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I have speculated here that the tax cuts were merely a facade for further irresponsibility and I seem to have found the proof. I suggested that the President will sign any bill into law, no matter the size. The reasoning is simple. No it isn't the sunset clauses or the dividend tax cuts that prompted the President to sign the bill. What gave him encouragement was the heroic nature of further changes.

The first hint of this came with the announcement that some less well-to-do voters were left out of the package altogether. The very people who would have received the largest benefit from child tax credit, a gratuitous hand out to the middle class to cover the increased taxes in their local living area, would not be eligible.

Further gaps were uncovered by the Urban-Brookings Tax Policy Center adding an additional eight million, mostly single wage earners to the number left behind by the tax package. Those poor sots who were left out with wages in excess of $75,000 will just have to understand that, in order to penalize 5 million lower income workers, a few heads at the top will need to be included. Call it collateral damage. Those wage earners that no longer have a job from which to earn a wage, don't qualify either. For the most part, the benefit doesn't allow them the proper tax status.

Revisiting the tax plan will get all of the additional cuts included, swelling the package, now conservatively estimated at $800 billion over its lifetime, to almost a trillion.

The Democrats are caught in a Republican debate that resembles some of the best one sided face offs regularly entertaining viewers at Fox News. When the Democrats point out all of those left behind, the Republicans simply turn on them. Do they, heaven forbid, want to increases the package further to include all of those left out the first time around. Laughing and willing to accommodate, the Republicans, lead by the tie breaking Vice President, will add as much as it takes, responsible or not.

I spent many a newsletter and quite a few columns urging the government to practice fiscal responsibility. It wasn't that I expected the Bush administration to do otherwise, but I didn't understand the magnitude of what this group was capable of doing. I am breathless at the change of party attitude from conservative to radical. What this administration proposes is incredibly risky and if it doesn't work, many of the social programs that are faltering, will collapse leaving the financial net for those who don't own dividend paying stocks in a world of hurt.

As problematic as they are, Social Security, Medicare and Medicaid have their place in the fabric of this country. Removing all financial support in an effort to enrich those who are supposedly going to create jobs, is a gamble on which I am unprepared to place odds. If the economy continues to drift, the price of energy continues to climb, and businesses see only passive interest in growth, I am not seeing how an after tax income increase of 4.4% will have the necessary impetus to get America going.

The Week Ahead in Equities
You just have to love the recent and prolonged rise in the markets. Six out of the last seven weeks is a run worth noting. But only to help you understand that if you are throwing your money back in the market because you see those upward trending charts, stop right there. This is what got you into trouble in the first place.

So lets take a moment and try and understand why I remain a bit pessimistic about the immediate future. For openers, nothing has really changed from a fundamental standpoint. Suppose, the thinking goes, any real rally should have the Blue Chip stocks involved in an attractive way. They should be yielding at least 5% and the earnings for those stocks should be less than ten percent. I mention this because those Blue Chips are part of what the S&P 500 is. And the index getting the most attention of late, there is cause for concern as it hit an eleven month high last week. Those fundamentals necessary to squash talk of a bear market rally aren't there. With those prices at three times what they should be with yields running about half of relatively decent, there are reasons to be worried.

It is your fault even if you haven't bought individual stocks. Your fund manager has. Inflows have skyrocketed leaving these managers little choice but to get busy and buy.

So what do you do in the face of incredibly mixed messages? Sitting the market out in money markets is actually losing ground with inflation. Dropping your hard earned cash in bonds is just as risky with the unusual tandem of stocks and bonds rising in unison. Dollar cost averaging will find itself as the new old thing in investing. Mark my words. This is not some new alignment of the economy. It is disaster, waiting to happen.

The Week Ahead in Bonds
Nobody I have spoken to can understand exactly what is happening in the bond markets. By all sound reasoning, they should be suffering.

But you have to wonder. How we can continue this cheery outlook in the face of the following items: The thirty year long bond has rallied in the face of a flattened yield curve, unemployment is still a pesky problem, and the global situation is not falling in our favor. At least dollar-wise.

But on the other hand, that semi permanent ease that the Fed has decided to ride, coupled with tax cuts, improved consumer confidence, narrower credit spreads and overall better sentiment make the world seem so much better since only months ago.

Much of this long bond purchasing is being done in anticipation of the next Fed move. That move it is believed could come in a number of ways, the most popular theory expected would be the purchasing of long bonds. This would keep those long term rates lower ending much of the deflationary pressure that seems to be shadowing every move businesses make. With lower mortgage rates perhaps but not necessarily trickling into lower credit card rates with jobs, created by enthusiastic business purchasing might be a far too rosy scenario just yet. If the Fed does succeed, those long maturities will be worth a good deal less in a growth and inflation strong marketplace.

But this is how I see it playing itself out. With a growing possibility that any investment is risky, the investor will opt for the most risk deciding that more is better than none. They will then find that the maturities on the bonds they hold either individually or in funds will need to be of the much shorter variety if they expect to come out with their investment intact. Refinancing will accelerate followed by securities people looking for short term coverage.