If you had been in a certain hearing room this week on Capitol Hill, you might have heard this:
“The most powerful messages that individuals receive each day are to spend and, if need be, to borrow to do so.
“The government is about to send out stimulus tax checks with the request they be used for more consumption. Better that they be used to pay down debt or fund an IRA if the objective is long-term financial security.
“The current mortgage crisis is a direct result of our society having been so dedicated to borrowing and spending and growth that it made it possible for people to borrow well beyond what we now know was advisable.”
Those remarks were prepared by Dallas Salisbury, chief executive of the Employee Benefit Research Institute and chairman of its affiliated American Savings Education Council.
The two organizations don’t lobby or take policy positions. They do research and try to raise public awareness. Some of that effort has been directed through the workplace.
Salisbury said many employers had provided financial literacy tools to help their employees make savings and investment decisions. But not nearly enough workers have paid attention or followed through.
He’s pleading a case he’s made often before.
“All of our work since 1978 can be found on our Web sites,” Salisbury said, “and I encourage you — and everyone — to make use of it.”
For people like Salisbury, who’ve been in the trenches for years in the battle to improve financial literacy, the current economy represents one big “I told you so.”
We are a nation in love with spending, and spending beyond our means has gotten a lot of us in trouble. Well-off and poor alike are overloaded with debt and facing payments they can’t meet.
“Use that plastic today to enjoy life now,” Salisbury characterized the American psyche. “Be patriotic and spend for growth now, and worry about tomorrow another day.”
And worry about what kind of mess we’re leaving our children and grandchildren, who unfortunately may be even more interested in quick self-gratification.
Surely you’ve read before that the American savings rate is negative, that we are now collectively spending more each month than we earn.
That’s a lousy way to run a railroad, a household, or a nation.
And, although Salisbury wasn’t making a political charge, he certainly provided the ammunition for one.
Running out and buying stuff with your rebate check may be the stupidest thing you can do for your own financial security.
Smart people are planning to save it (most are likely to need it in retirement if not before) or pay down their debts.
As tax filing day passed and we submitted the numbers that will influence the size of our rebates, we should wonder, like Salisbury, at the wisdom of those who tout the stimulus checks as the prescription for our economic ills.
Join the discussion
Share your observations and experiences about news. Lively, open debate is the goal, but please refrain from personal attacks or comments that are racist, vulgar or otherwise inappropriate. If you see an inappropriate comment, please click the "Report as violation" link to notify a KansasCity.com editor. Thanks for your feedback.