Group pits lit­tle-known law against Trea­sury claims

It says depart­ment’s state­ments about tax cuts vi­o­late Data Qual­ity Act

The Washington Post - - ECONOMY & BUSINESS - BY SPENCER S. HSU

For­mer U.S. pol­icy an­a­lysts backed by ex-Obama ad­min­is­tra­tion lawyers are in­vok­ing an ob­scure fed­eral law to try to cor­rect what they call “mis­lead­ing and un­re­li­able” state­ments by Trea­sury Sec­re­tary Steven Mnuchin and se­nior depart­ment of­fi­cials in sup­port of the GOP’s tax cut pro­posal.

The ma­neu­ver is one of sev­eral ac­tions aimed at us­ing the ad­min­is­tra­tion’s pub­lic state­ments to launch le­gal chal­lenges to pol­icy changes and ex­ec­u­tive or­ders.

Since its en­act­ment in 2000, the lit­tle-known and rarely lit­i­gated In­for­ma­tion Qual­ity Act has man­dated that in­for­ma­tion is­sued to the pub­lic or spon­sored by fed­eral agen­cies be “ac­cu­rate, re­li­able and un­bi­ased.”

The law, some­times called the Data Qual­ity Act, arose out of fears that fed­eral reg­u­la­tions could be warped or ma­nip­u­lated by flawed or “junk” sci­ence.

In a 10-page let­ter dated Mon­day, a lib­eral ad­vo­cacy or­ga­ni­za­tion for­mally re­quested the Trea­sury Depart­ment re­tract its claims about the ben­e­fits to work­ing Amer­i­cans of the tax plan. The let­ter is an ini­tial step re­quired un­der the data qual­ity law be­fore a fed­eral law­suit can be filed mak­ing the same de­mand.

The chal­lenge comes af­ter the Trea­sury Depart­ment ear­lier this year re­moved from its web­site a peer-re­viewed 2012 tax cut anal­y­sis by ca­reer depart­ment econ­o­mists that con­tra­dicted the depart­ment’s cur­rent claims.

A Trea­sury spokes­woman de­clined im­me­di­ate com­ment on the chal­lenge.

The law has been em­braced by in­dus­tries and con­ser­va­tive groups as a way to chal­lenge gov­ern­ment reg­u­la­tors, and crit­i­cized by progressive or­ga­ni­za­tions who say it can be abused to bog down or block new health, safety and en­vi­ron­men­tal rules. Un­der Pres­i­dent Trump, how­ever, some lib­eral groups have ex­plored it as a way to com­bat pro­posed ad­min­is­tra­tion shifts on mat­ters in­clud­ing cli­mate sci­ence and busi­ness dereg­u­la­tion.

At is­sue in the let­ter are state­ments by Mnuchin and depart­ment spokesman Tony Sayegh that say chang­ing the cor­po­rate tax code would help U.S. work­ers.

Slash­ing cor­po­rate tax rates would ben­e­fit the av­er­age Amer­i­can house­hold by “$4,000-9,000 once the tax plan is fully op­er­a­tional,” Sayegh said in an Oct. 18 in­ter­view on the Fox News Chan­nel, one of the as­ser­tions the let­ter con­tends has “no sup­port” in Trea­sury Depart­ment re­search.

The lawyers pur­su­ing the claim are not ask­ing for mone­tary or other dam­ages but are de­mand­ing that the depart­ment com­ply with in­for­ma­tion act rules gov­ern­ing the ac­cu­racy of agen­cies’ pub­lic state­ments. If the depart­ment re­buffs their re­quest, the group could ask a fed­eral court to probe the mat­ter or en­force com­pli­ance.

Trea­sury guide­lines re­quire its state­ments be ob­jec­tive and sup­ported by “full, ac­cu­rate [and] trans­par­ent doc­u­men­ta­tion,” and that sta­tis­ti­cal data meet a higher de­gree of trans­parency, ac­cord­ing to the let­ter.

While po­lit­i­cal an­a­lysts have noted Trump’s use of fac­tu­ally in­ac­cu­rate claims over mat­ters rang­ing from the size of his In­au­gu­ra­tion Day crowds to al­le­ga­tions of wide­spread voter fraud as a tool for po­lit­i­cal dis­rup­tion — the suit marks an­other in­stance where the pres­i­dent’s truth­ful­ness in a de­bate dom­i­nat­ing Congress could be tested in court.

“Im­por­tant pol­icy de­ci­sions — like tax re­form — that af­fect ev­ery Amer­i­can should be based on facts, not fancy,” said Anne Harkavy, a top En­ergy Depart­ment at­tor­ney from 2013 to 2016 and ex­ec­u­tive di­rec­tor of Democ­racy For­ward, a non­par­ti­san, lib­eral-lean­ing lit­i­ga­tion and pol­icy shop formed this year to chal­lenge ex­ec­u­tive branch ac­tions.

In the Oct. 18 in­ter­view, Sayegh said the av­er­age Amer­i­can house­hold would ben­e­fit by “$4,000-9,000” once the plan is fully im­ple­mented, a claim that has “no sup­port” from eco­nomic lit­er­a­ture and is non­sen­si­cal since it av­er­ages out to two to five times the to­tal pro­posed amount of cor­po­rate tax cut, Democ­racy For­ward’s let­ter al­leged.

Among the other ex­am­ples cited in the let­ter was an op-ed ar­ti­cle from Mnuchin that cited econ­o­mists’ find­ings, in­clud­ing work by Trump Coun­cil of Eco­nomic Ad­vis­ers Chair­man Kevin Has­sett, that more than 70 per­cent of the cor­po­rate tax bur­den is passed on to U.S. work­ers.

Ac­cord­ing to the let­ter to the depart­ment’s Chief In­for­ma­tion Of­fice, Democ­racy For­ward sought re­trac­tions within 60 days of the “$4,000” and “70 per­cent” claims.

The group cited among other ev­i­dence a state­ment by Obama ad­min­is­tra­tion chief econ­o­mist and for­mer CEA chair Ja­son Fur­man, say­ing the na­tion’s 125 mil­lion house­holds would need to ben­e­fit by $550 bil­lion to $1.1 tril­lion from a cor­po­rate tax cut es­ti­mated at $200 bil­lion.

The ac­tion marks the lat­est twist over the use of the law, which re­quires agen­cies to is­sue guide­lines to en­sure the “qual­ity, ob­jec­tiv­ity, util­ity, and in­tegrity” of their pub­lic pro­nounce­ments.

Courts have is­sued mixed rul­ings on the reach of the law. The U.S. Court of Ap­peals for the 4th Cir­cuit in 2006 de­nied an ef­fort by salt pro­duc­ers to chal­lenge new fed­eral low-sodium health guide­lines, for ex­am­ple, say­ing the law es­tab­lished no right to sue.

How­ever, in more re­cent years, the U.S. Court of Ap­peals for the 9th Cir­cuit found that while the law could not be used by a drug mar­keter con­victed of fraud to re­tract a Jus­tice Depart­ment news re­lease, it did not pro­hibit him from go­ing to court. Sim­i­larly, the U.S. Court of Ap­peals for the D.C. Cir­cuit did not bar a to­bacco com­pany from su­ing, al­though it de­nied its at­tempt to over­turn an Agri­cul­ture Depart­ment fee rul­ing.

An ar­chi­tect of the law, James J. Tozzi, a for­mer OMB of­fi­cial and founder of the Cen­ter for Reg­u­la­tory Ef­fec­tive­ness, said the ap­peals court in Wash­ing­ton — where Democ­racy For­ward is based — in par­tic­u­lar has left the door open for a chal­lenge to hold the Trea­sury Depart­ment ac­count­able for tax cut claims.

The Wall Street Jour­nal first re­ported in Septem­ber that the depart­ment deleted con­flict­ing data and anal­y­sis by ca­reer ex­perts in Trea­sury’s in-house tax eco­nom­ics think tank, the Of­fice of Tax Anal­y­sis, which found that “82 per­cent of the cor­po­rate in­come tax bur­den is borne by […] cap­i­tal in­come and 18 per­cent is borne by la­bor [in­come].”


Trea­sury Sec­re­tary Steven Mnuchin ar­rives be­fore Pres­i­dent Trump and Greek Prime Min­is­ter Alexis Tsipras par­tic­i­pate in a White House news con­fer­ence. A lib­eral ad­vo­cacy group is con­test­ing claims Mnuchin has made about ben­e­fits the tax cut plan would bring.

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