Obama Highlights Savings Initiatives as a Foundation for the Economic Recovery and Long-Term Security

President Obama used his Labor Day weekly address to herald the important role that savings plays in people’s economic well-being and explain what his Administration is proposing to do about it.

Specifically, he focused on four “common sense” and low-cost proposals that will be pursued by the Department of Treasury and the IRS right now administratively and will augment some of his other savings policies already out forth in his budget proposals submitted to Congress. We previously described these proposals, such as the AutoIRA and improved Saver’s Credit, here in our Assets Report 2009.

The new initiatives include policies that enable expanded use of automatric enrollment in savings plans, increased leveraging of tax time to support savings through the revival of U.S. Savings Bonds, and support for more effective account rollovers when changing jobs. This low cost agenda is one we have been discussing for a number of years, we have articulated aspects of these policies in our Assets Agenda and it is gratifying to see them realized in policy. The savings bond proposal is particulalry promising; it was one of the signature ideas of the New Savers Act, which we developed along with then-Senator Hillary Clinton.

What is especially revealing from this weekend’s announcement (as well as the supportive material from Treasury and the IRS) is the extent to which the White House is linking their savings agenda to the performance of the broader economy. It is clear that they see increased household savings as connected not just to the economic recovery but as a foundation for a new and improved economy. Creating increased access to savings opportunities, which currently leave out many with lower incomes and fewer resources, is also a matter of fairness. That is why the adress was titled Labor Day and Fair Rewards for Hard Work. Here is how the President put it:

“The fact is, even before this recession hit, the savings rate was essentially zero, while borrowing had risen and credit card debt had increased… We cannot continue on this course. And we certainly cannot go back to an economy based on inflated profits and maxed-out credit cards; the cycles of speculative booms and painful busts; a system that put the interests of the short-term ahead of the needs of long-term. We have to revive this economy and rebuild it stronger than before. And making sure that folks have the opportunity and incentive to save – for a home or college, for retirement or a rainy day – is essential to that effort.”

You can read and view the whole speech here.