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I have seen a lot of the calls for a jobs program here, including the Schakowsky proposal (Nulwee's diary). The one thing that is never explained is how to get a jobs program through the Congress. You think the President doesn't read the polls? We all get that something needs to be done about jobs but any plan that increases the deficit is DOA, and any plan that has a chance of working will really require big outlays. Well, here is a plan that will grow the economy, will lower unemployment, and does not increase the deficit. In fact, it's based on something America has done before. It's the peacetime equivalent of war bonds. Instead of raising funds to prosecute a war, we should do the same to attack unemployment, inefficient infrastructure and weakening education. More below.

I think we need an Rebuild America Bond Act (RABA) that would allow Americans to put their 401K contributions as well as employers' matching into the fund. Other sources of funds within America (no foreign capital) could also be invested. The fund would then be used to fuel a war on unemployment by rebuilding American infrastructure and expanding education. The bonds would be 10-year bonds and would provide an interest rate slightly higher than T bills. Given the uncertainties in the stock market, I think this would be broadly attractive. By actively promoting this fund, it would provide a sense of national purpose as well. If the goal were to raise about $1 Trillion , I think we could lower unemployment enormously, increase efficiency, improve education, and trigger growth sufficient to eliminate the deficit in less than 10 years. Note that 401(k)'s and IRAs held $7.9 trillion in the first quarter of 2010, up 23 percent since a trough of $5.9 trillion in the first quarter of 2009. Some of the projects funded by the RABA fund would make a profit, some would be break-even and some would lose money. But the expected surge in revenues to the government would be sufficient to pay for the whole program. That's the plan we need now. Since it would not be funded by government outlay but by Americans investing in it, I don't see how it could be reasonably opposed by deficit hawks.

Since Americans put huge amounts into their 401K's and IRA's, and since the returns have been not so good and perceived as very risky, given the choice, I think a lot of Americans would choose to buy these patriotic bonds that pay an assured interest rate and help to strengthen the future of the country. If you can't sell those bonds, then America is in much bigger trouble than having high unemployment. So, for me, this is the way forward for the unemployment/investment/deficit trap

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