When you get right down to it, the political targeting and stalling of tax-exempt applications by the IRS was an effort to defund the Tea Party. Rick Santelli, one of the Tea Party founders and my CNBC colleague, was the first to make this point. I've taken it a step further: The IRS was taking the Tea Party out of play for the 2012 election, as it looked to avoid a repeat of 2010 and another Tea Party landslide.

There are a lot of numbers out there. Some say Tea Party applications for tax-exempt status averaged 27 months for approval, while applications from liberal groups averaged nine. In one extreme case, according to the Washington Post, the IRS granted the Barack H. Obama Foundation tax-exempt status in a speedy one-month timeframe. Yet some conservative groups waited up to three years, and some still haven't received approval.

But there can be only one reason for the stalled-out approval process for conservative groups. The IRS was trying to put them out of business. Thus far, there's not one wit of contradictory evidence.

(Read More: Incoming IRS chief asked to conduct "thorough review" of agency)

Think of this: If the IRS wasn't politically targeting conservative groups, why did its leading spokespeople lie? This was not even cognitive dissonance. It was outright lying before Congress. Lois Lerner, a key player in the IRS's tax-exempt division, is being accused by the House Oversight and Government Reform Committee of no fewer than four lies. The inspector general's report shows that she knew about the targeting problem in June 2011, but wouldn't admit to it in correspondence with Congress over the next two years.

Then there's former IRS commissioner Douglas Shulman, a Bush appointee. He apparently knew about the targeting in May 2012, but told Congress in August 2012 that he didn't.

Or there's former IRS acting director Steve Miller, who was just pushed out. He also knew about the targeting in May 2012, but later refused to admit it to Congress during testimony.

(Read More: Lawmakers Accuse IRS Officials of Lying in Scandal)

In fact, the whole bloody agency may have known about it on August 4, 2011. According to the Treasury Department IG report, various IRS big wigs met that day to talk about the conservative-targeting problem. That meeting may have included the IRS's chief counsel; while the IG report says he was at the meeting, the IRS has denied that he was. But if one of his minions was at the meeting, the chief counsel would have known about the problem.

And it turns out the Treasury's inspector general, J. Russell George, told senior Treasury officials in June 2012 that he was auditing the IRS's political-organization screening. That means White House appointees in the Treasury, including deputy secretary Neal Wolin, were aware of the IRS scandal before the presidential election. According to the New York Times, IG George "did not tell the officials of his conclusions that the targeting had been improper."

No one knows the exact facts, which presumably will come out in the hearings. But this is important stuff. It is conspiracy stuff. Criminal stuff.

We already know that IRS employees gave heavily to Obama in 2008 and 2012, and very little to candidates McCain and Romney. But who was the quarterback in all this? Who was managing the targeting operation in the bowels of the IRS?

It could have been Sarah Hall Ingram. She served as commissioner of the IRS's tax-exempt division between 2009 and 2012. And she got a $100,000 bonus for her efforts. And now — incredibly — she's running the IRS's Affordable Care Act (Obamacare) office, leaving her successor Joseph Grant to take the fall. But he just turned tail and resigned.

And now get this: President Obama has named OMB controller Daniel Werfel acting director of the IRS. And he's only going to serve between May 22 and the end of the fiscal year, which is September 30. Are you kidding?

(Read More: Outgoing U.S. IRS chief apologizes for 'foolish mistakes')

In four months, we're to believe Mr. Werfel is going to piece together the lies, finger the quarterback, and replace everybody who was involved, not just in the now-infamous Cincinnati office, but in offices in Washington, D.C., two towns in California, and even Austin, Texas. (That's the latest count.) And this guy Werfel is also supposed to manage the agency which is adding Obamacare to its income-tax-collection responsibilities. In four months.

Nuts.

Senate Minority Leader Mitch McConnell said on CNBC's "The Kudlow Report" the IRS' "huge scandal" is just one of many instances where the Obama administration has attacked conservatives and the First Amendment.

"What you've got is administration that, based on the Attorney General's report, engaged in discriminating against conservative groups who had criticized the administration," he said. "This is a huge, huge story."

His remarks came in response to Attorney General Eric Holder's order to the FBI Tuesday to open a criminal probe in the Internal Revenue Service's targeting of conservative political groups.

Lawmakers are pressuring President Barack Obama to act on his administration's suspicion that the Syrian government has used chemical weapons, a move the president has said would cross his "red line."

"I urge President Obama to explain to Congress and the American people how he will ensure Syria's chemical and biological weapons stockpiles are secured, how we'll work with our allies to prevent further use of these deadly weapons, and what additional measures he is ready to take to follow through on his previous statement," Sen. Marco Rubio, R-FL., said in a statement Thursday.

(Read More: U.S. Says It Suspects Assad Used Chemical Weapons)

The President first established his "red line" on Syria this summer, saying the use of chemical weapons would change his calculations significantly, but some military experts question whether he drew the line too soon.

Former Deputy Assistant Secretary of Defense and Heritage Foundation Senior Fellow Peter Brookes called the red line an "embarrassment to Obama."

"I think the Obama team has laid down a marker that's regrettable," NBC News Military Analyst Gen. Barry McCaffrey said. "It's always a mistake to put out in public your red line and imply what you'll do. It should be done in private."

McCaffrey, a retired U.S. Army General, said it would be difficult to find a sensible way to intervene in Syria.

"It would be utter nonsense to go after chemical weapons," he said. "The only option is on-the-ground power, but there is zero likelihood this will happen. It would cause uproar in the country."

(Watch: Time for Boots on the Ground in Syria?)

Sen. John McCain, R-AZ., said the U.S. must take action in Syria but agreed that military intervention is not the next step.

"It requires the United States' help and assistance," McCain told reporters. "It does not mean boots on the ground."

House Intelligence Committee Chairman Rep. Mike Rodgers, R-MI., urged President Obama to outline a specific plan for the transition to a post-Assad Syria, saying "the world is waiting for American leadership."

(Read More: U.S. believes Syria used chemical weapons but says facts needed)

But White House officials have yet to confirm any plan for U.S. intervention in Syria, saying intelligence assessments are not alone sufficient.

--By CNBC Associate Producer Elizabeth Schulze. Follow her on Twitter: @ESchulze9

In the last two days gold has plunged so deep that it's being called the worst drop -- at least in percentage terms -- in 30 years. That brings us back to the early Reagan period, when falling gold was regarded as a good thing.

Back then, lower gold showed inflation coming down after the horrible 1970s. It also showed confidence in the economy recovering and greater respect for the dollar. Over the next two decades, in the '80s and '90s, gold basically dropped in round numbers from $800 an ounce all the way to $250. Stocks soared. So did jobs and the economy. It was one hell of a good period.

No matter how you slice the Obama budget pie, the inescapable fact is that the president wants to get rid of the roughly $1 trillion budget-cutting sequester and substitute in a $1 trillion-plus tax hike. In other words, more spending, more taxing. Growth-busting. The GOP should just say no.

And let me provide some counsel to my Republican friends in Washington, in particular in the House. Balanced budgets don't create growth. This mantra is wrong. It's growth that creates balanced budgets.

Many profound and detailed admiration pieces will be written about the late Margaret Thatcher, and they'll be much deeper than this one. But I want to get on record with my own esteem for Thatcher, whose character, philosophy, and achievements made her one of Britain's greatest prime ministers.

Way back in the early 1990s, at a National Review conference on the eastern shore of Maryland, I had the great honor to serve on an economics panel that Thatcher moderated. (Craig Roberts was also on that panel, although I can't remember the name of the third panelist.)

The topic was free markets and freedom, areas in which Margaret Thatcher made huge contributions, so I had a lot to live up to. And how did it go? Well, following the discussion, I got to sit next to Thatcher during the luncheon. And she told me, "You know, Kudlow, you did rather well in that talk." Naturally, I was thrilled.

Apropos of my column of a week ago, "Has Bernanke Gotten the Story Right?", this week's paltry gross domestic product revision again backs up the actions of Federal Reserve Chairman Ben Bernanke and his market-monetarist supporters.

Real GDP was a miniscule 0.4 percent at an annual rate for last year's fourth quarter, up from an earlier estimate of 0.1 percent. Perhaps more to the point, the year-on-year GDP change is only 1.7 percent, less than the 2 percent average growth of the Obama recovery, which is still the weakest in modern times going back to 1947.

(Read More: Not-So-Great News for Jobless Claims and GDP)

Inside the report, there was good strength in housing investment (17.6 percent), business equipment (11.8 percent), and business structures like factories and warehouses (16.7 percent), all in annual rates for last year's fourth quarter. Consumer spending, however, was a rather soft 1.8 percent.

You might not know it from the acrimonious political debate on cable and broadcast TV, or on talk radio, or on websites and blogs. But here's a counterintuitive observation: Amid all the negativism out there, I believe optimism is in the air.

That's right. Optimism.

Sometimes you have to search for it, or read it in the fine print. But I believe the political economy is getting better, not worse.

Let me make a few points to defend what most folks believe is an indefensible position.

President Barack Obama may be backing away from his doomsday spending-cut predictions as the sequester goes into place. But the new party line is that while there will be no impact in the first few days, there'll be a slow, downward slump after that.

What, are we to believe that lower spending and smaller government damage the economy? Doesn't that run counter to virtually every reasonably objective study in recent years—including ones from a number of U.S. academics and the OECD in Europe—that describe how countries with lower government spending grow more, and how countries with higher government spending grow less?

The Obama administration is whipping up hysteria over the sequester budget cuts and their impact on the economy, the military, first providers, and so forth and so on. Armageddon. But if you climb into the Congressional Budget Office numbers for 2013, you see a much lighter and easier picture than all the worst-case scenarios being conjured up by the administration.

For example, the $85 billion so-called spending cut is actually budget authority, not budget outlays. According to the CBO, budget outlays will come down by $44 billion, or one-quarter of 1 percent of GDP (GDP is $15.8 trillion). What's more, that $44 billion outlay reduction is only 1.25 percent of the $3.6 trillion government budget.