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A great book will be written about this. The IRS targeting of unorthodox Tea Party groups, pro-family groups, and others while Obama was president is going to only become a bigger scandal, and every day a new nugget of information shocks me.  For starters, the dribbling of new, damaging information implies that the White House is trying to contain the scandal instead of opening up with full transparency. Why, after so many weeks, has the public not been told who initiated the targeting? That is a simple thing to discover. A president should be able to get an answer to that question and to share it with the public within 24 hours.

Here are some of nuggets that are troubling:

1. Lois Lerner, who originally organized the failed spin event that alerted the public to the scandal, who is now on some kind of paid leave, who denied personal involvement and blamed “rogue” underlings for the targeting, worked for years at the Federal Election Commission before going to the IRS.  The FEC is the primary enforcer of political speech limits, euphemistically known as “campaign finance reform” laws.  For decades such limits were constitutional, but SCOTUS pared them back.

2. The spouse of ex-IRS chief Douglas Shulman was a vocal advocate for speech limits:

 Now, the focus has shifted to [Shulman's] wife, Susan L. Anderson, after she was identified as a senior advisor for a liberal organization opposed to corporate influence in elections. The group, Public Campaign, says it is “dedicated to sweeping campaign reform that aims to dramatically reduce the role of big special interest money in American politics” and has defended the IRS in recent weeks.

Talk about euphemism, Public Campaign supports “Clean Elections” and “Fair Elections.”  Just not Free Speech.

3. No liberal/progressive groups have been identified that were harassed by the IRS. None.

4. More revelations about individual cases of IRS abuse indicate that crimes were committed — leaking of private information.  This is exactly the kind of institutionalized harassment conducted against civil rights groups in the 1950s!  It is a big, ugly, scary deal. Crimes means criminals. Who did this? The IRS dragged its feet doing its internal investigation in recent years, and tried to keep it hush-hush. Did the White House know about it?

It’s a fair point that a spouse’s political activity, however aggressive (e.g., a vocal liberal Occupy supporter), is improper guilt-by-association. Should the reputation of the IRS be smeared because its chief’s spouse was politically extreme and coincidentally the agency targeted groups she didn’t favor? Maybe not. It is also a fair question to ask what relationships were between IRS employees and the large network of anti-speech activists. Do we have any transparency on the latter question yet?  No. Do we have confidence that the administration will transparently investigate itself?  I do not. It is time for a special prosecutor.

Peggy Noonan is doing amazing work on this story.  Really, really great, and I could only do it justice by copying everything, so treat yourself and read here.

Finally, this week Russell George, the inspector general whose audit confirmed the targeting of conservative groups, mentioned, as we all do these days, Richard Nixon’s attempt to use the agency to target his enemies. But part of that Watergate story is that Nixon failed. Last week David Dykes of the Greenville (S.C.) News wrote of meeting with 93-year-old Johnnie Mac Walters, head of the IRS almost 40 years ago, in the Nixon era. Mr. Dykes quoted Tim Naftali, former director of the Nixon Presidential Library and Museum, who told him the IRS wouldn’t do what Nixon asked: “It didn’t happen, not because the White House didn’t want it to happen, but because people like Johnnie Walters said ‘no.’”

That was the IRS doing its job—attempting to be above politics, refusing to act as the muscle for a political agenda.

Man—those were the days.

My grandfather, Ed Kane, told me that two scandals in his lifetime riveted his attention, and the national response fulfilled his faith in American democracy. McCarthy was one.  Watergate was the second.  This is our generation’s moment and I pray our institutions are up for it.

Jonathan Tobin provocatively argues that the long-serving late Senator Frank Lautenberg and active Congressman John Dingell are the poster children for term limits. Children being metaphorical, clearly. As for me, I am more than a little saddened by closing of the WW2 veterans’ chapter in service to the nation. I’ve always thought that our legislature was enriched by the wisdom of ex-soldiers.  Regardless, Tobin makes a good point:

That’s the point that Tom Bevan makes today at RealClearPolitics.com and its one worth pondering. The ability of people like Lautenberg and Representative John Dingell, who will break the record for the longest-serving member of Congress on Friday, to hang on into their old age isn’t so much testimony to the nation’s desire to make use of the wisdom of our elders as it is to the way the system is still rigged to help incumbents.

OK, but are term limits the answer?  Aside from the title, the essay is silent on its policy proposal.  The only way we can discuss this, then, is to put words in Tobin’s mouth.  Let’s go!

No, term limits are not a good idea. The reason I say that is because they are a shortcut. We wish democracy worked better and didn’t allow incumbency to self-serve. But it doesn’t, so instead of reducing the power of incumbency, we treat it superficially.

In fact, this kind of artificial institutional change is rather common. In BALANCE, we draw a comparison to the “Tall Man” problem that plagued basketball in the middle of the 20th century. The artificial fix to this problem, seriously considered, was to set a height restriction on athletes allowed to play the game.  Imagine a speed limit on running backs, or an IQ limit on PhD candidates! Instead, the game of basketball adopted institutions that naturally addressed the tall man problem: widening the key, adding a 3-point arc, and alternating possession instead of jump-balls after each basket scored.

What natural rule changes would reduce the power of incumbency?  One would be to make gerrymandering unconstitutional (again). Another good reform would be to allow individual candidates to raise unlimited funds, instead of channeling finances through the established political parties.  And the good news is that the U.S. is moving in the right direction on both of those fronts.

Says Bob Samuelson:

At the end of the Eisenhower administration in the late 1950s, nearly three-quarters of Americans said they trusted the government to “do what is right” all or most of the time. Now that’s only 26 percent, finds a Pew survey done in January.

… Something more pervasive has occurred. Our political system has changed. Rather than admit this, many Americans blame the actors. In the Pew poll, 56 percent of respondents agreed with this statement: “The political system can work fine, it’s the members [of Congress] that are the problem.”

On the contrary, it’s not the people; it is the system.

California is still in trouble, despite naive reports (CNN: “California’s finances are golden again”) of its surprising fiscal health. When the San Diego Union Tribune, the biggest paper in the city, ran a very short, insightful, mathematically simple editorial, one commenter said the facts presented were “conservative extremist talking points.”

That attitude is sad, and I hope it doesn’t reflect what Democrats in the state (and also across the nation) think. Here is the core of the editorial, which puts the $3 billion surplus in daunting context:

• $87 billion in unfunded liabilities for the California Public Employees’ Retirement System. The $87 billion would be far higher if not for the rosy investment assumptions used by CalPERS.

• $73 billion in unfunded liabilities for the California State Teachers’ Retirement System, a sum that increases a staggering $6 billion a year. The $73 billion would be far higher if not for the rosy investment assumptions by CalSTRS.

• $64 billion in unfunded liabilities for health insurance coverage guaranteed to retired employees.

• $8.2 billion in money borrowed from the federal government to replenish the state’s broke unemployment compensation fund. California only pays the interest on the debt.

Nobody wins if math becomes a public enemy, so it is worth considering WHO sees math as the enemy?  Who is really threatening the economic balance of the states?  In our book, we ask “Who are the Praetorians?” because it was the Praetorian Guard in Rome that destabilized imperial finances by demanding higher and higher bonuses once they had captured the power to control the Emperor as de facto kingmakers. As this NY Times article makes clear (HT David Henderson), public pensions due to public sector workers and teachers are the main beneficiaries of fantasy budgeting.

And California, which faced a $26 billion deficit two years ago, expects a surplus of between $1.2 billion and $4.4 billion this year, thanks to a combination of tax increases, budget cuts and an improving economy. But it could be erased if the state were to adequately finance its teachers’ pension fund, which says it will need an additional $4.5 billion a year, much of it from the state, to pay the benefits it promised.

“The problems are still there,” said Richard Ravitch, a former lieutenant governor of New York who formed a State Budget Crisis Task Force last year to focus attention on the long-term problems facing states. “It’s retirement expenses, generally, and health care expenses — and they’re crowding out other things.”

We have an op-Ed in the LA Times on the 40 years of federal hostility to unorthodox political voices, corrected by the Citizens United case. Be careful, the piece has lots of unorthodox material and may influence your binary view of American politics.

http://www.latimes.com/news/opinion/commentary/la-oe-hubbard-irs-scandal-20130529,0,2458184.story

The number of interviews Glenn and I have done are a bit difficult to keep up with, thanks to the great work of Larry Hughes at Simon & Schuster and the fantastic power of Rimjhim Dey’s team at Publisez. Here are links to a few:

• Politics not keeping up with debt burden: Hubbard / Marketwatch.com, Greg Robb
• Glenn on MSNBC’s Morning Joe
• Tim on TheStreet.com
• Glenn on BloombergTV (mixed into a complicated 10 minute conversation)
• Tim on WSJ OpinionJournal with Mary Kissel
• And on May 30, Dianne Rehm will interview Glenn on her show!

I’ll try to keep more updates going on https://twitter.com/TimmerKane and https://www.facebook.com/balanceofeconomics

Buy the book at Amazon or BarnesandNoble.com.

The big day is finally here: BALANCE is available wherever books are sold.  And its on discount pretty heavily at Amazon and Barnes & Noble to spark sales. Of course, we are excited, but the biggest part of the excitement is the opportunity we will have to finally have a conversation with readers.  On that point, if you have ANY comments or questions and want to engage in a dialogue, write them here.  I look forward to reading what you think.

Did we choose the right seven (eight if you count California) case studies?  My favorite chapter may well be the one about Britain, especially our offhand comment that it never really declined, but we knew that its exclusion would be met by howls. So, fine, there it is.

Thanks and enjoy!

We are days away from the book’s publication date (Tuesday), and the essence of our core theory couldn’t be more obvious: the Great Power of America is economically – and politically – imbalanced. Here’s David Rhode in the Atlantic,

The IRS actions – from targeting conservative tax-exempt organization to lying to members of Congress – were outrageous. … An increasingly polarized Washington is devouring its own. Ceaseless, take-no-prisoners political warfare, not nefarious White House plots, ravages government.

and Peggy Noonan in WSJ,

We are in the midst of the worst Washington scandal since Watergate. … The IRS case deserves and calls out for an independent counsel, fully armed with all that position’s powers. Only then will stables that badly need to be cleaned, be cleaned. Everyone involved in this abuse of power should pay a price, because if they don’t, the politicization of the IRS will continue—forever. If it is not stopped now, it will never stop. And if it isn’t stopped, no one will ever respect or have even minimal faith in the revenue-gathering arm of the U.S. government again.

Of course, I am deeply disturbed by the IRS scandal. Glenn and I are working on some op-eds to coincide with the launch that will go into more detail, not to mention the remedies we discuss in the final two chapters of BALANCE, and we are eager to talk about the real root of America’s political dysfunction in the weeks and months ahead. As a White House chief of staff once said, we shouldn’t let a crisis go to waste. Good can come of this.

A warning: Even if there are some bad Democratic apples, this scandal is more complicated than a left-right battle, no matter how criminal the actions may be. Let’s keep our eye on the nonpartisan, structural causes of political polarization.

Ambrose Evans-Pritchard doubts China will surpass U.S. GDP in this century. Now that’s a long view, quite contrary to conventional wisdom.  Note his use of the term “economic power”

Doubts are growing about whether China can pass the US to become the world’s biggest economy this century amid warnings that the country’s 30-year miracle is nearing exhaustion. … As of last year US GDP was roughly $15.7 trillion, compared to $8 trillion for China on a nominal exchange rate basis, the measure that matters for gauging economic power.

An emerging great power opens up to the world (China, capital). Nice essay by Ezra Klenn. Meanwhile another builds walls (America, migration).  What a week!

It helps answer one of the great questions for the future of the world. Namely, what sort of economic power will China be? Will it remain an inwardly focused nation concerned only with attaining rising incomes for its own population? Or will it become a major force in international finance, with Shanghai one day emerging as a financial center on par with New York or London?