Savings impact taxpayers' ability to save for emergencies, education, home buying and most importantly, for retirement. Consumer spending is powering the United States economy at a brisk rate of growth, even as we struggle with diminished export sales and slumping economies in Asia, Russia, and Latin America. However, as demonstrated by the low levels of personal savings in September and October of 1998, we are raiding our savings to purchase homes, consumer goods, and other products. Consumers can not raid their wealth forever. In the event this does happen, increased personal savings will give Americans a financial cushion to weather any potential downturn.
Retirement looms around the corner for many baby boomers.
While I am confident Congress will ensure that the Social Security trust funds will be solvent when the baby boomers retire, Social Security alone may not be sufficient to maintain the boomers' current standard of living. Personal savings must make up this gap. Since personal savings are at an all-time low, it is unlikely that a substantial number of baby boomers will have sufficient personal savings to supplement their social security benefits to make up this income gap. Tax reform which encourages savings and investment can be an important tool to ensure that retiring Americans have sufficient personal savings to maintain their current standard of living. Increased personal savings and investment are also good for the nation's fiscal well-being.