government plans to keep. It goes without saying that all of these solutions are highly charged politically. Addressing the long - term fi scal challenges of the country will only be successful if both parties can put aside their differences and work toward a common goal. c02.indd 42 8/26/08 8:42:45 PM C h a p t e r 3 THE SAVINGS DEFICIT Too many Americans are following the bad example of their federal government. They’re spending more money then they make. They’re taking out home equity loans. They’re charging up their credit cards. They’re building up compound interest. —David Walker For two years in a row, in 2005 and 2006, American households spent more money than they took home. That ’ s a negative savings rate. The last time the country had a negative savings rate was back in 1933 and 1934 — admittedly not good years for America or the world. It wasn ’ t always this way for the United States. Previous generations didn ’ t believe that they could live on credit and borrow their way into prosperity.
