Tarry for the Nonce

January 30, 2006

FDR’s Legacy

Filed under: News — lmwalker @ 12:00 pm

The Commerce Department seems surprised that Americans aren’t saving money:

The Commerce Department reported Monday that the savings rate fell into negative territory at minus 0.5 percent, meaning that Americans not only spent all of their after-tax income last year but had to dip into previous savings or increase borrowing.

I can give them one explanation: Americans have no incentive to save. If, for example, a college student chooses to work and save money for college, without accepting government aid, that savings-prone student is – by definition – “wealthy” and subject to to the tax on that hefty chunk of tuition savings. (Apparently, it is inconceivable to the federal government that a student would pay their own way.) Students smart enough to live off the public dole have no such problem.

Another explation: Americans feel a sense of entitlement to the money they have “invested” in the government-subsidized retirement programs (i.e., SSN, Medicare, Medicaid,) so they feel it unnecessary to worry about their old age. Having just received my W-2s (and noting the ridiculous amount of money I have contributed to these bureaucratic, bloated charities,) I too feel a sense of entitlement to money that I know I will never see.

And it annoys me.



  1. Laura, I agree, but it is not rational to view student-loan policies and social security as disincentives to save. Same thing with income taxes. Those programs may make it slightly less lucrative to save, but money in the bank is money in the bank. However, given the common irrational behavior of people not saving a single dime, maybe it doesn’t matter what is rational or not. I just fear for the future when all of these wealthless people want to retire. God help us if they feel *entitled* to retire!

    Comment by Troy — January 30, 2006 @ 12:18 pm

  2. God help us if they feel *entitled* to retire! — Troy

    At current growth rates, Medicare, its cousin Medicaid and Social Security will consume a fifth of the nation’s gross national product by 2020. That number represents the current size of the entire federal government.–http://www.opinionjournal.com/diary/?id=110007889

    too late, Troy.

    Comment by auntlori — January 30, 2006 @ 5:51 pm

  3. To help fix it, just increase the yearly amount you can contribute to a retirement plan.

    Also, would increasing the amount of money you have to earn before they stop taking out SSI tax make sense (it was $86,000 last year)?

    Social Security isn’t any part of my retirement plan. If it’s there, it’ll be gravy.

    Comment by Howard — January 30, 2006 @ 8:27 pm

  4. Hey, just go work for a government entity. Any government entity, even your local community college. You won’t have to contribute a cent to Social Security.

    Comment by Toly — January 31, 2006 @ 12:01 am

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