Richard Nixon never got the IRS he wanted.
His problem was the agency’s annoying, almost ostentatious tradition of nonpartisan independence. Not that Nixon, or his advisers, believed that IRS claims to apolitical objectivity were genuine. They knew the agency was actually “a monstrous bureaucracy, dominated and controlled by Democrats.” Independence was just a cloak, useful for hiding the anti-Nixon bias of its employees.
That, at least, was the story that Nixon aide John Dean was telling in a series of memos written during 1971 and 1972. And it was a story that Nixon himself embraced as White House officials mounted a pressure campaign intended to intimidate the IRS and its leaders. (Prior discussion: Tax Notes Federal, Mar. 13, 2023, p. 1646.)
The pressure campaign was not especially successful. Nixon’s first commissioner, Randolph Thrower, clashed repeatedly with the White House over requests for politically motivated audits. Eventually, the president tired of the commissioner’s intransigence and canned him. “May I simply reiterate for the record that I wish Randolph Thrower, commissioner of the Internal Revenue Service, removed at the earliest feasible opportunity,” Nixon wrote in January 1971.
A Ruthless Replacement
In looking for a replacement, Nixon knew exactly what he wanted. “I want to be sure he is a ruthless son of a bitch, that he will do what he’s told, that every income tax return I want to see I see, that he will go after our enemies and not go after our friends,” the president explained in one of his famous taped conversations.
Like Thrower, however, Nixon’s second choice to head the IRS also fell short of the president’s mark. Confirmed to head the agency in August 1971, Johnnie Walters came to the post from the Justice Department, where he had served as the assistant attorney general supervising the Tax Division. He had a solid reputation as a tax lawyer, having built a career in his native South Carolina. But critics suggested that his principal qualification was his assumed pliability.
“After Mr. Walters’s appointment as tax commissioner, some sources charged that he had been picked after powerful White House assistants had promoted his candidacy in the belief that he would not be overly independent in exercising his powerful office,” The New York Times reported.
White House chief of staff H.R. Haldeman actually confirmed that rumor during a taped conversation in the Oval Office. When Attorney General John Mitchell had recommended Walters for the commissioner’s job, he promised that Walters was “the guy who would cooperate.” That assurance had been decisive in securing the IRS nomination for Walters, Haldeman noted.
But as it turned out, Mitchell was wrong about Walters: He was not the pushover that people were expecting — or the ruthless enforcer that Nixon was demanding. Walters’s stubborn streak became obvious on September 11, 1972, when Dean gave Walters the famous “enemies list,” featuring the names of people that the White House wanted the IRS to investigate and otherwise harass.
Walters refused to cooperate, instead informing Treasury Secretary George Shultz of Dean’s request. Shultz told him to ignore it, and Walters agreed. The following year, Walters delivered the list to congressional investigators.
Presidential Fury
Dean reported Walters’s intransigence to the president almost immediately. “Johnnie has been a disappointment,” Dean said during an Oval Office meeting on September 15, just four days after his meeting with the commissioner. Dean then offered his most damning indictment: “There’s not a dime’s worth of difference between Randy Thrower and Johnnie Walters.”
Nixon was furious. “Well, he’s going to get out,” he declared. With an eye on the looming election, Nixon even set a deadline of sorts. “He’s finished November the 8th, believe me. Out.”
For Nixon, Walters’s refusal to play ball was part of a larger pattern. As historian Rick Pearlstein argued in Nixonland, the president saw politics (and his own life) as a battle between the elites and the regular people. Whenever the elites got the upper hand, they managed to destroy all that was good and decent in the world. The task facing people like Nixon — a leader of America’s “silent majority” of hardworking, decent people — was to resist the enticements proffered by the elites.
Nixon believed that many of his allies and appointees had faltered in the face of temptation. People like Walters, who hailed from the right sort of middle-America background, were being swayed by the charms of elite approval. “A lot of our people come in here and they start sucking around the Georgetown set, all of a sudden they’re just as bad as the others,” the president complained.
Meanwhile, Walters’s boss was in hot water, too. Rather than protecting the commissioner, the Treasury secretary should have been forcing him to comply with Dean’s request. In the future, things would be different, Nixon declared. “Shultz is to see that any order or list that [Walters] gets comes directly,” the president said. “I don’t want George Shultz ever raising a question.”
Nixon was fed up with Shultz’s fussy respect for procedural niceties; the secretary needed to get his hands dirty from time to time. “He didn’t get secretary of Treasury because he’s got nice blue eyes and not for any other reason,” Nixon said. Or as he immediately rephrased it (in a statement expunged from the official tape to spare Shultz the embarrassment but recounted by Dean in his congressional testimony): “If Shultz thinks he’s been put over there to be some sort of candy ass, he is mistaken.”
Presidential Plotting
Despite Walters’s refusal, Nixon was still determined to have the IRS investigate his opponents. Haldeman agreed and suggested that the White House simply acknowledge that the investigations were happening. Tell the media that “we’ve had a lot of complaints and we’ve got to check these things out, and we just do it,” he said.
Still, Haldeman and the president agreed that even a straightforward approach would demand some delicacy. “We have to do it artfully so that we don’t create an issue by abusing the IRS politically,” Nixon said. And then he added with no apparent sense of irony: “There are ways to do it . . . sneak in in the middle of the night.”
Dean agreed, while also relating his past successes at sneaking material out of the IRS. “We had a man who could do it and was doing it for me,” he told Nixon. Unfortunately, that man — who had been able to deliver information to Dean without going through official IRS channels — had been promoted out of that useful position.
But again, Haldeman returned to the idea that the administration could simply acknowledge its intention to investigate its political opponents. “Let the Democrats down there squeal and say Nixon’s pulling the tax files of all the Democrats,” he said. “You see, it’s damn right because we’re worried about being charged with covering up tax problems.”
Dean agreed with this approach. Normalizing the investigations made sense, and when they concluded, it would simply be a coincidence that “a lot of Democrats get caught . . . in the new compliance program.”
Haldeman wrapped up by proposing some misdirection. “We’ll pull a lot of Republicans too and just don’t look at those after we pull ‘em,” he said. Nixon wondered briefly which unfortunate Republicans might be targeted as decoys but then quickly signed off on the idea before getting a serious answer. “Just do as you say,” he told Haldeman. “We’re just going to do it.”
Too Many Democrats
Before starting the enemies’ audits, the IRS would need a new commissioner. “We’ve just got to get a guy with guts in there, don’t we,” Haldeman observed. But replacing Walters was only a start; the agency needed new personnel from top to bottom. “The problem is this,” Dean said pointedly. “There are so damn many Democrats.”
Dean had made that point before. In an undated “talking paper” written the previous year, Dean had provided a scathing assessment of the IRS and its partisan bias. “IRS is a monstrous bureaucracy,” he declared, “which is dominated and controlled by Democrats.” As a result, the agency “had been unresponsive and insensitive to both the White House and Treasury in many areas.”
Dean believed that good politics and good policy could coexist at the IRS — but only if Republicans gained a foothold in the agency’s upper ranks. “The lack of key Republican bureaucrats at high levels precludes the initiation of policies that would be proper and politically advantageous,” he wrote. Democrats at the agency were frustrating the administration’s plans at every turn: “Practically every effort to proceed in sensitive areas is met with resistance, delay and the threat of derogatory exposure.”
Nixon embraced Dean’s assessment of the IRS. And the obvious solution was to fire everyone hired during previous administrations. “I want there to be no holdovers left,” Nixon said during the September 15 Oval Office meeting. “The whole . . . bunch go out.”
And once again, Nixon made Shultz responsible. “If he doesn’t do it, he’s out as secretary to the Treasury. And that’s the way it’s going to be played,” he said. “We’re not going to have a secretary to the Treasury who doesn’t do what we say.”
“Absolutely, every . . . one,” Nixon emphasized for good measure. “And George doesn’t want ‘em out, that’s too damn bad.”
Mass firings were unprecedented, both at the IRS and elsewhere in the federal government. Civil Service rules impeded the process, but even those without legal protection were often left alone. Typically, Haldeman said, White House officials had held off because they were worried about restaffing the depleted agencies.
Such worries seemed minor, however, as Nixon anticipated a sweeping victory in his 1972 reelection campaign. “The excuse of waiting was that we don’t have a guy to fill it. That doesn’t make any difference either now,” Haldeman said. “We can leave it empty.”
Haldeman wasn’t talking only about the IRS, although the tax agency was certainly high on his list for a housecleaning. “We can leave the whole . . . government empty and it wouldn’t hurt the world one bit,” Haldeman exclaimed defiantly. Nixon agreed, predicting that Americans would be grateful that “finally somebody is cleaning house.”
For Nixon, it was another chance to put the elites in their place. Or more to the point, to eject them from his place: the federal government, which Nixon was poised to claim on behalf of the silent majority.
Third Time, No Charm
As he expected, Nixon won in a landslide in 1972. But his plans for a housecleaning at the IRS didn’t materialize quite as planned. He did get rid of Walters, who resigned as commissioner in the spring of 1973. And Nixon named the third commissioner of his presidency, Cincinnati tax lawyer Donald Alexander.
But Alexander would prove to be the biggest disappointment of all Nixon’s commissioners — assuming we measure disappointment in Nixonian terms. Within months of Alexander’s confirmation, Congress began investigating Nixon’s effort to politicize the IRS. Several of Dean’s memos had found their way to Capitol Hill, including the famous enemies list, and Congress was hot on the trail of Nixon’s official misdeeds at the tax agency.
When reporters asked the new commissioner for a comment, he offered a statement that couldn’t have pleased Nixon. “I have read the news reports of Mr. Dean’s testimony concerning statements that Internal Revenue Service was Democratically oriented and that after the elections people should be placed in this agency who would be responsive to White House requirements,” Alexander said. “If there is anything to those statements then, in appointing me, they have appointed the wrong man. I intend to administer the Federal tax laws even-handedly and fairly and without any regard to political affiliation.”
There was nothing unusual about Alexander’s claim to nonpartisan independence, nothing controversial about his commitment to fairness and objectivity. But there was something very important about it: Alexander’s statement represented everything that Nixon hated about the IRS — everything he had been trying to change about the agency for years. And everything he had failed to accomplish.