In the first year of Richard M. Nixon’s presidency, key members of his White House staff began agitating for major changes at the IRS. The agency’s most serious problem, they contended, was its independence. The obvious solution: politicize it.
“There is no office in government touching on more people than the IRS and one report I get is that there are 175 super-grade jobs over there — and we have not appointed one,” complained Nixon adviser Pat Buchanan in an April 3, 1970, memo to White House Chief of Staff H.R. Haldeman (emphasis in original). “I have been told that to take effective control of it we need probably 10 men of competence and loyalty to the President.”
Buchanan was hardly the only Nixon aide eager to revamp the IRS. But inconveniently, the agency was notably independent, especially when it came to personnel. Thanks to its restructuring in the 1950s, only the commissioner was directly appointed by the president. Adding loyalists to the staff was no simple task. Buchanan suggested “a pre-emptive strike,” noting that “a scandal of minor sorts” might get the job done. It would at least permit the administration to fire many existing employees, whom Buchanan suspected of being Democrats.
Buchanan’s plan for a minor scandal went nowhere. But officials in the Nixon White House continued their efforts to politicize the IRS and bring it to heel through administrative and personnel reform.
Nixon’s misuse of the IRS came to light during the various Watergate investigations, including those conducted by Congress and the Watergate Special Prosecution Force. But Nixon’s sustained effort to bend the IRS to his will through a process of structural reform and institutional pressure got less attention than his more lurid transgressions, like the famous “enemies list.”
Nixon’s plan for revamping the IRS deserves attention. It provides a stark reminder of the agency’s vulnerability, as well as its appeal to partisan operatives eager to exploit its considerable enforcement powers. It also provides important historical context for the House Judiciary Committee’s current investigation into the “weaponization of the federal government.”
Weaponization is hardly new; when it comes to the IRS, it’s a bipartisan practice with a long history.
John Dean’s Project
White House counsel John Dean was a key figure in Nixon’s plan to remake the IRS. In September 1970 he told Haldeman that to “solve the problems at IRS it will be necessary to make major changes from top to bottom.” More specifically, Dean said, the agency would require “a total reorganization,” which could be publicly defended “in the name of improving tax collection operations, etc.”
In fact, Dean never cared about the IRS’s “tax collection operations.” But he was passionate about the agency’s capacity for “etc.” — specifically its ability (and willingness) to wield its enforcement powers on behalf of the president.
Haldeman embraced Dean’s plan for radically overhauling the tax agency, responding with an enthusiastic “Right on!” according to historian John A. Andrew III, who recounted the exchange in Power to Destroy: The Political Uses of the IRS From Kennedy to Nixon.
But Dean’s plan for revamping the IRS wasn’t all about structural reform, which was complicated since it involved congressional approval and public scrutiny. Dean also proposed a pressure campaign directed at the IRS commissioner, which could deliver less dramatic but still important results. This sort of informal “reform” also had the virtue of being invisible to the public.
Problems Worth Solving
Dean had a clear idea of the problems he was trying to solve at the IRS. And like other members of the Nixon administration, he was unafraid to commit his thoughts to paper. That is how his pressure campaign came to light: During his Senate testimony on the Watergate scandal, Dean provided investigators with a copy of his memo on strong-arming the commissioner.
The goal, as Dean laid out in an undated memo to Haldeman, was to “make IRS politically responsive.” This was a reasonable aim, and essentially just corrective action. “Democrat Administrations have discreetly used IRS most effectively,” he wrote. “We have been unable.”
At root, the problem was one of personnel — both the people already at the IRS and the ones that needed to be installed there. Current GOP appointees had shown a “lack of guts and effort,” Dean wrote, failing to make the most of their positions. “The Republican appointees appear afraid and unwilling to do anything with IRS that could be politically helpful.”
Dean had some specific failures in mind:
“We have been unable to crack down on the multitude of tax-exempt foundations that feed left wing political causes,” Dean told Haldeman. He almost certainly had in mind foundations like the Carnegie Corporation of New York. In 1972 Buchanan had exchanged memos with Dean about a voter education campaign that Carnegie had funded in Georgia. “This is something the IRS should look into,” Buchanan wrote. “Don’t know what the law says, but clearly registering black teenagers and Mexican American teenagers is not an enterprise that is going to be advantageous in November; and it should not be done with either tax-exempt or corporate funds.” Dean responded by asking Gordon Strachan, one of Haldeman’s aides, to investigate. (The Buchanan/Dean exchange is preserved in Dean’s papers at the Richard Nixon Presidential Library and Museum in Yorba Linda, California.)
“We have been unable to obtain information in the possession of the IRS regarding our political enemies,” Dean complained. His concern went to the heart of Nixon’s misuse of the IRS, including the infamous enemies list. White House officials had tried, sometimes successfully, to secure personal tax information about individuals, including both friends and enemies of the president. But the IRS officials also resisted such efforts, sometimes tepidly and other times vigorously. Dean and his White House colleagues wanted a free flow of taxpayer information between the IRS and the White House, with the agency complying quickly and completely with all requests.
“We have been unable to stimulate audits of persons who should be audited,” Dean noted. Again, this ostensible failure at the IRS underscored Nixon’s systemic misuse of presidential power. The enemies list, for instance, never seemed to function as intended; it never resulted in the kind of IRS harassment that its authors had in mind. Dean hoped that reorganizing the IRS might make the agency more responsive to harassment efforts, including initiatives like the enemies list.
“We have been unsuccessful in placing RN [Richard Nixon] supporters in IRS bureaucracy,” Dean wrote. The key stumbling block, in terms of installing personnel, had been a lack of political appointments within the IRS; all but one had been eliminated by the 1952 legislative reform of the agency. But IRS leaders, including Nixon’s chosen commissioners, also resisted informal pressure to name certain individuals to key, nonpolitical posts. As a result, Dean contended, the agency was dominated by holdovers, many of them Democrats.
Dean advised Haldeman to lay down the law with IRS Commissioner Johnnie Walters. As it happened, Walters was actually Nixon’s second commissioner, having replaced Randolph Thrower, who was forced out for being excessively independent during his brief tenure. Walters, however, was also proving troublesome, at least from the perspective of White House officials.
“Walters must be more responsive,” Dean wrote, especially when it came to “personnel and political actions.” Dean was explicit about White House expectations. “Walters should make personnel changes to make IRS responsive to the President,” he declared. An upcoming opening for IRS general counsel would be “a first test” of Walters’s attitude.
More to the point, Walters should be generally disabused of the notion that he was independent of the White House and its political goals. The commissioner “should be told that discreet political action and investigations are a firm requirement and responsibility on his part,” Dean told Haldeman. White House staff — and Dean in particular — should have “direct access” to the commissioner, with no preliminary approval required from the Treasury Department. “Walters should understand that when a request comes to him, it [is] his responsibility to accomplish it — without the White House having to tell him how to do it!”
Dean’s memo to Haldeman was only one part of his pressure campaign on the agency. And it didn’t include his plans for structural change, which would have rolled back some of the 1952 institutional changes intended to depoliticize the agency.
But of course, that was the point. For Dean and his White House colleagues, insulating the IRS from politics wasn’t a feature of the 1952 IRS reform — it was a bug. And Dean was determined to squash it.