Obama taps little-known turnaround specialist to head IRS

Kevin G. Hall,Anita Kumar,David Lightman

President Barack Obama nominated a corporate turnaround specialist Thursday to head the embattled Internal Revenue Service.

The surprise move came as Republicans prepared to spend their summer recess campaigning against the agency.

Obama chose John Koskinen to head the agency, prompting an initial reaction of, “Who?” Koskinen isn’t a household name, either in politics or tax circles. On Capitol Hill and among government watchdog groups, most were unfamiliar with Obama’s pick.

Koskinen, 74, served as the non-executive chairman at mortgage finance giant Freddie Mac, from 2008 after it went into government receivership during the unfolding financial crisis until 2011. He briefly served as interim CEO.

Before that, Koskinen ran the United States Soccer Foundation, and also worked for 21 years at the Palmieri Co., a politically connected corporate turnaround firm.

“John is an expert at turning around institutions in need of reform. . . . John knows how to lead in difficult times, whether that means ensuring new management or implementing new checks and balances,” the president said in a statement. “I am confident that John will do whatever it takes to restore the public’s trust in the agency.”

Obama’s opponents were initially perplexed by the pick.

“They didn’t call me and I’m somewhat familiar with his name and with him. I just don’t know enough about him. What I do know seems favorable,” said Utah Sen. Orrin Hatch, the top Republican on the Senate Finance Committee, which must confirm the nominee.

But Hatch seemed conflicted.

“Whoever restructured Freddie Mac didn’t do too good a job,” the senator said. “I’d like to know a little bit more about him.”

The head of the committee, Montana Democratic Sen. Max Baucus, told McClatchy the pick was a good one. He said it’s important “to have somebody with strong managerial background, someone who has some tax expertise. It’s needed now in the IRS.”

The White House declined to comment on whether Hatch or any other lawmakers, including Democrats, were told beforehand. But administration officials noted that they have responded to numerous requests from Capitol Hill on the IRS, producing more than 13,000 pages of documents in response to more than 41 different requests from lawmakers and participating in 15 hearings.

Koskinen was actually approached about heading the IRS before the scandal broke, said a source familiar with his nomination, demanding anonymity in order to speak freely. Although Koskinen was not initially interested, he was approached after the scandal by Treasury Secretary Jack Lew and accepted the turnaround challenge.

In a statement Thursday night, Lew said: “With a distinguished record of turning around large companies and reorganizing the management and operations of highly complex public and private institutions, John is the right person to take on this critical position at this important time.”

Since 2010, Koskinen, a Duke University alumni, has contributed at least $15,500 to Democratic candidates, according to the Center for Responsive Politics, a nonpartisan tracker of money in politics. He contributed $5,000 to Obama in 2012. His only contribution this year _ $2,500 _ was to Sen. Mark Warner, a Virginia Democrat who serves on the banking and budget committees and is running for re-election in 2014.

The IRS is currently headed by an interim chief, Daniel Werfel, who is a career bureaucrat from the Office of Management and Budget and had been brought in after Obama unceremoniously fired Acting IRS Director Steve Miller in May.

The IRS has been mired in political scandal since May 10, when a division leader, Lois Lerner, answered a planted question at a legal conference and admitted that the agency had inappropriately targeted conservative and tea party organizations for special scrutiny. Specifically, the IRS delayed approval of applications for tax-exempt status from groups that had tea party, patriot and similar politically charged names.

Since then, several senior-level IRS officials have resigned or been put on administrative leave. The Republican-led House of Representatives has held almost weekly hearings, and the Justice Department, the FBI and the Treasury Department have separate ongoing probes.

The strongest reaction Thursday came from Rep. Darrell Issa, R-Calif., head of the House Committee on Oversight and Government Reform, which has been hounding the Obama administration over problems at the IRS.

“Anyone who does not share the American people’s outrage about IRS wrongdoing is not qualified to lead this agency that has abused its power,” Issa said in a statement, noting what he wants to hear from Koskinen.

Obama’s surprise pick comes as Republicans Thursday launched an aggressive effort to use the agency’s troubles for political gain. Congress plans to leave Friday for a five-week recess, and House of Representatives Republicans are being sent home with a “message packet” that includes advice on how to organize events discussing the IRS.

House Speaker John Boehner of Ohio listed the IRS activity Thursday as a priority at his last pre-recess press conference.

“The American people deserve answers, and we’re going to continue to fight for the truth, no matter how badly the administration wants to sweep these issues under the carpet,” he said.

In the message packet, Republican leaders include a page titled “Conversation with Groups Potentially Targeted by the IRS.”

It urges members to invite leaders of local tax-exempt groups “to your district office to hear stories of how they could have been targeted by the IRS.” It suggests a local press conference and submitting “an op-ed to local papers about the rampant overreach of power by the Obama administration _ and what House Republicans are doing to combat it.”

By Kevin G. Hall, Anita Kumar and David Lightman
McClatchy Washington Bureau