More tax breaks needed

Before the start of the longest recession since World War II -- the current one -- Americans collectively were spending as much as or more than they were earning, leading to a savings rate of almost zero. Savings rates are calculated as a percentage of disposable income.

When the economy soured and jobs were disappearing, those who had overextended their spending, relying on credit for everything from mortgages to auto loans to consumer goods, suddenly had no way to make even minimum payments on what they owed.

Recently, the Commerce Department said the savings rate jumped to 6.9 percent in May, which is considered a healthy economic trend in the long run. But another statistic is more meaningful as the nation shrugs off the recession: consumer spending. And there was good news there as well: A 0.3 percent rise in May.

These figures require some interpretation. The saving rate increased because many Americans received an income boost thanks to various stimulus programs. The idea was that cash-strapped consumers would spend the extra dollars and help revive the economy. But a big chunk of stimulus funds has gone into checking or savings accounts rather than being spent on consumer items.

Now some government officials say it may take another round of stimulus spending or more tax breaks to make the recession go away. Our choice: more tax breaks. The current administration is learning that reducing the tax burden has a more enduring positive effect on the economy.