation with Ehrlichman prefigured the White House's bid to have the IRS adopt their enemies list and carry out political audits in the weeks leading up to the election. When the president's counsel John Dean presented a list of hundreds of McGovern campaign contributors that the White House wanted the IRS to audit, both Shultz and Walters refused. The list was one of several that had been drafted within the White House, but it was the only one that had been delivered to the commissioner with specific instructions to audit individuals for their political contributions. The president had hoped Walters would be a "ruthless son of a bitch," who would "do what he's told." But with the support of his superior George Shultz, Walters locked the list in a safe and never followed through on the White House's order. Although the Nixon White House did succeed in infiltrating certain parts of the IRS, Walters and Shultz's refusal to audit political enemies protected the greater integrity of the agency. The two men stood in the way of Nixon's most ambitious power grab, one that would have institutionalized his abuses of power.
The president's plans for the IRS ultimately failed, as the rise of the Watergate scandal brushed aside any of the White House's attempts for more control over the agency. The president's schemes could have easily been carried out had it not been for the leadership of Republicans within the IRS and the Treasury Department like Shultz and Walters. If they had decided to yield to the president's orders, the IRS would have turned into a direct extension of the Nixon White House by initiating hundreds of politically based audits on Nixon's enemies. These actions would have further damaged the integrity of the agency, as well as the nation's entire democratic process. With the enemies list in their hands, Shultz and Walters both acutely recognized the danger of the requests and fought to protect the IRS from the president.
The White House's actions in the months leading up to the 1972 presidential election were one part of a nearly four-year effort to transform the IRS. Since his first year in office, the president and his aides had tried to wrest control of the IRS from a bureaucracy that they felt was largely at odds with the White House. Whether it was going after the tax-exempt status of left-wing organizations or trying to promote Nixon loyalists, the White House regularly attempted to use the IRS as a tool to expand their authority. In numerous taped conversations, Nixon described the IRS as a vital part of his plans to dramatically reshape the federal government. As Nixon outlined his goals for a second term, appointing Walters's successor at the IRS was often a central part of his vision of the next four years. In a meeting with H.R. Haldeman and the then White House's personnel chief Fred Malek just weeks before his second inauguration, the president stated, "There's no appointment that I consider more important than the IRS appointment."
Control over the sixty thousand civil servants within the IRS was at the forefront of the White House's attempts to establish a more dominant executive branch that could readily use the agency to stifle a wide range of political activities. In order to expand the power of the state through the use of the IRS, Nixon often relied on his most loyal, and often most conservative, supporters within the federal government. For the president, loyalty trumped any sort of conservative ideology, but the two were often in sync when it came to the White House's attempts to control the IRS. On the whole, several key conservative loyalists within the administration saw the IRS as an agency that could and should be used against liberal and left-wing organizations.
The White House initially viewed the Republicans who stood in their way as irritating roadblocks, but as time went on, they were grouped together with the president's enemies. Shultz and Walters were both Republicans, identified as conservatives, but they were efficient civil servants above everything else. Nixon's attempt to politicize the IRS is arguably the most representative of Nixon's tendency to conflate conservatism with presidential power. With very few exceptions, Nixon wanted to use the IRS to punish the left. Unlike Nixon's cultural approach to conservatism, which placed a high priority on loyalty, Shultz and Walters both demonstrated political independence and a strong desire to keep their work within the federal government separate from politics. Although they came from different backgrounds, their mutual decision to stand up to the White House with regard to the enemies list was connected to their shared belief in the value of civil service.
In order to fully understand the importance of Shultz and Walters's refusal to take action on the White House's enemies list, one must start with Nixon's relationship with the IRS during the early years of his presidency. The White House's earliest efforts to reshape the IRS included monitoring appointments, attempting to promote Nixon loyalists, and targeting left-wing organizations and their tax-exempt status. The president and his aides avoided a direct confrontation with the IRS, and chose instead to work around the edges in order to avoid a potential scandal. Embedded within these practices were signs of what became a more fully developed vision for the IRS and the role that it would play within the Nixon administration. Throughout his first term, Nixon frequently became embittered over his failed attempts to change the IRS, and subsequently adopted a much more aggressive approach to politicize the agency. Although the president's own advisers occasionally dragged their feet due to their fears of getting caught, it was the leadership of the IRS that directly resisted Nixon's orders. It is through the Nixon White House's earliest interactions with the IRS that it becomes clear just how important the agency would eventually loom in the president's ambitious plans for the agency following his reelection.
NIXON, RANDOLPH THROWER, AND THE WHITE HOUSE'S EARLY ATTEMPTS TO CONTROL THE IRS
In a three-hour meeting with Haldeman, Ehrlichman, and Kissinger on July 21, 1969, Nixon mapped out his thoughts on the overall direction of his administration. Sitting with the men whom he identified as his "hard-core inner circle," the president was inspired by the recent Apollo 11 mission, which had taken place the day before. Throughout the meeting, he was insistent that the White House should use the word "GO" as their theme for the next several months. Haldeman wrote in his daily diary that Nixon argued that the theme meant "All systems ready, never be indecisive, get along, take risks, be exciting," and argued that they should not "fall into dry rot of just managing the chaos better. Must use the great power of the office to do something." While the rest of the nation celebrated the feats of the Apollo 11 astronauts, Nixon linked the event to the need not only to take a more proactive approach to the presidency in the broader sense, but also to use the power of his office to harass and intimidate his opponents. During the meeting, Nixon stated that the "Main thing is we haven't used the power of the White House, to reward and punish." Later in the meeting Nixon also mentioned that he wanted to "set up and activate dirty tricks." While Nixon saw the first six months of his presidency as a period where his team had settled into the White House, he was now prepared to take action on solidifying his support within his administration and take certain steps to expand his reach within the government.
The previous spring, Nixon appointed Randolph W. Thrower, a Republican lawyer from Georgia, to be the new commissioner of the IRS. In the midst of his appointment, Congress began to pressure the IRS to take a harder line on tax-exempt groups, targeting newly formed left-wing activist groups. There was arguably a legitimate concern about the wave of antiwar and civil rights organizations that had sprung up in the late 1960s, as their political activities may have violated their tax-exempt status. In response, the Senate and the House's Committee on Ways and Means led separate investigations into the process of granting tax exemptions to activist groups. Nixon naturally shared Congress's concern and began to encourage the IRS to begin cracking down on groups that actively opposed his presidency. Soon after his appointment, Thrower met with Arthur F. Burns, a counselor to the president, and discussed the president's interest regarding the tax-exempt status of activist groups. Based on Thrower's notes of the meeting, Burns said that Nixon was worried "over the fact that tax-exempt funds may be supporting activist groups engaged in stimulating riots both on the campus and within our inner cities." The meeting coincided with a memorandum written by White House aide Tom Charles Huston on June 18, 1969, that directly notified the president that the IRS would now take "a close look at activities of left-wing organizations which are operating with tax exempt fund." Huston recommended the White House use the IRS to monitor left-wing organizations, and Nixon wrote back that he agreed.
Arising out of the public pressure from Congress and the private conversations and memorandums within the White House, the IRS created the Activist Organization Committee, later renamed the Special Services Staff (SSS) in the summer of 1969. Under the leadership of Thrower, the SSS conducted many credible investigations, but the secret committee also became susceptible to attempts by other parts of the administration to target certain organizations. While other special committees within the IRS relied on internal investigations, the SSS was the only group within the agency that relied on reports from other agencies. Whether it was the FBI, the Justice Department, or even the White House, the SSS regularly responded to reports that focused more on the politics of a particular group rather than the details of their finances. The FBI was the largest source, sending nearly twelve thousand individual reports to the SSS, some of which had come from its infamous COINTELPRO surveillance program that targeted the left. Overall, information from the FBI added up to 43 percent of the data collected by the SSS, leading to politicized investigations of the Black Panthers, the Vietnam War Moratorium Day Committee, and other left-wing organizations. Through the work of the SSS, the IRS audited many of the same groups that were targeted by Congress and the White House for full-fledged investigations. The actions of the SSS were certainly not unprecedented within the history of the federal government, but they provided a crucial outlet for the White House to begin to expand its influence within the IRS.
Despite the agency's efforts to clamp down on tax-exempt groups, the president and his aides within the White House continued to feel powerless when it came to the IRS. Even with the high level of harassment of activist organizations, the White House often complained that the SSS was not aggressive enough in collecting damaging information about their enemies. A year and a half after the establishment of the SSS, Huston reported to Haldeman that the IRS had demonstrated a "lack of guts and effort." He concluded: "The Republican appointees appear afraid and unwilling to do anything with IRS that could be politically helpful." The memorandum eventually reached Commissioner Thrower, who saw Huston as part of a group of "young men at the White House who were unaware of the proper function of the IRS," a trend that he identified as "a growing concern over the latter period of 1970."
The White House's earliest attempt to have one of its own staff members gain access to private tax records occurred soon after they hired Clark Mollenhoff in the fall of 1969. Mollenhoff, a journalist whose reports on corruption within the Teamsters union earned him a Pulitzer Prize in 1958, was officially hired as a special counsel to the president. Mollenhoff only worked for Nixon for nine months, but during that time he oversaw special investigations that led to him obtaining access to the tax returns of several individuals. Thrower agreed to let Mollenhoff study certain tax returns under "limited circumstances," and only with written authorization from the president.
The commissioner provided office space in the IRS for Mollenhoff, who went through the records of nine individuals over the period of seven to eight months. Based on the information he had collected, Mollenhoff submitted a request to Thrower for audits on thirteen individuals on March 31, 1970. Mollenhoff's list had originally come from Haldeman, who had told him to have the IRS audit the thirteen individuals. When the request reached the IRS, Thrower refused to initiate any of the audits since there was not enough data to provide justification. The request for audits in the spring of 1970 did not lead to abuses of power, but the decision to allow a Nixon aide access to private records marked a new stage in the precarious relationship between the IRS and the White House. Although Mollenhoff later defended his actions and claimed that he primarily conducted background checks, his investigations set a dangerous precedent for the Nixon White House and opened the door to future attempts to politicize the IRS.
Within the IRS, the White House relied on Roger V. Barth, a former advance man for the Nixon daughters during the 1968 campaign, to provide insider information about the agency and its investigations. Based on recommendations from the White House, Barth was hired as Thrower's assistant in the spring of 1969 and quickly established himself as Nixon's man. Barth's deep-seated loyalty to Nixon was not a secret to most of his coworkers, as he hung framed, autographed pictures of the president and his family on the walls of his office. Despite objections from many within the agency who saw Barth as a White House spy, the commissioner relied on his assistant for meetings notes and for background research on potential appointees. Throughout his time at the IRS, Barth regularly discussed internal IRS investigations with White House staff members while also complaining about the commissioner's leadership. In a meeting with the president, Ehrlichman once described Barth as "not only our man, but he likes to snitch on people. ... gets vicious hatred of anyone on the other side."(Continues…)
Excerpted from "They Said No to Nixon"
Copyright © 2018 Michael Koncewicz.
Excerpted by permission of UNIVERSITY OF CALIFORNIA PRESS.
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