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Our False Recovery: Why Wall Street Is Up and Everyone Else Is Down

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The gap between Wall Street and Main Street is growing everyday. While people continue to lose their jobs, houses, and savings, financial markets are seeing record profits. In other words, the very people who produced the global economic meltdown are being rewarded with increased compensation and inflated market returns. In fact, in order to avoid new restrictions on pay, investment bankers are taking their profits through stock options, and they are using taxpayer dollars to help them buy up their own stocks in order to inflate the value of their holdings. Furthermore, since stock profits are only taxed at 15%, the high earners are able to keep more of their money as our national tax base is eroded.

Obama's stimulus plan has only exaggerated this fake recovery by funneling money into tax breaks and the short-term alleviation of state deficits, and now that the states are not getting another fix of federal aid, they will be forced to impose massive layoffs and reductions to needed social services. Over 150,000 K-12 teachers stand to lose their jobs, and thousands of college and university faculty also face layoffs. Moreover, the feds have taken on over a trillion dollars of bad mortgages, which has resulted in allowing the banks to look very healthy, while taxpayers are left holding most of the toxic assets as foreclosures continue to mount.

Since Americans believe that the New York Stock Exchange represents the national economic thermometer, they have been seduced into thinking hat we have fixed our financial problems, and we are on the road to a real recovery. What is really going on is an increased concentration of wealth and power, while most people now face declining wages coupled with growing costs in housing, education, and housing.

What Obama should have done is to use the federal stimulus money to create a national jobs program. Some of these funds could have been channeled to states in order to support teachers and social services, but much of the money should have gone into construction since this industry was one of the hardest hit by the bust in the housing market. We could have put Americans to work by fixing bridges and building public transportation, but instead, hundreds of billions went to tax cuts and plugging the holes of state deficits.

It may seem that there is a contradiction in my argument because I am asking for federal dollars to go to the states to create jobs, while I am complaining about the use of stimulus money as a temporary fix to state budget deficits. However, my point is that the money should have been restricted to job creation because when you put people to work, you not only expand the tax base, you also feed the local economies.