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Democrats, one columnist for Barron's suggested, should ride horses. Americans like horses. They like the way folks with power appear on a well groomed stead. In the face of one or the other of these bills passing intact, even after weeks of wrangling between the members of the President's own party, the only hope for this deformed centerpiece of the administrations economic policy to be criticized is from a Democrat who looks very tall in the saddle. The columnist, Jim McTague points out that the President is a smallish sized man who would, "look like a kid on a carnival pony" if he tried to do what his hero, Ronald reagan did with so much success. Would those Texas Democrats have been able to out run the Homeland Security boys riding in force with the Texas Rangers? Doubtful but the the scene would have been picturesque as we would have watched wondering if Republicans would shoot horses.

Expect the plan, one of the many proposed by the President, the House, the Senate, or Representative Bill Thomas from California to pass in the coming weeks. The effect will be minimal on the economy at best. The last installment of this plan that took effect in 2001 saw additional job cuts numbering into and beyond 1.7 million. Cited as not stimulative enough, the supply siders have trotted out their criticism for progessivity.

For those of you who don't understand this basic tenet of the tax code, supply side economists will tell you that the rich are paying a disproportionate amount of the taxes based on income. These same economist will tell you that because of this thinking, too many states are in financial trouble. This crisis among state budgets threatens to undermine the administration's attempt to put things in line with Bush's vision of an economy that grows in tandem with the wealth of the top 1%.

Now however, the tax coffers are showing up a good deal more empty, some down as much as 70% from those boom and bubble years. Now the wealthy are crying foul and using their well supported political candidates to do the yelling. Don't misunderstand me. I think that taxes are far too high but the alternative right now might be far too dangerous. Many of these state governments are holding their citizens hostage with threats of releasing criminals and closing schools if taxes aren't raised.

Anti-progressives also point to states who weren't hurt as much by the economic downturn as models for the plan. Although these states have generally been conservative spenders with low tax bases and relatively small wealth centers, they still are placed high on the supply siders pedestal.

Now that Senator Russell Long has passed away, it will be interesting to watch this deceased Democrat's efforts at making "Every Man a King" and his belief that capitalism should make every worker rich slowly become unraveled by the current bunch of tax cuts. Sen. Long believed and fought for a tax code that would make each worker act more like an owner. Companies such as Enron and WorldCom skewed this theory by making employee ownership the cornerstone of their growth. Many companies brought his principle to bare this way: Lock the investment down, match only those that contribute to the stock ownership, continue to bolster their belief that this was the one and only place for their investor money to be, and then base it all on lies and you have the prefect distortion of a practical plan.

But his principle lives on in the current plans now before both bodies of Congress. Throw a bone to the little guy and you will appear to be concerned about their welfare. Although Sen. Long was concerned about the little guy. Behind closed doors the Republicans may scoff at the process of tie-ins and sunset provisions, but in the end it will be those "itsy bitsy" inclusions that will benefit those at the top.

The Week Ahead in Equities
David A. Braaten, president of Strong Investments, Inc. wrote me the other day. No it wasn't a letter directed to me specifically but as a member of his investment fold. We Strong investors he felt should know that the bottom had been hit and now is the time to jump in with both feet. His letter pointed out the returns that an investor who reacted quickly to this change in sentiment would receive if they acted now. Based on data collected from 1953 to 2000, leaving out the last two and a half years, in which three possible bottoms were hit before they found new lower lows, the first three months of the rebound in the S&P 500 average, he reported, was 14.9%. Each successive month following that saw these returns diminish considerably until the last three months, nine months after the market hit that low, the returns would be at a paltry 3%. The average return over the course of that rebuilding year was around 8%.

How does Mr. Braaten know that the bottom has been hit? He doesn't. What he does know though, is that the economy is poised for an upswing if you are an optimist, or another slightly longer down swing if you are not. Because of that, money isn't coming in to his group in the quantities that an upswing would suggest. How, in other words will he make the moves his company needs to make without more cash to do it with.

Investors are doing the same stupid things that got them in trouble before they lost much of their hard earned money. In the face of the continued parade of poor economic data, low producer prices, record low factory output, the Fed mentioning deflation (in not so many words), and profits based on labor cuts, they are pouring their money into stocks and funds whose base of investment is technology and the internet. Too many folks are now pointing to overvaluation of these companies and over purchasing of these valuations as not what the economy needs right now.

Is Mr. Braaten doing the right thing for his investors? Possibly. He and his other mutual fund cronies need to find some way of encouraging their shareholders to get off their wallets and write a check. It is the only letter I have received so far suggesting that this next year won't be a disappointment. In spite of the "sell in May and go away" bears and the presidential election cycle bulls, this and any subsequent rally will be short lived and ill-fated for those looking for these historic pops in returns.

The Week Ahead in Bonds
Last week I took a poke at Alan Greenspan, Chairman of the Federal Reserve and John Snow, Secretary of the Treasury. I had a great deal of fun characterizing them as Statler and Waldorf, the curmudgeonly old muppets who are forced to watch the show from the balcony, all the while lending acerbic commentary about their plight.

He will bow his scholarly head and be forced to disagree... again with these elected politicians, most of whom may disagree with the President in private and support him publically. Businesses can not achieve growth as long as their outlook is based on less employees than more. He will, as the option indexes that chart his decisions suggest, cut the overnight rate to 1% in June or July. He will base this on the simple notion that growth is best achieved through monetary policy, not deficit increases and supply side tax cuts.

In Mr. Snow's corner of the theater box, the dollar has continued to slide. The administration continues to force him to say, possibly against his better judgment, that he and the White House supports a strong dollar. The four year low against the Euro, while seeming to be a bad thing, isn't quite bad enough according to some currency theorists. If the Europeans are forced to cut their interest rates as a result of a weaker dollar, something they have been reluctant to do, then the slide would be perceieved as the right thing. If the dollar drops another 15% or so, that would be a win/win situation for companies who ply the international trade waters. This is however, loosely based on a global economy who is willing to buy American goods in the face of their own personal economic recession.

If the Senate fails to pass a $1 trillion debt approval, there could be trouble on the horizon for the Treasury. The House's version has passed authorizing their end of the deal but their legislative counterparts aren't reacting with as much speed. Too long a delay and the government will default. Not likely, but it is a good indication of how closely things are being run on the Beltway. Is forced cooperation to avoid disaster really cooperation?