Why We Must Raise Taxes

Bator, Francis M.
March 1990
Challenge (05775132);Mar/Apr90, Vol. 33 Issue 2, p50
Academic Journal
This article presents information on the author's view about increasing the national saving to make enough room for investment in the U.S. Net national saving and investment by Americans fell from 9 percent of GNP during 1950-79 to 2.7 percent during 1982-88. During 1950-79 it never once fell below 6 percent. The shortfall in national investment, and not the trade deficit, is the major resource allocation problem. To make room for enough investment one must sharply increase national saving, the combined total of private saving and government saving. Government saving consists of the operating budget surpluses of all levels of government; government operating deficits constitute dissaving, a subtraction from national saving. The only reliable method for increasing national saving is to increase federal government saving. That means gradually shifting the government's structural operating budget--what the budget would be at high employment, including social security, but excluding federal civilian investment from a large deficit to a large surplus.


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