FROM THE OFFICE OF PUBLIC AFFAIRS

Today, Deputy Treasury Secretary Samuel W. Bodman joined Congressman Sam Johnson and Senator Craig Thomas at the unveiling of new legislation to that implements President Bush’s proposal to create a new savings vehicle--Lifetime Savings Accounts—that make it easier for all Americans to save.

Deputy Secretary Bodman delivered the following remarks:

I would like to thank Representative Sam Johnson and Senator Craig Thomas for allowing me to join them in introducing legislation that implements one of President’s Bush’s key priorities: expanding opportunities for all Americans to save and invest for the future. 

Lifetime Savings Accounts (or LSAs) make saving simpler and more flexible.  LSAs replace some of the existing—and complicated—savings options with a simple tax-preferred vehicle that allows everyone to contribute regardless of age or income. LSAs can be used to fund a college education, to start a business, or to buy a first home. In other words, they will help millions of hardworking families pursue the American dream.  They will also allow individuals and families the flexibility to save for emergencies and to enhance their retirement savings.

Over the last several years, the personal savings rate has been on a steep decline. In 2002, the personal saving rate was revised down 1.4 points, from 3.7 percent to 2.3 percent.  This is not acceptable. We must reduce the barriers to savings—and the simplicity and flexibility of LSAs does just that.  LSAs are simple: people can save, take their money out without penalty when they need access to it, and all earnings in the account are tax and penalty free. 

Importantly, LSAs will enhance savings opportunities for millions of low and moderate-income individuals. Lower income individuals often do not have the resources to save for the distant future.  Many are unwilling to risk locking up their savings in tightly restricted accounts, where they would face penalties for withdrawing the money in emergencies. The flexibility of LSAs provides access to tax preferred savings regardless of a family’s savings horizon.

In addition, LSAs will simplify the current complex, and often conflicting, rules that govern the existing "alphabet soup" of savings vehicles. LSAs have been designed to make the decision to save easy.  It is a savings vehicle accessible for all.  Any money contributed can be withdrawn at any time without penalty.

In addition to benefiting individuals and families, this legislation benefits our economy as a whole. Greater national savings translates into higher investment and capital accumulation, which in turn means higher productivity, increased output, and higher wages and living standards in the future.

In short, more savings means a more secure future for the citizens of this great nation. 

I look forward to working with Congress to ensure that all Americans have the expanded savings opportunities they deserve.