Congratulations to the Dow Jones Industrial Average for closing at a record high for the fourth straight day on Friday evening. It closed at 14,393, which is 20 points more than it did in October 2007. Whatever that means.
Is everyone reaping the benefits yet? Have our bank accounts suddenly increased? And our friends and family who have been out of work, have they finally been offered a job with a 401K? Yeah, didn’t think so.
Let’s leave the celebrations to those pompous stock traders and investors on Wall Street. They can bask in the stock market’s false sense of security for only so long. Because back in 2007, only a few months after the Dow hit its record high, we spiraled into a great recession.
In 2007, some of the companies that peaked were AIG, GM and Citigroup. Today, those companies have been substituted with Cisco, United Health and Bank of America.
Not to mention that the price of crude oil has increased to 91.54 dollars a barrel, forcing our gas prices to rise for over a month straight.
And let’s not forget the impending sequester cuts set to take place this month that will negatively affect us all.
According to an article from the Washington Post from March 1, 2013, the abrupt subtraction of $85.4 billion from important programs in our economy this year would have been avoided if the government had followed through and passed the Budget Control Act of 2011, which was set to reasonably and gradually eliminate $1.5 trillion over a period of 10 years.
Unfortunately, the Budget Control Act could not be enacted at the start of the new year because of the end to Bush’s tax cuts, the payroll tax cut and the government’s inability to agree on its specific terms. Had all of these cuts occurred at once, we would have spiraled into another great recession. Thus, the sequester cuts were set for March 1, 2013.
Following the $85.4 billion cut this year, from 2014 to 2021 our economy will face a loss of $109.3 billion per year.
The sequester cuts will affect college students in the coming years much more than the rise and fall of the Dow ever will. Sadly, this can also be said for the general population.
With the sequester cuts, the Federal Work-Study program, a very beneficial program that gives many college students access to on-campus jobs, will lose $49 million, while another college aid program for low-income students will lose $37 million.
Not only will our education be compromised, but our health programs as well. The National Institutes of Health, which contribute 97 percent to the total of the United States government’s health research, will lose just under 10 percent of its funding.
On a broader scale, according to an article by Paul La Monica from CNN Money, our public debt is currently over 100 percent of the United State’s GDP, while back in 2007, it was only 65 percent of the GDP.
And we can all certainly bet on the fact that tax returns this year will be delayed and less than expected.
But seriously, thank goodness the Dow hit a new record.