One particularly important benefit of budget surpluses is that they increase the level of national savings. That is why the hard choices we made in 1993 and 1997 were so important. The growth of budget surpluses has created more resources that the Administration proposes to transfer to the Social Security Trust Funds to extend their solvency for the benefit of future generations. And surpluses have enabled this Administration to pay off Federal debt that reduces long-term interest rates and raises the level of private sector investment. This, in turn, has boosted productivity and lifted earnings in a virtuous circle that leads to higher surpluses.
Greater income gives individuals the ability to save more on their own account.
But we must not become complacent. In spite of making genuine progress, America is still behind most of its developed country partners in terms of domestic savings. America's savings rate is also well below the level it was in the early 1960s. Yet in 1960, there were more than five workers for every retiree. This ratio has steadily declined ever since and now stands at little more than three workers per retiree.