The Surplus? Make It A National Savings Account

As any student of introductory economics knows, the government's budget surplus is part of our nation's savings. And far from being a problem, saving is necessary to finance investment in productive capacity that increases future living standards. So, with the private saving rate at record lows, it should be good news that the government is projected to run large budget surpluses over the next decade. Why, then, is Federal Reserve Chairman Alan Greenspan, an outstanding student of economics, concerned about "looming surpluses" and calling for "surplus-lowering policy initiatives?" It's not because the nation is saving too much. The record current-account deficit, which measures how much foreigners are lending to us, is a sobering reminder that we are in fact saving far too little.

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