Save your Money! Why the Stimulus Check is a Bad Idea.

Here is an editorial by Dalton Conley in the NY Times making a case for family savings accounts. Here is what Mr. Conley says about the premise that giving people money to spend will stimulate the economy:

"But the most fundamentally troubling thing is the premise that while consumer overspending got us into this mess, more will get us out of it. This is akin to the old saw about curing a hangover with the hair of the dog that bit you."

Here's more about how shallow Republicans and Democrats are concerning the economy (read: its all about constituencies, and not fixing our problems):

Republicans have long argued that the way to stimulate long-term growth is by promoting investment over spending. Hence their perennial efforts to lower taxes on capital gains, dividends and corporate profits. But whether such policies actually stimulate increased investment is open to debate, since the wealthy folks who gain most from these tax reductions are probably already investing their money. And the tax savings don’t trickle down as much as their advocates claim.

Democrats, more concerned with helping working families, consider consumer spending to be the magic bullet, so they favor tax rebates. But this only encourages us to continue our profligate ways.

Here is Mr. Conley's solution, which deserves consideration:

"Why not combine the best of both philosophies and try to stimulate investment by all Americans? The simplest approach would be to seed universal mutual fund accounts for low-income Americans. The best way to do this would be through a so-called refundable tax credit deposited directly into a special investment account for each taxpayer. In future years, the government could contribute an additional 50 cents for every dollar the taxpayer deposited into this account. Think of it as a universal 401(k), but one that could be used not only for retirement but also for things like a down payment on a house, college expenses or unexpected health costs."

We might even expand this idea to health care. I know the idea of saving money is so old fashioned, but I think its a way to turn our country around.