At present, measured on a NIPA (national income and product accounts) basis, gross dissaving by the government sector represents about 6–3/4 percent of U.S. GDP. While much of this spending in excess of tax collections represents the transitory effect of the economic downturn, the aging of our population will pose severe challenges in the decades to come.
And as we design fiscal reforms, we should look for opportunities to improve incentives for private saving. So creating the sustained growth required to address the needs of future retirees will almost certainly involve increases in national saving.