A universal Jobs Guarantee Program could free us from the predations of politicians and foster a strong economy.

On the anniversary of the inauguration of the Works Progress Administration (WPA), it is striking to compare the unemployment record of Franklin Delano Roosevelt, and that of his modern day successor, Barack Obama. FDR's achievements in putting Americans back to work are among the most impressive of his tenure; he took the rate from 25% to 9.6% by 1936. But so far, Obama's policies have failed to "jump-start" unemployment in a significant way, even as Wall Street has continued a recovery utterly and totally divorced from Main Street.

It's easy to see why: The debt loads remain too high while income and employment continue to fall. Meanwhile, delinquencies and foreclosures continue to rise. Even at current depressed prices, assets are overvalued. Many financial institutions (probably including most of the big ones) are hopelessly insolvent, holding mountains of toxic waste that will never be worth anything. By the same token, almost 14 million active job seekers remain unemployed. Another 6.4 million people who are not actively looking for work (and therefore are not counted as unemployed) say they want jobs. Among workers who are lucky enough to have jobs, 8.3 million are employed part-time but want full-time jobs. Taken together, there are well over 28 million people in the United States for whom the economy has not performed its most important function -- providing enough jobs to go around.

The pace of recovery from the recession has been distressingly slow. It took only 18 months for the nation's unemployment rate to climb from 5.0 percent to its peak of 10.1 percent in October 2009. In the 16 months since then, the rate has made up less than a quarter of that loss. True, we did dodge another Great Depression. That fact is attributable to the federal government's forceful macroeconomic intervention in late 2008 and early 2009. Economists Alan Blinder and Mark Zandi (one a former Clinton appointee to the Federal Reserve Board of Governors, and the other a former economic adviser to Senator John McCain) have estimated that the nation's unemployment rate would have reached 16 percent rather than its actual 10.1 percent in the absence of this intervention.

And yet, in spite of the historic successes of programs such as the WPA, the current government cannot seem to even begin to replicate it. The very fiscal stimulus that helped to avert an even greater economic calamity is now viewed as an excuse against further action to mitigate the scourge of unemployment. We continue to be plagued by misguided notions that our government faces imminent insolvency (imagine the fate of the US had the Roosevelt Administration embraced this idea!).

Part of the aversion toward embracing WPA-style programs today is the false idea that they did little to reduce unemployment, which some claim was only "solved" by the war. Most statistical studies understate the effect of the New Deal job creation measures because they don't show how much of the decline in official employment was attributable to the multiplier effect of spending on direct job creation. Additionally, the "work relief" category does not include employment on public works funded by the Public Works Administration (PWA), nor the multiplier effect of PWA spending. The figures tell the story indirectly, however, in the path official unemployment followed -- steeply declining in periods when work relief spending was high and either declining more slowly or increasing in periods when work relief spending was cut back*.

Estimates for the years prior to 1940 are intended to measure the number of persons who are totally unemployed, having no work at all. For the 1930s this concept, however, does include one large group of persons who had both work and income from work -- those on emergency work. In the United States we are concerned with measuring lack of regular work and do not minimize the total by excluding persons with made work or emergency jobs. This contrasts sharply, for example, with the German practice during the 1930s when persons in the labor-force camps were classed as employed, and Soviet practice which includes employment in labor camps, if it includes it at all, as employment. Counting the WPA programs, FDR's record on unemployment, notably in his first time of office, was formidable, as he took the rate down from 25% to 9.6% by 1936.

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True, an economy can boom for a time, with what may appear to be inadequate levels of net government spending without rising unemployment. In these situations, as is evidenced in countries like the US during the Clinton Administration, GDP growth can be driven by an expansion in private debt. The problem with this strategy is that when the debt service levels reach some threshold percentage of income, the private sector will "run out of borrowing capacity" as incomes limit debt service. This tends to restructure their balance sheets to make them less precarious and as a consequence the aggregate demand from debt expansion slows and the economy falters. In this case, any fiscal drag (inadequate levels of net spending) begins to manifest as unemployment.

The Obama Administration remains fixated by deficit reduction at the expense of reducing unemployment. This is not helpful to recovery: In addition to inflicting lasting damage on an individual's labor market prospects, unemployment is associated with increased rates of physical and mental illness, alcohol and drug abuse, child and spouse abuse, failed relationships and family dissolution, suicide and attempted suicide, and a host of other personal and social ills. All sectors of the unemployed suffer an increased risk of experiencing these problems, but since unemployment itself is distributed unequally among population groups, with disadvantaged workers bearing more than their fair share of its immediate burdens, so too are they destined to bear more than their fair share of its painful, longer-term consequences.

The existence of our current job shortage also makes it harder for us to dig our way out of the recession. Long term unemployment prevents the housing market from rebounding and the housing industry from recovering. It forces the consumer sector to wait anxiously for customers. It keeps capital goods producers waiting for a plausible customer.

A more effective way to restart the economic process on solid ground is to deal with the underlying cause of the problem: We have a credit-based economy, rather than an incomes-based economy. The whole boom of the 2000s (and more broadly the growth process that emerged at the in the early 1980s) was based on household borrowing and the continuation of negative saving trends (that is, household deficit spending). A good place to start recovery efforts, therefore, would be to change this method of economic growth by fostering more, not fewer WPA-type programs.

In my view, a universal Job Guarantee program would be the best way forward and truest to the spirit of the WPA. The jobs would pay basic wages and benefits with a goal to provide a living wage. The program would take all comers -- anyone ready and willing to work, regardless of education, training, or experience. We could adapt the jobs to the workers. As the late Hyman Minsky put it, we could "take the workers as they are", work them up to their ability, and then enhance their skills through on- the-job-training. Additionally, the guaranteed public service job would be a counter- cyclical influence, automatically increasing government employment and spending as jobs were lost in the private sector, and decreasing government jobs and spending as the private sector expanded. Such a program would remain a permanent feature of our economy, acting as a buffer stock to put a floor under unemployment, while maintaining price stability whereby government offers a fixed wage which does not "outbid" the private sector, but simply creates a stabilizing floor and thereby prevents deflation.

Given the nature of today's "predator state" (to use Jamie Galbraith's felicitous phrase), politicians have a proclivity to reward those who "pay to play".  They tend toward wasteful spending and give goodies to campaign contributors. But we could take this power away from sock puppet politicians through a mechanism that automatically adjusts to insure the private sector can actually realize its desired net nominal savings position. This would help to free the system from political parasites while increasing the freedom of the private sector to achieve its savings goals. What better way to celebrate the anniversary of the WPA's inauguration?

Marshall Auerback is a Senior Fellow at the Roosevelt Institute, and a market analyst and commentator.

*The original source of this finding was Michael R. Darby (1976) "Three-and-a-Half Million U.S. Employees Have Been Mislaid: Or, an Explanation of Unemployment, 1934-1941", Journal of Political Economy, 84(1), 1-16). Darby had studied the writings of Stanley Lebergott (1964) Manpower in Economic Growth: The American Record since 1800, New York, McGraw-Hill. He had constructed early data from the Great Depression. See also Weir, D.R. (1992) "A Century of U.S. Unemployment, 1890-1990: Revised Estimates and Evidence for Stabilization", Research in Economic History, 14, 301-346. The hint that Darby picked up was in the original book by Stanley Lebergott on pages 184-5.

There's something rotten on Sesame Street. And it ain't Oscar's garbage can.

"One of the best things about being around preschool-age children," gushes Ron Lieber in the NYT, "is that they are a blank slate awaiting your imprint."

Or perhaps the imprint of Visa, HSBC, and Wells Fargo.

In an article archly titled, "Too Young for Finance? Think Again", we are informed by Lieber that it's time for America's toddlers to "think hard about money." And why? Well, because irresponsible little people are likely to grow up into spendthrift adults. Bite-sized lessons, outlined in cute storybooks and videos, sound straightforward and wholesome enough: Save. Spend. Earn. All together now!

But who exactly will be teaching Little Jimmy the joys of fiscal responsibility? The very people who brought you the financial crisis.

That's right. The campaign to teach economics to tots comes courtesy of a group called the JumpStart Coalition for Personal Financial Literacy, which describes itself as a D.C.-based "non-profit organization of organizations that share an interest in advancing financial literacy among students in pre-kindergarten through college." Peruse the website, and you will find that the folks behind JumpStart share a very significant interest: Nearly everyone listed is either directly or indirectly involved with Big Finance. We're talking giant banks, mortgage financiers, and credit card companies.

What you will not find on JumpStart's board or list of partners is even the usual ceremonial window dressing of representatives from labor or consumer advocates. There is one person listed associated with the Consumer Federation of America, but this pathetic nod is hardly a counterweight to the entire banking industry. Where is Elizabeth Warren, for example? Not here. Nor is anyone identified with criticism of the banks and financial firms that have bilked consumers, raised fees, and nearly tanked the global economy. Are  preschoolers really supposed to learn about financial responsibility from the Mortgage Federation of America? Obviously, the logic is to start 'em young before they have had any real contact with these paragons of fiscal virtue. And before their brains are properly functioning.

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Lieber begins his article with the #1  lesson that the financial sector has been pushing ever since the meltdown. The crisis really wasn't their fault. It was ours. And that means you, Little Sally, with your greedy, ice-cream coveting ways.  "In the wake of the financial crisis," writes Lieber, must come a "realization that individuals share at least some of the blame for the bubble." What's needed, says Lieber, are "better habits from an earlier age" that will help kids grow up responsibly.

"For Me, For You, For Later" is the title of Sesame Street's package of videos -- offered free at banks around the country! -- that will encourage anklebiters to forgo that ice cream and donate cat food to a local shelter instead.  Very nice. But coming from this gang, perhaps a more appropriate title would be"For Me, For Now, Forever." It could include lessons on How to Indenture Young People Through Student Debt. Or How to Make Families Homeless Through Predatory Mortgage Lending. And the biggest lesson of all, How to Defraud Your Neighbor and Not Go To Jail.

In its crusade for fiscal values, JumpStart Coalition has enlisted Sesame Street to use the popular character Elmo to urge children to create three special jars labeled "Spending", "Saving", and "Sharing" into which they drop their pennies. But it forgot a very important jar. "Stealing". Because that's how many of the firms represented by JumpStart have made much of their money.

So how does Sesame Street, beloved of educated parents everywhere, get into the game of pushing the financial sector's fiscal ABCs? It just so happens that Joan Ganz Cooney, one of the founders of Sesame Street, is married to Blackstone Group billionaire Pete Peterson, the former investment banker and conservative who has been spending quite a lot of his own money to push the destruction of Social Security and Medicare through his Peterson Foundation and convince us all to forget the lessons of Macroeconomics 101 on deficits. Being married, of course, is not a crime. But here's the smoking gun: Muckety.com reveals that Cooney also serves on the board of the Peterson Foundation.

Frankly, this whole thing reeks worse that Oscar's garbage can.

Lynn Parramore is the editor of New Deal 2.0, Media Fellow at the Roosevelt Institute fellow, co-founder of Recessionwire, and the author of Reading the Sphinx.

**Follow Lynn Parramore on Twitter at http://www.twitter.com/lynnparramore

It's not enough to gut programs for low-income Americans. Paul Ryan wants to roll the clock back on Wall Street to 2008.

The budget Paul Ryan released yesterday has huge cuts that are likely to fall on the poorest Americans while offering all kinds of bonuses to the top 1%. Others will be talking about how it eliminates Medicare and Medicaid. I want to talk about how it dismantles one of the few regulations put on Wall Street post-crisis.

Recap: Living Wills

Let's back up with a high-level overview. During the financial crisis of 2008, regulators found that they were lacking the necessary legal powers for unwinding and resolving large financial institutions. We can debate whether they actually lacked these powers, but their argument that they didn't have them was more than enough for them to avoid having to do anything. They also found that when they went to collapsing institutions like Lehman, there was little prep done at the firm by either regulators or staff for what it would mean to unwind itself, so the only option was to send it flying into bankruptcy in the most awkward way or do an extensive bailout. These were the only options.

How to solve this problem? Give regulators the powers they need and then make a very public showing of prepping firms for resolution when they fail. Have records of "living wills" so it is clear that no firm is too big to fail. It's not enough to say, "We'll never bail anyone out again." We need to do a few simple things to make sure a crisis or a failure goes more smoothly. Seems fair, right?

Well a funny thing happened on the way to writing living wills. Wall Street has decided that they can't be bothered and are lobbying against it. From Bloomberg, March 24th, 2011, "Banks, Insurers Resist U.S. ‘Funeral Plan’ Crisis Breakup Rules":

Lobby groups including the American Bankers Association are voicing concern to regulators in a series of comment letters seeking to limit the impact of the new rules. JPMorgan Chase & Co. and New York-based insurer MetLife Inc. have discussed so-called resolution, or the unwinding process, with FDIC officials...

Since November, representatives from companies including JPMorgan, Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley, Fidelity Investments, BlackRock Inc., Barclays Plc, Credit Suisse Group AG and Deutsche Bank AG have met with Fed or Treasury Department officials to discuss issues related to systemic risk, according to records released by regulators.

A living will is an “enormous burden” that puts banks on a course “that differs dramatically from the way they currently look at their business,” said Mark Tenhundfeld, senior vice president at the American Bankers Association.

So here's a sensible, necessary (but not sufficient) part of taking down a large, failing financial firm. Wall Street hates it because it requires work and it requires them to think of their business as something that could in fact fail. Who can they turn to?

Republican Budget

Cue Paul Ryan and the new Republican budget. Pat Garofalo at Wonkroom finds the following in the new budget:

Although the bill is dubbed “Wall Street Reform,” it actually intensifies the problem of too-big-to-fail by giving large, interconnected financial institutions advantages that small firms will not enjoy. While the authors of Dodd-Frank went to great lengths to denounce bailouts, this law only sustains them.

The Federal Deposit Insurance Corporation (FDIC) now has the authority to access taxpayer dollars in order to bail out the creditors of large, “systemically significant” financial institutions. CBO’s expected cost for this new authority is $26 billion, although CBO Director Douglas Elmendorf recently testified that “the cost of the program will depend on future economic and financial events that are inherently unpredictable.” In other words, another large-scale financial crisis in which creditors are guaranteed to get government bailouts would cost taxpayers much, much more. This budget would end the regime now enshrined into law that paves the way for future bailouts.

Wall Street really likes the status quo. Resolution authority requires a series of actions, from having to make funeral plans to being subject to prompt corrective action, that begin to make it credible to resolve firms and move us away from the status quo.

These are not radical proposals. Here's Squam Lake Working Group on the topic, a group that includes Greg Mankiw, John Cochrane and Frederic Mishkin, a fairly conservative bunch. Their recommendation:

We endorse legislation that would give authorities the necessary powers to effect an orderly resolution. As part of this authority, every large complex financial institution should be required to create its own rapid resolution plans, which would be subject to periodic regulatory scrutiny. These “living wills” would help authorities anticipate and address the difficulties that might arise in a resolution. Required levels of capital should depend in part on what the living wills imply about the time required to close an institution. This will create an incentive for financial institutions to make their organizational and contractual structures simpler and easier to dismantle.

The GOP's budget is far more radical than what people like Greg Mankiw see as the role of regulation for the financial sector. There are problems with resolution authority that need to be addressed, particularly its international components. But the idea that the legal structure of summer 2008 is ideal -- the idea that "let's do it over, but mean it this time" is the strategy -- is horrific.

Remember, Paul Ryan voted for TARP. And now he wants to say "no problems here" and simply set the dial back. What more could Wall Street want -- someone who votes for bailouts in TARP and then fights any and all accountability and reform mechanisms after the fact? In a budget that skews so strongly towards the top 1%, it's telling that it tries to break apart one of the few mechanisms for holding Wall Street accountable post-crisis.

Mike Konczal is a Fellow at the Roosevelt Institute.

With skyrocketing costs and falling coverage, many Americans have to pull out the plastic to pay their bills.

This week's credit check: 17% of consumers can't afford to pay medical bills and Americans pay about $45 billion worth of health care costs with credit cards.

Today marks the one-year anniversary of the health care reform bill. Ezra Klein, ever an expert on the matter, explains exactly what it is meant to do:

In 2019, once the law has been fully implemented for five years, it is expected to cover about two-thirds of the uninsured, to cost about 4 percent of what the health-care system spends in any given year and to cut the federal deficit by less than 1 percent... [O]nce it kicks in fully in 2014, is expected to do four things: provide coverage; remake a small slice of the private insurance market; pay for itself; and try to control costs... Of the 32 million people the law is expected to cover by 2019, 16 million will be on Medicaid and the rest covered by private insurance.

This legislation literally can't come a moment too soon. Not only does our broken health care system have catastrophic -- and sometimes fatal -- effects on our health, but it has a serious effect on our wallets. There's been a recent increase in those who can't afford to pay their medical bills or buy medications -- 17% of consumers in February as opposed to 15.6% in January and 14.7% a year ago, according to the Consumer Reports Trouble Tracker. It was the most prevalent trouble faced by consumers, ahead of missing payments on their bills. The story is particularly bad for low-income households -- of those earning less than $50,000 a year, 26% can't afford medical bills or medications.

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The recession is likely to blame for the upsurge in these numbers. High unemployment levels, rising treatment costs and unaffordable coverage means four in 10 Americans struggled to pay their medical bills last year, according to a report by the Commonwealth fund. The report also found that 40% of respondents had to forgo care they needed because of high costs. (That number was at 29% in 2001.) Fifty-seven percent of those who lost their coverage with their job couldn't get new insurance, and enrollment in a government program to cover part of the cost of COBRA ended last May.

In the struggle to pay for necessary care and medications, many Americans turn to using their credit cards. We pay about $45 billion worth of health care costs with cards, according to a report from McKinsey & Company. Meanwhile, Demos and the Center for Responsible Lending surveyed low- and middle-income households and found that nearly a third had used a credit card to pay medical expenses. They also had high levels of credit card debt: an average of $11,623, as opposed to $7,964 for households without, with 44% of those carrying more than $10,000.

Why do medical costs get so easily coupled with credit card debt? It's not that Americans have a knee-jerk reaction to reach for the plastic. "Up to Our Eyeballs" notes that the rising use of cards can be linked to an insistence from health care providers on getting up-front collection on co-pays and deductibles -- and the number one strategy is getting credit card information before treatment. Not to mention the creation of a whole new product: the medical credit card. They come in many shapes and forms, but most are filled with fine print and loopholes. While almost all start with an 0% interest rate, they often rocket up to over 20% after an initial period -- rates on GE's CareCredit card jump to 26.9%, for example.

Health care reform will help ease these problems by covering more Americans and hopefully lowering the cost of care. But even this sweeping bill won't grant relief to many until its implementation in 2014. Until then, more Americans are going to have to reach for plastic when faced with medical bills they can't afford.

Bryce Covert is Assistant Editor at New Deal 2.0.