by Randolph T. Holhut
American Reporter Correspondent
April 3, 2010
THE ECONOMY IS IMPROVING FOR WALL STREET, BUT NOT MAIN STREET
DUMMERSTON, Vt. -- In March of last year, the U.S. stock market was at the lowest point of the current recession. Since then, the Standard & Poor's 500 index has risen nearly 70 percent. Housing prices around the country have stabilized. Commodity prices have begun to rise again. Economic growth, as measured by the Gross Domestic Product, rose at double the rate that economists predicted.
And, of course, President Obama gets none of the credit for any of this.
"We've had a phenomenal run in asset classes across the board," Dan Grenhaus, chief economic strategist for Miller Tabak & Co. in New York, recently told Bloomberg News. "If [Obama] was a Republican, we would hear a never-ending drumbeat of news stories about markets voting in favor of the President."
Monthly job losses have declined from 779,000 in January 2009, when Mr. Obama took office, to 36,000 in February, and rose b y 162,000 last month. Of the 491 companies in the S&P 500 that reported fourth quarter earnings, profits rose 180 percent from a year ago.
But unemployment is still hovering at 9.7 percent, even after the solid gain in March, and as far as most Americans are concerned, that's the only economic statistic that matters. That's why, according to Gallup polls, public approval of the President's handling of the economy has gone from 59 percent approval in February 2009 to 61 percent disapproval a year later.
That swing in disapproval is mainly due to the perception that the Obama Administration and the Federal Reserve did more to help the financial markets than to help average people. One in four of those with a high school education or less are unemployed or underemployed. More and more households can't make mortgage payments, can't pay the rent, can't pay off credit cards or car loans.
Unemployment is projected to remain above 7 percent until 2014. We still need large-scale, long-term investments in infrastructure and more public investment in the short term to ease the employment crisis. If more people are working and paying taxes, revenues will increase and deficits will go down.
Unfortunately, lawmakers in Washington are afraid to raise taxes on the people that can afford to pay them. Remember, most of the current federal deficit can be traced to the Bush tax cuts for the wealthy and his waging two wars. It is this, and not last year's watered-down stimulus plan - one that President Obama had to accept to get a handful of Republican votes - that has led to huge deficits.
And all deficits are not created equal. Borrowing money to finance wars or to lavish giveaways to the financial sector leads to liabilities without corresponding assets. Borrowing money to fix or upgrade public infrastructure or to boost the most promising industries of the 21st century will ultimately pay economic dividends.
That's why President Obama and the Democrats need to vigorously attack the jobless problem.
The jobs legislation that has been passed in recent weeks is much too little and much too late to help the people who have been out of work for far too long. That's why more stimulus spending is needed - at least $300 billion for starters, and we need to split that money between helping states and municipalities deal with their budget problems and rebuilding our nation's crumbling infrastructure.
For those who are afraid of trying a second stimulus, the bottom line is this: According to the Congressional Budget Office, last year's $787 billion stimulus bill was less than half of what was needed to fill an estimated output shortfall of almost 14 percent of the nation's Gross Domestic Product, or around $2 trillion, from the recession. While too small, the first round kept the recession from turning into a depression. And the President said this week that TARP expenditures will actually produce a profit when all the debts are paid. But now, a second round of stimulus is needed to rebuild the nation and provide the jobs that the still sputtering private sector can't or won't provide.
Mr. Obama finally shed his political caution and the result was a health care bill. Now, it's time to go big again. It's time to clean up Wall Street and put Americans back to productive work. As we've seen time and time again - from the days of the Transcontinental Railroad to the Depression-era Works Projetss Administraton to the '60s' Interstate highway system to the Internet of the '90s - government investment is essential to private-sector growth. If we want the economic recovery to go beyond Wall Street, we need more public spending, not less.
AR Senior Correspondent Randolph T. Holhut has been a journalist in New England for nearly 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at firstname.lastname@example.org.