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Politics : Ask Michael Burke
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To: Zeev Hed who wrote (79684)4/16/2000 9:20:00 PM
From: Les H  Read Replies (1) of 132070
 
Since the FICA tax (12+% for SS, 3% for Medicare/Medicaid) is being spent as it goes, that can't be counted as savings. If anything, it's a future liability since they need to pay back in the funds they took out plus the statuatory interest they failed to book on the budget as well. I'd have to look into it, but I recall the new version of the savings rate includes the government employee's savings plans such as their 401Ks as well.

IMO the sharp drop in interest rates in 1998 allowed many homeowners to pull equity out of their properties at the same monthly payment, and to use it to expand their consumption and trading in 1999-2000. That coupled with the repeal of the capital gains tax on the sale of residences added the initial fuel to the fire.
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