Finally, the federal government has accepted an offer from Girls Gone Wild founder Joe Francis. Earlier this year, the feds turned down his request for bailout money, but the filmmaker entrepreneur executive soft-core porn guru had better luck with the judiciary branch. His deal to get out of jail came through.

U.S. District Judge S. James Otero accepted a plea agreement that Francis reached with prosecutors. It will put him on probation for the next year for filing false income tax returns. He was also sentenced to time served -- 301 days, but that's all in the past. He also has to pay restitution of $250,000.

The U.S. dollar continues to weaken, which has led to commodity price increases, including a higher-than-fundamentals-dictate oil price of about $80 per barrel, and U.S. Treasury Department professionals are working long-and-hard to continue to refinance and rollover U.S. debt to finance the U.S. government's operations -- all because the budget deficit is high.

What could take pressure off all of the above? Well, in addition to letting the 2001 Bush income tax cut expire in 2011 as expected, Congress could pass a modest tax increase above the expiration amounts -- for example, increasing the top two income tax brackets by 2-4 percentage points.

After haggling since September the US Senate finally passed an extension for unemployed persons and extended the credit for first time home buyers.

The situation for unemployed persons is dire. Here are just a few facts about their current situation:

• We have 15 million unemployed vying for just three million available jobs.
• 200,000 persons lost their benefits since September
• 7000 persons a day are losing their benefits.
• More than 1/3 of the unemployed have been out or work for at least six months.

Just call it a 'moderate public option.' Sort of. U.S. House Speaker Nancy Pelosi, D-California, Thursday unveiled a revised, $894 billion health care reform bill that would provide insurance to up to 36 million more Americans while cutting the budget deficit by $30 billion over 10 years.

The bill's key elements: subsidies offered to moderate-income Americans to buy insurance either from private carriers or a new, government-run program, an expansion of Medicaid to insure the poor, and an income tax increase on upper income Americans -- individuals earning more than $500,000 per year and couples earning more than $1 million.

The U.S. Congress is moving closer to passing a bill that would extend unemployment benefits in all states by 14 weeks.

As of late Wednesday, the bill had paused in the Senate, as members offered various amendments, some of which are designed to limit the allocation. If passed, the bill would then have to be reconciled with a House bill passed a month ago that extends benefits by 13 weeks in high-unemployment states.

Even though it faces an uphill battle in the Senate, look for U.S. Sen. Harry Reid's, D-Nevada, flexible public option to become part of a universal health care bill.

That's because Reid's 'flex-pub' fits the federalist system of governance
(local-state-federal) practiced by the United States in that it enables states to 'opt-out' of the public option, provided they have a state-level plan for universal care and/or are complying with other federal requirements for universal health care coverage.

And, when one thinks about it, politically and operationally, a flex-public option makes a great deal of sense.

Put this one under the the category of 'a half-loaf is better than none.'

Senate leaders are apparently poised to extend the $8,000 federal tax credit for first-time home buyers, Bloomberg News reported Monday.

However, the extension will not please all in the housing sector, as the Senate is working on a plan that would extend the credit, which expires November 30, for homes that close before April 1, 2010. The credit would then be reduced to $6,000, then $4,000, then $2,000 for homes that close in each successive quarter, until the end of 2010, at which time the credit program would end.

Can Congress balance the federal budget without a tax increase?

Indeed it is possible, but to do it Congress would have to undertake fiscal policy changes of Herculean proportions. Namely: radically changing Social Security's benefit for retirees, turn Medicaid over to the states, and implement other spending cuts.

Amid Fed Chairman Ben Bernanke's call for a "credible process" for imposing losses on shareholders and creditors for a U.S. government decision to close down a financial institution, a parallel discussion will have to occur.

Namely, if an institution is 'too big too fail,' does that mean the institution is too big? In other words, should the U.S. government begin a long, incremental process of breaking-up those financial institutions – and other corporations – whose wayward behavior would pose systemic risk?

Health care reform's long and winding road continues, as debate will begin soon on several bills in the House and Senate. Each chamber is likely to approve a bill, with the all-important conference committee set to reconcile the two after each chamber's vote.

Let's put on the old political science hat for a moment to see if history and research can tell us anything about the likely shape of the health care reform bill at this stage of the U.S. public policy process.

The House, Senate, and conference committee (CC) outcomes are labeled: Probable, Possible, Doubtful.

Investors, like the former great New York Yankee Manager Joe Torre, now manager of the Los Angeles Dodgers, have to be both aware of the current game situation, and be a few innings ahead, working through the permutations of what might occur.

With the above in mind, from an investor-relevance standpoint, what's next on the public policy front, after health care reform?

First-time claims for jobless benefits fell last week, hitting the lowest level we've seen since January. The U.S. Department of Labor pegged the number at 521,000. This is down from the previous week's 554,000 (which had been revised upward). Wall Street economists anticipated 540,000. Claims of this type have fallen four times in five weeks, and the four-week average reached 539,750 – its lowest level since January 17, 2009.

In general, first-time claims for unemployment benefits have been declining since the spring, though slowly. Unfortunately, they still remain well above the 325,000 that economists claim to be indicative of a healthy economy.

Is it time to rethink the U.S. job creation paradigm? It may very well be.

The Obama administration is said-to-be weighing whether to propose a corporate tax credit for new hires and extending unemployment insurance and Cobra benefits in light the nation's job creation drought, The Wall Street Journal reported(subscription required.)

The U.S. Treasury and Congress are putting pressure on the Fed to disclose its governance policies.

Almost three months ago, on June 17, the Obama administration proposed a regulatory overhaul including a "comprehensive review of the Fed's ability to accomplish its existing and proposed functions."

There is some confusion as to why the Treasury is undertaking this task. The Fed was created by Congress to be independent of the executive branch and Congress.

A new bill that would revamp student loan programs in the United States passed the House of Representatives. The proposed program, which would affect the largest change on college aid since they came into existence in the 1960s would push private lenders out of the business and put the U.S. government in control.

The new measure would end subsidies for private lenders, increase Pell Grants available for students in financial need, and create grants for community colleges. The proposal includes almost all of President Obama's key points on higher education from the campaign trail. It passed the House 253 – 171, with most representatives sticking to party lines.