In 1970 President Richard Nixon took a keen interest in Alabama Gov. George C. Wallace and his problems with the IRS. According to two historians, Nixon may have used an IRS investigation to deter Wallace from mounting a third-party campaign for the White House in 1972.
In The Politics of Rage: George Wallace, the Origins of the New Conservatism, and the Transformation of American Politics, author Dan T. Carter suggests that Nixon coerced Wallace into running for the Democratic nomination rather than mounting a third-party bid. Such a move all but guaranteed that Wallace would be absent from the November ballot. As a bonus, it would also disrupt the Democratic primaries, sowing discord among Nixon’s opponents.
The Wallace Challenge
To understand Nixon’s actions around the Wallace investigation, it’s important to start with Wallace himself, a racial demagogue remembered for his defense of segregation. Wallace rose to national prominence in the early 1960s after making his infamous pledge in 1963 to defend “segregation now, segregation tomorrow, segregation forever.” He made headlines again just a few months later with his notorious “Stand in the Schoolhouse Door,” when he personally obstructed Black students trying to enter a building at the University of Alabama.
Wallace used his notoriety as a springboard to national office. In 1964 he entered the Democratic presidential primaries, and he did well enough to try again four years later. In 1968 Wallace made his second bid for the White House, this time as the nominee of the American Independent Party. Again, he did remarkably well, winning five Southern states and 46 electoral votes.
More important, Wallace performed quite well outside the South. “In addition to the five southern states he carried, Wallace polled from 8 to 15 percent of the vote in eighteen nonsouthern states,” observed Carter. “A statistically insignificant shift of votes in Tennessee and the two Carolinas and a 1 percent increase in the Democratic vote in Ohio and New Jersey would indeed have thrown the election into the House of Representatives.”
It was this possibility — of an election decided by the House — that worried Nixon most during the run-up to the 1972 campaign. Nixon expected to run against President Lyndon Johnson, and he explained his concern to Harry Dent, an aide to South Carolina Sen. Strom Thurmond (who had recently abandoned the Democratic Party to become a Republican). As Carter recounted Nixon’s discussion with Dent:
If Wallace should “take most of the South,” Nixon would be “unable to win enough votes in the rest of the country to gain a clear majority.” Either Johnson would win outright or the election would go into the Democrat-controlled House of Representatives. Wallace, Nixon concluded intensely, was the key to his chances for winning the presidency.
Nixon was determined to prevent Wallace from mounting a third-party run. And as it happened, he had a powerful weapon at his disposal that might deter just such a bid: an IRS investigation that was already underway.
Wallace and the IRS
According to historian John A. Andrew III, author of Power to Destroy: The Political Uses of the IRS From Kennedy to Nixon, the White House took an interest in Wallace’s tax returns in the late winter of 1970. Chief of Staff Bob Haldeman asked a staff member, Clark Mollenhoff, to take a look at the IRS investigation of Wallace’s brother, Gerald. The IRS had opened that investigation, known as Project Alabama, during Johnson’s presidency.
For someone with a background as an investigative reporter, Mollenhoff was surprisingly credulous. He accepted Haldeman’s disingenuous explanation that the president was interested in the Wallace investigation solely to ensure that it was proceeding without political interference. “Mollenhoff seemed naive in his belief that secret scrutiny of Wallace’s tax returns was justified on the grounds that Nixon suspected corruption among Wallace appointees working in Alabama IRS Offices,” Andrew wrote.
Within the Nixon administration, Mollenhoff had developed a niche as an IRS liaison. He was unable to get the agency to divulge any tax returns associated with the Wallace case, but he did get a summary of the investigation prepared by Donald Bacon, assistant commissioner for compliance. Mollenhoff passed that summary to Haldeman but, according to Andrew, refused to give a second copy to Murray Chotiner, a special White House counsel with a reputation for being Nixon’s “hatchet man.”
Mollenhoff’s refusal suggested that he may have wised up, at least with regard to Nixon’s rather transparent motives. “Without question the White House request was politically motivated,” Andrew contended. “Nixon undoubtedly hoped to remove Wallace as a threat in the 1972 presidential election.”
Nixon was looking for leverage, Andrew explained. The president might agree, for instance, to terminate the IRS investigation in exchange for a promise not to run in 1972. Or he could simply destroy Wallace’s political career by leaking information to the media. Both options seemed plausible, especially since the IRS was developing a “rather large criminal case” that might involve not just Gerald but George Wallace himself.
Nixon’s Fixation
Nixon had been scheming to neutralize Wallace ever since the 1968 election. “As early as the fall of 1969, a secret campaign had been initiated to neutralize George Wallace as a threat to Nixon’s — and the Republican Party’s — future,” Carter wrote in his biographical study of Wallace. “Although it would be overshadowed by the Watergate revelations, the struggle was characterized by the same patterns of high-level duplicity, dirty tricks, and back-room deals.”
Nixon’s campaign to sink Wallace extended beyond tax. For instance, he made large contributions to Wallace’s primary opponent in the 1970 Alabama gubernatorial campaign. But when Wallace managed to win anyway, Nixon simply redoubled his efforts. “Need to handle Wallace,” he wrote in his personal notes on July 19, 1970.
The IRS was next up in Nixon’s effort to “handle” Wallace. Shortly after Nixon penned his note, Attorney General John Mitchell appointed a special assistant in the Justice Department to help with the ongoing IRS investigation of Wallace and his brother, as well as associated corruption investigations. That signal of presidential interest got things moving.
“What had been a relatively low-key investigation moved into high gear in late summer,” Carter wrote, “as more than sixty IRS agents and Justice Department representatives pored over the records of Alabama agencies and state contractors” looking for evidence of corruption. In April 1971 federal prosecutors began presenting evidence to a grand jury in Montgomery, Alabama. And while George Wallace seemed to be safe from prosecution, he was headed for political embarrassment, with indictments planned for his brother and many close associates.
What Did Nixon Do?
It’s not entirely clear whether Nixon used the IRS and Justice Department investigations to coerce Wallace into abandoning his plans for a third-party presidential campaign. But several crucial facts were “not in question,” Carter wrote. On April 30, just two weeks into the grand jury proceedings in Montgomery, prosecutors announced a temporary recess. In mid-May, while visiting Alabama, Nixon asked Wallace to join him on a helicopter ride. At the end of the month, Nixon representatives were back in the state for additional meetings with Wallace.
When the grand jury reconvened in September 1971, it returned a series of indictments against several Alabama political figures — but none with close ties to Wallace. And in January 1972, the Justice Department announced that it was dropping its investigation of Gerald Wallace. The IRS had also abandoned its investigation.
“Twenty-four hours later, George Wallace announced in a Montgomery press conference that he was a candidate for president of the United States — but would run in the Democratic primaries, not as a third-party candidate,” Carter wrote.
It was all very suggestive, if not quite conclusive. “Was a deal made in 1971, an agreement to trade tax fraud charges for Wallace’s promise to run in the Democratic primaries?” It certainly looked that way to Carter. Not least because the stakes were very high for Nixon.
“Whether or not an explicit agreement was made, Wallace’s decision to abandon his third-party effort was an act of extraordinary importance for the Nixon reelection campaign strategists,” Carter concluded. “No longer would they have to worry about responding to Wallace; he was the Democrats’ problem.”
And quite a problem he would be. One White House aide predicted that Wallace would “move through the Democratic primaries like a pyromaniac in the middle of a fireworks factory, leaving the party in shambles,” Carter noted. “And indeed, the Wallace candidacy was a major factor in the collapse of the Democrats in 1972.”
As Carter noted, “Nixon repeatedly groused that he did not invent the practice of using the nation’s tax system to harass political enemies.” And he was right; both the Roosevelt and Kennedy administrations had crossed some lines, using audits to make life difficult for political opponents, Carter contended. But as any number of investigations have established, Nixon raised the malfeasance “to an art form.”
Not all of Nixon’s efforts to weaponize the tax system were effective; his Enemies List didn’t seem to offer him much protection, ultimately.
But in the case of George Wallace, some tax targeting may have done the trick.