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Obama slams IRS actions, calls Benghazi probe a 'sideshow'

Holding a tax rebate letter from the Internal Revenue Service, U.S. President George W. Bush speaks about the economy during a visit to a sm
Holding a tax rebate letter from the Internal Revenue Service, U.S. President George W. Bush speaks about the economy during a visit to a sm

By Jeff Mason and Thomas Ferraro

WASHINGTON (Reuters) - President Barack Obama on Monday called the targeting of conservative groups by U.S. tax officials "outrageous" and said that any Internal Revenue Service employees involved would be held accountable.

Obama's comments, during a news conference with visiting British Prime Minister David Cameron, marked the first time the president had spoken publicly about the IRS scandal.

The scandal was ignited last Friday, when an IRS official revealed at a meeting of tax lawyers that the agency had inappropriately singled out Tea Party and other conservative groups for extra scrutiny of their claims for tax-exempt status.

As lawmakers in both parties expressed outrage on Capitol Hill on Monday, Obama - who said he first learned about the IRS's targeting of conservative groups on Friday - said that he had "no patience" for such actions by the tax agency.

"The IRS as an independent agency requires absolute integrity, and people have to have confidence that they're applying ... the laws in a nonpartisan way," Obama said.

While making clear that he considers the IRS scandal a serious concern, Obama took a dimmer view of another issue dominating his administration's time: the ongoing probe by congressional Republicans into the deadly attacks on the U.S. mission in Benghazi, Libya, last September.

That, Obama said, has been a political "sideshow."

The Benghazi matter flared up again last week after internal emails were made public showing that in the days after the attack, the administration tried to shape "talking points" to explain why four Americans, including U.S. Ambassador Christopher Stevens, had been killed.

Obama rejected Republicans' claims that the administration tried to cover up the role of Islamist militants in the attack to avoid looking weak on terrorism eight weeks before the presidential election.

Obama said Republicans have had political motives in criticizing him, his staff and former Secretary of State Hillary Clinton, a potential 2016 presidential candidate.

"The whole issue of this - of talking points, frankly, throughout this process has been a sideshow," he said. "The whole thing defies logic. And the fact that this keeps on getting churned out, frankly, has a lot to do with political motivations."

For the White House, the political sniping over Benghazi combined with the new flap over the IRS has placed it on the defensive, just as the administration is trying to bounce back from failing to get a gun-control bill through Congress and continues to wrangle with Republicans over budget and deficit issues.

"This will be another issue that takes the administration way off message," said Ron Bonjean, a Republican strategist.

"There's no way they can punch through with a positive agenda while investigations of the IRS are going on."

Yet another potential distraction popped up on Monday, when the Associated Press reported that the Justice Department had secretly obtained two months of telephone records of AP editors and reporters involving what the news agency described as a variety of stories.

In its story on the records seizure, the AP indicated that federal investigators were interested in a May 2012 story that disclosed details of a CIA effort in Yemen to stop an airliner bomb plot around the one-year anniversary of the May 2, 2011, killing of Osama bin Laden.

The seizure is likely to reignite post-9/11 debates over whether the U.S. government, in its efforts to ensure national security, sometimes violates individual rights.

REPUBLICANS, DEMOCRATS UPSET

The IRS scandal rippled across Capitol Hill, where lawmakers from both political parties heaped criticism on the tax agency on Monday.

Republican Senator Marco Rubio of Florida, a favorite of the conservative Tea Party movement and a potential 2016 presidential candidate, called for the resignation of acting IRS Commissioner Steven Miller.

"(It) is clear the IRS cannot operate with even a shred of the American people's confidence under the current leadership," Rubio wrote in a letter to Treasury Secretary Jack Lew.

Obama's fellow Democrats joined Republicans in calling for there to be consequences for those responsible for the IRS targeting, which began in 2010 - shortly after the emergence of the Tea Party movement that helped Republicans win control of the House that year.

Senate Finance Committee Chairman Max Baucus, a Democrat from Montana, promised an investigation by his panel. Republicans in the House of Representatives already had announced they would launch their own investigation.

"Targeting groups based on their political views is not only inappropriate but it is intolerable," Baucus said in a statement issued by his committee, which oversees the IRS.

The House Ways and Means Committee will hold a hearing on the issue on Friday, attended by Miller and J. Russell George, the Treasury inspector general for tax administration.

"We must take appropriate action, without any delay or hesitation, to ensure that the IRS remains an impartial agency for America's taxpayers and our nation's families and businesses," said House Democratic Leader Nancy Pelosi.

Obama noted that the U.S. inspector general was investigating the controversy, which focuses on the IRS's office in Cincinnati.

That office was tasked with examining whether non-profit advocacy groups that claimed to qualify for tax-exempt status were granted it. To qualify for tax-exempt status, groups must limit their activity to advocating for issues or causes, and avoid endorsing political candidates.

"We'll wait and see what exactly all the details and the facts are. But I've got no patience with it," Obama said. "I will not tolerate it. And we will make sure that we find out exactly what happened."

(Additional reporting by Laura MacInnis, Susan Heavey, and Roberta Rampton; Editing by David Lindsey and Philip Barbara)

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