Personal Savings and the Age of Reagan

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"Personal Savings and the Age of Reagan"

I’ve heard Europeans ascribe the low American savings rate to some aspect of our national character, but as you can see on this chart it’s something that’s changed quite a bit over the years:

personalsavingmarch2009-1

Any political observer will look at this trend and swiftly see that the period of declining personal savings corresponds to the “Age of Reagan,” the span of time in which the conservative movement has generally been setting the policy agenda. I’m not really sure why that would be. But my understanding of conservative thinking on tax policy is that their ideas are explicitly intended to have the reverse effect. Lower, and more regressive taxes are said to boost growth through the mechanism of higher savings.

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