08/05/2011 06:39 pm ET Updated Oct 05, 2011

The Stock Market Reacts Negatively to Bad Economic Compromises That Threaten Consumer Spending

An awful lot of groups are condemning this week's "compromise" between Congress and the president which raises the debt ceiling and allegedly holds at bay the predicted worldwide economic calamity a U.S. default may have caused. One of those groups was the National Organization for Women. Their website states,

"This deal is sure to further depress the economy, lead to higher unemployment and further limit consumer spending, which is the reason the economy is not growing. This phony crisis -- forced by conservatives in Congress -- robs middle- and lower-income families in order to give a free pass to multi-millionaires and big corporations."

One thing is certain; this country has endured many periods of debt and the term phony crisis is warranted. Beginning with the Revolutionary War, and continuing through the next two centuries, every war -- and Roosevelt's New Deal -- indebted the U.S. and that debt was eventually repaid.

Still, Congress and the president would have us believe that cuts to those who can least afford it are necessary to right our ship of state. But Thursday the Dow Jones industrial average dropped more than 500 points in the sharpest decline since the whole mess started in 2008. It looks like Wall Street doesn't agree with the notion that tightening the purse strings on the folks who actually do the consumer spending is a good way to get out of our current crisis.

I'm recommending you read the Center for Housing Policy's excellent report entitled, "The Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development." While the title is pretty self explanatory, you'll get lots of statistics and information on how spending money to provide housing creates jobs and puts money in the hands of private business.

Or maybe I should just write a story about one of the homeless folks in my care who came to us when the economy tanked and received housing when the federal stimulus programs were implemented.

This 50+ woman lost her job as a book keeper at a local manufacturer. She was a low wage earner who had never before been homeless. She lived meagerly and saved what she could in her 401K. Some of that money may well have been lost in Wall Street's recent post compromise crash.

At any rate, she received unemployment compensation which couldn't meet her expenses and she lost her health insurance. She had extremely high blood pressure and stopped taking her medicine. Eventually she lost her apartment and came to us.

We got a local clinic to care for her and prescribe the necessary blood pressure medicines. The co-pays on her drugs were within her reach once she became homeless and stopped struggling to pay rent.

She applied for all the usual housing options and didn't qualify because -- you guessed it -- she had assets. Her 401K disqualified her from any housing program for the poor. But then the economic stimulus program went into effect and offered new kinds of housing funds that hadn't been available prior to 2009. The Homeless Prevention and Rapid Re-housing program provided the money necessary for her security deposit and utilities.

She now lives in a lovely little apartment. For those of us who aren't economists that means that some federal money was given to a private landlord on her behalf. A man who had an empty apartment to rent was able to pay his bills and our resident got a home that she could afford without giving up the small retirement savings she had set aside while working.

Her landlord will pay his mortgage, maintenance bills, property tax and income tax and eventually the money will come full circle.

But our government has kept silent about these successes and now effects compromises as though these investments weren't valuable. And they've again acquiesced to the concept that taxing the richest among us to help low income folks and their potential landlords isn't worth it either.

I only wish that we weren't so constantly busy in the homeless business. Her room at the shelter was instantly filled by another homeless person and we currently have no vacancies. And that's sad because with Washington's new agenda, I'm expecting plenty more like her.