Augusta Chronicle Editorial Staff
Americans have, for decades, needed to save more.
We picked an awful time to finally do it.
Understandable fear of the economy, tight credit and uncertainty about having a job have all led Americans to save more: about 2.9 percent, as a percentage of after-tax income, in the final quarter of 2008. That's about three times what we were putting away a year before.
Economists have been warning us for years that Americans were spending too much and saving too little, especially when you consider the now ongoing retirement of the massive baby-boom generation.
But the irony is, the saving is hurting the economy. When there's more being hoarded, there's less being spent. And that means less money to hire people and produce goods and services.
Consumer spending amounts to about 70 percent of the U.S. economy -- and it has become quite obvious that the American consumer is key to the global economy, as people around the world get pneumonia from the American consumer's cold.
It's a vicious spiral downward.
All the more reason for Washington to cut, cut cut.
The massive "stimulus" bill wending its way through Congress won't stimulate much except for government borrowing and spending.
What Washington needs to do is to cut spending, to lower taxes and to allow Americans to keep more of their own money -- money that could then be circulated into the economy.
Rather than borrow nearly $1 trillion to dole out in dubious government spending -- and leave our progeny with the tab -- Congress should quickly pass an income tax moratorium of, say, six months.
That money would immediately be put to work in the economy, because Americans would get a raise in their paychecks overnight.
It would be more of a stimulus, and its effects would attach much more quickly than the massive government spending now being proposed.
But even that's not enough. Long-term, taxes must be cut permanently, and the size of government forever reduced.
Last year, average corporate tax rates in the United States stayed the same -- but rates fell in other countries. And now our corporate tax rates are 50 percent higher than the international average, crippling America's ability to compete and to have the kind of good-paying jobs that fill government coffers and family budgets.
"People are not saving; they are building financial bomb shelters," says one financial pro.
If Americans are finally going to save more over the long term, which they should, the onus is on government to take less money out of the economy and leave more of it in our pockets.
Regulation is fine, even necessary, if done at a minimum. But when it comes to spending and saving, the best thing the government can do is to butt out.
