Ben Bernanke Repudiates Bush Administration Deficit-Spending Fiscal Policy

From the Wall Street Journal's Washington Wire:

Washington Wire - WSJ.com: Bernanke Advocates More Saving: Brian Blackstone reports on Bernanke’s speech in Montana.

Federal Reserve Chairman Ben Bernanke said that U.S. lawmakers should aim economic policies at boosting U.S. savings, the lack of which is the primary source of the U.S. trade deficit. “Saving is critical,” Bernanke said in response to questions after a speech at Montana Tech. He said the trade deficit isn’t a reflection of the quality of U.S. goods and services but rather a result of the fact that the U.S. invests more than it saves and the rest of the world is a “net saver.”

“That saving is sloshing around the world,” Bernanke said, and is one reason that U.S. real long-term interest rates remain “very, very low.” “We won’t always have that,” Bernanke said in reference to the high rates of foreign saving that are coming into the U.S. That’s why it’s important for the U.S. to find ways to boost domestic saving, he said.

"That the U.S. invests more than it saves" is economist-speak for (a) American households and businesses don't save very much, and (b) the government spends a honking amount more than it collects in taxes. "Aiming economic policies at boosting U.S. savings" is economist-speak for (a) raising taxes, (b) cutting government spending, and (c) encouraging households to save more.