SCOTT SIMON, HOST:

President Obama's challenges continue on the domestic front with skepticism this week. After Lois Lerner, the former director of the Internal Revenue Service's Exempt Organizations Unit, said that a crash of her hard drive in 2011 obliterated much of her email. Now, that correspondence is believed to contain crucial information about the targeting of conservative nonprofit groups for special attention from the IRS. And it reminded a lot of journalists and congressional critics of the 18-minute gap on Richard Nixon's Watergate tapes. But Megan McArdle, an economics columnist for Bloomberg View, finds the hard-drive-ate-my-mail defense to be plausible and, in a way, more alarming than any possibly disingenuous excuse. Megan McArdle joins us in our studios. Thanks so much for being with us.

MEGAN MCARDLE: Thank you for having me.

SIMON: You have a background in information technology. So...

MCARDLE: Yes.

SIMON: Why do you find this explanation so plausible?

MCARDLE: So what they did was bad IT management, but it is not uniquely bad IT management. Basically, what they had done is they had set the server so that in 2009, only 150 megabytes worth of mail could be stored in a mailbox. The result of that was that people either had to delete or archive their email. And where they archived it was on their local hard drive. What they say happened is that Lois Lerner was archiving stuff on her local hard drive. That hard drive failed catastrophically. They were unable to recover the emails. And before anyone really knew that this was going to be a target of a congressional investigation, that hard drive was taken out and thrown away because you don't keep bad hard drives around.

Now, they are coming forward and saying that six other people, including the chief of staff of the IRS, had the same problem. And we're still waiting for information on exactly what happened. So we know that it looks like at least one person - the chief of staff - had that problem and that other people have lost documents, although not clear exactly how. Whether it is the same problem or whether it's a - you know, they lost a few files here and there. If one person has that problem, that is believable. It happens. It does. You know, I've heard from people in the federal government who this has happened to. I have seen it in the private sector. That said, if seven people had hard drives fail in a very short period of time, then you start thinking that maybe someone was helping them to fail.

SIMON: Was the IRS, at the same time, constrained with the kind of archiving they could do, maybe by the fact that they're a government agency and are not encouraged to spend a lot of money on it?

MCARDLE: I don't think so. So the IRS themselves say that it would have cost over $10 million to upgrade the system so that people can have unlimited storage in their mailboxes. They have an annual IT budget of about 1.8 billion, so it's hard to say that they couldn't have found the money. And also, if you look at lost productivity that you have when people spend all of this time deleting emails and archiving - and taking even a low-paid employee - given how cheap hard drive storage is, it's not worth their time. So this was kind of - the best you could say is penny wise, pound foolish. But much more likely that they just didn't feel like this had to be a priority for them. And I think that that is a big issue. Caesar's wife has to be above reproach. If you're going to say, you have to keep your tax records for seven years, then you better be prepared to deliver your own records for at least that long.

SIMON: Well, the absence of emails - given whatever number of employees it winds up being - make this case hard to investigate.

MCARDLE: It does. It makes it harder to figure out what happened.

SIMON: And it makes it hard to exonerate people, too.

MCARDLE: Yes. Exactly. If it's just an unhappy accident, it is very unhappy, indeed, for her.

SIMON: Megan McArdle, columnist for Bloomberg View. Thanks so much.

MCARDLE: Thank you. Transcript provided by NPR, Copyright NPR.