Friday, August 05, 2005

A Nation of Spenders

Harper’s Magazine brought together three of the nation’s top economic thinkers (Glenn Hubbard, Paul Kruggman, and Peter Peterson) in a discussion addressing the question: Can a nation of spenders be saved? The article invokes remembrance of the Titanic and alludes to an impending disaster with its title, “The Ice Berg Cometh.”

Some numbers that caught my attention:

  • a federal budget deficit of over $400 billion
  • a $666 billion international trade deficit
  • $1.5 trillion dollars of new spending in the last four years
  • $1.7 trillion dollars in tax cuts during the same period
  • more than 70% of the world’s savings distributed as loans to America
  • American net savings (saving in excess of spending) = zero

Discussion topics included social security, medicare, international relations, cultural trends, and considered solutions to the problems portending difficult days ahead. Says Peter Peterson, “The American people must be told a lot of hard truths so they understand what the problem is.” The article in its entirety is a fascinating and worthwhile read.

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