face a situation of rising debt and excessive tax burdens. in the 2000s, we generally had revenue a little under 25 % of gdp and spending slightly over 26 % of gdp. now we raise less than 24 % of gdp in revenue, despite higher taxes, and then spend about 29 % of gdp. 16 this is an unsustainable situation, not least because the efficiency of government spending has been low. 17 much as i wish we had a strong state that could deliver high quality public goods at reasonable prices, the facts reflect otherwise. relative to the 2000s, we have a weaker state, spending a larger share of gdp. the result is an economy barely capable of growth faster than 1 %, with a shrinking tax base and a weak outlook. in these circumstances, trying to deal with social needs simply through more spending, more debt and higher tax doesn ’ t really cure the patient, but rather limits the pain while accepting continued decline. living standards cannot rise materially without growth. the problem goes deeper. if investment did rebound, and government borrowing continues at around current levels, we would then hit a binding balance - of - payments constraint. we have had an investment rate of around 14 % of gdp recently, against for 2001 to 2009, revenue averaged 24. 8 % of gdp and expenditure averaged 26. 2 % of gdp. for 2012 to 2021, revenue averaged 23. 9 % of gdp and expenditure averaged 28. 9 % of gdp. these periods correspond to the most recent ten years as well as the preceding decade. alternative samples yield comparable results. theo janse van rensburg, shaun de jager and konstantin makrelov. “ fiscal multipliers in south africa after the global financial crisis ” sarb working paper. no. 21 / 07. available at : https : / / www. resbank. co. za / en / home / publications / publication - detail - pages / working - papers / 2021 / fiscalmultipliers - in - south - africa - after - the - global - financial - cr a savings rate of 15 % of gdp. 18 a reasonable investment rate would be over 20 % of gdp, and for fast growth probably 30 %. 19 but given savings levels, this implies borrowing between 5 % and 15 % of gdp from the world – very large sums. current account deficits of those magnitudes would simply become too unsustainable, if not impossible, as in the uk currently. to achieve balanced growth, rather

vigorous comment. the effective apr reflects the cost of interest and certain other finance charges imposed during the statement period. as an example, a cash advance carries an effective apr that reflects both interest assessed on the balance in the billing period and any fee charged by the creditor for the cash advance. the effective apr can be quite high, often much higher than the nominal apr, in part because it amortizes the cost of credit, including fees, over one month. although consumer groups argue that the resulting " sticker shock " helps consumers make better credit shopping and account management decisions, creditors argue that it confuses consumers and misleads them to think the cost of credit is higher than it is. consumer testing conducted for the board suggests that many consumers have a limited understanding, if any, of the effective apr, but it also suggests that clearer presentation of the disclosure can improve understanding. thus, the proposal seeks to present the effective apr more clearly to consumers with more straightforward terminology and better formatting that promotes understanding. in addition, the proposal seeks to improve consumer understanding and reduce creditor uncertainty by specifying more clearly than the present regulation which fees are to be included in the effective apr. however, because of inherent limitations of the calculation – such as the need to assume the repayment period – and continued concern that adequate consumer understanding may be difficult to achieve, the board is also seeking comment on an alternative proposal to eliminate the disclosure. when evaluating these two alternatives, and any others the public comments might suggest, the board will consider the comments as well as the results of additional consumer testing. conclusion madam chair, in closing, let me emphasize the federal reserve's commitment to ensuring that consumers get key information about credit card terms in ways they can understand, in formats they can use, and at times when it is most helpful. we appreciate efforts in the congress and among consumer groups and the credit card industry to ensure that disclosure practices are in line with the needs of consumers. as my testimony this morning indicates, more complex pricing and continuous change in the marketplace make the task of writing rules for effective disclosure challenging. nevertheless, the combination of extensive review, substantial public input, and systematic consumer testing has enabled us to propose changes that we believe will further the original goals of the truth in lending act to promote economic stability and competition through the informed use of credit. i look forward to our continuing efforts in this regard, and i am happy to address any questions you might have. appendix i summary of proposed changes