Financial 411: Congress Returns from Summer Break

Retail sales rose at the fastest pace in five months last month and businesses built up their inventories to the highest level since May 2009. Both reports beat expectations and were good news for those worried about the economic recovery. But then new worries from Europe tipped the scales to the pessimistic view of the global economy. At the end of the day, stocks seesawed and ended right around where they started. The Dow fell by 18 points to close at 10,526. The S&P 500 shed 1 point to close at 1,121. The Nasdaq gained 4 points, closing at 2,290.

One investment that did shine -- gold. The precious metal ended trading today at $1,271.70, a new record.

AIG, the insurance company rescued two years ago this week is developing plans to repay the federal government, according to the Wall Street Journal. The newspaper reports the company is discussing a plan to convert the $49 billion in shares the Treasury Department owns into common stock that could then be sold off to investors. The profits of those sales would reduce government ownership of AIG and could even earn the government a profit.

Will Lawmakers Take Action on the President's Economic Plan?

Congress has returned from its summer break and has a lot on its plate. With the economic recovery sputtering, President Barack Obama has proposed a series of programs, including billions of dollars for infrastructure projects, and tax write-offs for business investments in factories and equipment. On top of that, Congress has to approve legislation to fund the federal government, which begins its new fiscal year on on October 1.

All of this as a midterm election looms in the weeks ahead, making it even tougher for Democrats and Republicans to work together. What will be accomplished? What can be accomplished?

Brian Gardner, Washington analyst with financial services firm Keefe, Bruyette & Woods, tries to answer those questions.

How likely is Congress to move on the president's economic proposals in the next four weeks before break to campaign for the November election?

Probably not likely. I look at it in two pieces. One is the stimulus proposal, which is the infrastructure proposal that he put out a week or so ago. I think that's highly unlikely to pass. There has not been a lot of work done on it. Stimulus is a dirty word right now. The first stimulus plan from February 2009 has largely been seen as wasteful and unsuccessful. And so you already have a number of Senate Democrats coming out and saying, 'No, not right now.' House leadership has been fairly cool to the idea, so they don't want their members taking what would probably be seen as an unpopular vote before the election. The other part are the tax cuts. That has a better chance of passing, just because there's already some tax legislation that has been working its way through Congress over the last couple of months. Now, we're not talking about the extension of the Bush tax cuts, which have to do with marginal rates. What we're talking about is a tax extenders bill, which are all these little credits and deductions aimed at businesses, and for budget-gimmickry reasons, they only last a year and have to be re-upped every year. And that's kind of gone through the pipeline already, so what the president has proposed on R & D spending and accelerated depreciation, that has a chance of fitting into legislation that's already kind of worked its way through the pipeline. It's not a done deal, but it has a shot at passing.

Two years ago, we faced enormous economic uncertainty and the parties came together and passed the bank bailout and later the multi-billion-dollar stimulus package. What went wrong? The economy is still muddling along, why has it turned out that politics have taken priority over taking any action on the economy?

Well, I think politics has always, you know, been part of the process. It was part of the process for the TARP vote. I think, actually, the TARP vote was highly political. Remember, it failed in the House the first time around, and that's largely because House Republicans voted no, and they voted against it the second time. They were starting to put distance between themselves and the Bush administration and taking a very different course of where they wanted to go. So I think politics has always been there. Politics was part of the first stimulus plan. I think in part that's what has doomed chances of having further stimulus. And what hurt Obama's first stimulus plan, what made it ineffective, because it was so political, it was not bipartisan. So I think politics always has a role, and now we're just on the cusp of what seems to be another monumental election where we could have a huge shift in power from the Democrats to the Republicans. So politics is now more heightened than it has been over the last six months or so.

So because we might see such a sea change, do you think much of anything will be accomplished before November?

No, I think members are already looking for the door. They are scheduled to head back home to campaign by Friday, October 8th. That means we have four weeks -- we're already into the first week -- really only 10 to 12 legislative days. So I don't think we should expect much progress on most of these issues. Members don't want to take tough votes, especially vulnerable, moderate Democrats. They don't want to take another tough vote, especially House members. They've already done a couple on health care, they've done it on cap-and-trade, they don't want to go down that road again. They want to get as far away from Washington as they can, they want to get home and campaign for re-election, not vote on stuff in Washington.

Report Finds Obesity Is Taxing the Economy

A report finds that obesity not only has significant medical consequences — it costs the U.S. economy at least $215 billion. Researchers at the Brookings Institution found medical care costs for the obese were nearly 100 percent higher than costs for those at healthy weights. The report also found possibly higher transportation costs as a result of more fuel and larger vehicles needed to transport people. One-third of Americans are considered obese.