Tuesday, January 31, 2006

National Savings Rate

So NBC News reported last night that the national savings rate last year was -0.5%, that's negative 0.5 percent. That means that people spent their entire income and went into their savings or borrowed to spend more. This is the first negative savings rate since 1933, the bottom of the Great Depression.

Now tonight we know President Bush will talk about Iraq, terrorism, and nuclear weapons because the only way he stays somewhat popular (though NBC has his approval at 39%) is by scaring people. However, he also will probably talk about making sure the economy is secure for the future. What he should do is talk about a national savings plan. For years now the savings rate has been declining because the cost of everything: housing, food, health care, and gas among others has been increasing while wages have stayed steady or decreased. Bush should propose a national savings plan for Americans and provide incentives for saving.

Without a dramatic increase in the savings rate, more Americans will continue to borrow and too many will be unable to pay those loans back. Without savings fewer families will be able to help pay for college which will thus negatively affect the student's savings rates. Without savings fewer Americans will make big purchases thus damaging other sectors of the economy.

Instead of talking solely about fear tonight, President Bush should take the lead and help Americans to save more money for comfortable retirement and grow and support our economy.


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