Today the House passed a $800+ billion stimulus/recovery bill with no Republican votes!  The President may be gaining some points among the populace in his conciliatory gestures, but tired party line differences simplistically focus on the proportion of spending increases vs. tax cuts.  The Senate appears likely to add measures to hold down the alternative minimum tax, which may result in bipartisan approval and give President Obama and the nation a welcome valentine present.  Ironically this compromise may drive the total to nearly $900 billion.

Partisan politics, rhetoric and finger pointing disgusts the voting public, who are hoping that cooperative action will bring about swift action.  We as a nation will lose unless Democrats and Republicans put aside ideologies to quickly forge bipartisan solutions – neither party have the magic bullet. In my opinion, the attitude of Congress is just as egregious as wall street executives receiving large bonuses from failed institutions.

Budget analysts seem to agree that Congress and the Administration must meet the double, and somewhat contradictory challenge of reviving the economy and restoring fiscal responsibility at the same time.The TARP infusion of capital into financial institutions has not resulted in greater lending and there is no accountability. I think we will look back on TARP as a last ditch, Bush administration effort to put priority of business institutions over the individuals. Admittedly, as financial institutions fail, it will hurt the the chances for early economic recovery so a balance needs to be maintained.

Despite aggressive efforts of the Treasury and the Federal Reserve to stabilize the financial sector, credit is not flowing normally, even to credit- worthy borrowers.Unfortunately, the government has not found a way to effectively manipulate markets to get institutions and/or individuals to do precisely what they want. Last year’s tax cuts were not effective in stimulating demand nor averting financial disaster.  Spending may take longer than desired to have a stimulating effect on our economy, while at the same time increasing the deficit. Blunt instruments have mixed results.

The Fed’s decision to keep mortgage interest rates low by shoring up freddie and fannie loans has resulted in a mini refinancing boom which does not help stimulate the economy.  In my opinion government policy needs to focus more on helping speed up the housing recovery by working out the REO, as quickly as possible, as a priority. Government policy should help owner-occupied borrowers from going into foreclosure and not just fuel refinancing.

The trick is to once again regulate the institutions that put aside sound business practices because of greed (and now expect the government to bail them out at taxpayer expense, without strings attached) and to convince us as individuals to overcome our addiction to consumerism and to learn to live within our means.  Neither of these can be accomplished by Valentines Day.