Is President Obama Opposed to Workers Saving for Retirement?

That is what USA Today claims. It told readers that the Obama administration believes that current saving rates are impairing economic recovery:

"It [job growth] will be even tougher if Americans continue to save at high rates — somewhere in the 4% to 7% range — as the White House report predicts they will until the financial services sector eases lending."

Actually, the current saving rates are close to half of historic saving rates. Savings rates plummeted in the 90s and the 00s as the wealth created by the stock bubble and then the housing bubble led to consumption booms. This growth path was of course unsustainable and eventually led to the crash in 2008. The obvious path to sustainable growth would be to get the dollar down in order move the trade deficit closer to balance. However, this article implies that the Obama administration is instead seeking to return to bubble driven growth. That should have been the headline of this piece.

It is also ironic that the Obama administration would seek to discourage retirement savings at the same time that it is apparently considering substantial cuts to Social Security and Medicare.

--Dean Baker

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