04/30/2013 01:44 pm ET | Updated Jun 30, 2013

What's Really Going On in DC, Wall Street... and Moscow


1. Why didn't background checks pass the Senate? Not just because the 10 percent of the population that fears them (thanks to Rush Limbaugh's hold on that percent of the population) happens to live in States where key Democrats and Republicans are up for re-election (or thinking of running in 2016 Republican primaries). More important is the fact that there is simply no evidence that expanded checks could have been even voted on in the House of Representatives, and therefore the market value of a "courageous vote" would have been absolutely zero. Courage that loses would have left those senators with no accomplishment to counterbalance the millions of dollars in ads that would have been run against them. If you want to reconsider and win on background checks, create some pressure to at least assure a vote in the House.

2. Why did the Boston bombings not immediately derail the immigration reform process? Not just because key members of Congress are already out over their skis in support of a comprehensive compromise. More important is the reality that key business and church leaders have joined establishment media in coming out against the status quo. The Chamber of Commerce, Silicon Valley, the banking community have joined up with Catholic and evangelical leaders -- to support the type of reforms advocated by the "gang of eight." All of them are highly influential with the Republican Party that heretofore has been basically aligned with the "self-deportation and border fences only" position. The last time business, churches and the core media effectively turned the tide of political opinion was the case of the Vietnam War. Its time has come again.

3. Why did Russian intelligence tip us off to the Boston bomber, and then clam up? Nobody in Moscow was particularly trying to do us a favor. The Russians are rightly concerned about Chechen radicalism in terms of their own safety, and they really wanted us to do their homework (and maybe their dirty work) for them in the U.S. The FBI and CIA were no doubt quite aware of that, and were rightly circumspect about getting used in an internal Russian game. Notice that, after the bombing, Russian security agencies have essentially behaved as if they had been read Miranda rights. More cooperation would be helpful now, and the apparent release of Russian wiretaps of the bombers' mother's conversation with the elder son is a step in the right direction. Although it would have been good to know about those conversations in 2011!

4. Why are so many commentators on cable TV or the business media trying to talk the stock market down with predictions of a "Spring swoon" or the need for a market "correction" of 5-10 percent or more declines? Not just because the economy turned somewhat softer in March in terms of business activity (after all, even with tax increases consumers kept spending): or more problems in Europe (what's new?); or the slowdown in China (from 7.9 percent GDP to 7.7 percent!). The real reason is that a lot of very well-placed hedge funds missed the market rally in the first quarter because they again traded on ideological terms -- they hate Obama and think the best way to discredit him is to have the market go down, whereas it has more than doubled since his election). These powerful hedge funds have a lot of friends (and fellow "short" investors) who will trot out the same stories about the sky falling that have produced three straight "Spring swoons" in 2010, 2011 and 2012 -- and three straight market rallies that bailed out the hedge funds in the following months. Fool us four times, it's our fault. Even businesses got sucked in by faulty predictions that the Euro would crash, that Germany would leave the EU, that China's economy would collapse, that U.S. inflation would rage out of control: one of them happened.

5. Why aren't the Republicans again out threatening a U.S. default for this summer unless they get another round of austerity budget cuts to Social Security and Medicare? Not just because austerity has become such a "European thing" that the party of American exceptionalism is starting to have second thoughts, or that they have noticed how unpopular Obama has become with seniors for suggesting even he would do some such cuts as part of a budget deal as long as he could cut tax entitlements for the rich. More important is the fact that some key members of the Party have decided that the chances for historic tax reform involving really big rate cuts for individuals and business (coupled with simplification of the tax code to eliminate a wide range of deductions) might be politically achievable in this session of Congress -- especially if immigration reform makes it through. At bottom, the best chance for both Parties to "hold serve" in the 2014 elections (Republican keep the House, Democrats the Senate) is to have a record of real accomplishment by fall of next year, and a less confrontational atmosphere over the debt ceiling and U.S. default would be conducive to that outcome. The debt ceiling could be extended past the next election with the condition that tax reform would be enacted by that time: sort of a "sequester-in-reverse."

6. Why is Marco Rubio going on Rush Limbaugh's radio show and actually arguing with him (over immigration reform). Rush has been publicly counting on the freshman senator with presidential ambitions to actually be the one who torpedoes reform by pulling out of the "gang of eight" at the last minute because he isn't satisfied on border control. But Rubio gave no sign of that in his radio interview, and overtly took the other side in his answers to Limbaugh's pointed and leading questions. The reason isn't that Rubio's appeal is based on his Hispanic roots and he doesn't want to burn his base. More likely, Rubio and other 2016 aspirants (including both Rand Paul and Chris Christie) have finally figured out that Rush's act does them harm, not good. It is in Limbaugh's interest to not have a Republican elected president in 2016, or any time for that matter. His act depends, ironically, on convincing his audience that he and they are the real "victims" in American life, and that can't happen if Republicans control both Congress and the Presidency. So watch for more Republicans to put distance between themselves and "el Rushbo" -- no longer "the most interesting man in the world."