Heart Happy (cathy_edgett) wrote,
Heart Happy

Save, don't spend!

We have a government that spends what it doesn't have and will now give us a tax refund that we are supposed to spend rather than save to supposedly help the economy.  From what I gather from listening to people calling in to talk radio, most people will use the money to reduce the debt they already have.

This is from an editorial in the NY Times today.

According to the Congressional Budget Office, if the nation keeps on the path it is on, federal debt will exceed the size of the economy in the lifetimes of many people reading this editorial, and certainly within their children’s lifetimes. Approaching a debt load that large would slam the brakes on economic activity, making today’s slowdown look benign. How lawmakers — and candidates — act and communicate now will send a signal of their ability to see us not only through the current turmoil but to a more stable future. So far, the signals are about how much they want to dole out.

To be effective leaders, politicians also need to explain that stimulus — which promotes spending — is the opposite of what is needed long term. Going forward, the nation must increase savings, not consumption. That will be painful.

Higher private savings requires delayed gratification by individuals. Higher government savings requires higher taxes or reduced government benefits, or a combination of both. Yet, savings, which have been neglected as a policy imperative throughout the Bush years, are the only means of ultimately digging out of the hole the nation is in already, even before the extent of the slowdown is known.


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