Congressional Democrats are hoping to move a new stimulus package next month that would create jobs through vast new infrastructure spending and help for states. But speaking to reporters, Edward Lazear, chairman of the Council of Economic Advisors, seemed to reject that strategy:

We believe the appropriate stimulus right now is the $700 billion stimulus that comes in the form of the TARP. That’s a huge amount of money, and we believe that it’s targeted at exactly the right thing.

Lazear’s comments came just hours after the Commerce Dept. announced that the nation’s economy shrank by 0.3 percent in the third quarter. The news did little to discourage his belief that thawing the credit freeze would alone right the economy.

What we’re seeing in terms of consumption and some of the other things that you mentioned are actually the symptoms. The cause is the credit market difficulty, and we think that it’s important to get at that directly. So we believe that the $700 billion TARP will be the right way to do it.

Who said the partisan fireworks would end Nov. 4?

First, as Congress and the Bush administration were haggling over how to structure an effective Wall Street bailout package, the Treasury Dept. claimed that forcing banks to suspend dividend payments to their shareholders would discourage participation in the voluntary program. So Congress caved, dropping that prohibition. (The compromise: Banks can pay dividends but not raise them.)

Now — as reports are emerging that banks are using enormous chunks of bailout cash to pay out shareholder dividends — the administration is blaming Congress for its failure to stop them.

Edward Lazear, chairman of the White House Council of Economic Advisors, told reporters Thursday that “what we’re trying to do is implement the law as Congress passed the law.”

The law was quite specific on what rules banks had to follow when they get the — when they get the TARP. And I don’t think it’s the proper role of the administration to change the will of Congress.

That’s an answer, but it doesn’t explain well why banks solvent enough to pay billions in dividends to shareholders need a government bailout. The Washington Post reports today that the 33 banks enrolled in the bailout thus far intend to pay out roughly $7 billion in shareholder dividends this quarter.

Companies generally try to pay consistent dividends and, at the present pace, those dividends will consume 52 percent of the Treasury’s investment over the initial three-year term.

Was this what Karl Rove had in mind for his “ownership society?”