If people are saving, they aren't spending. If spending drops, a recession can follow. If the economy is not "on the edge" this is not a problem. A man with a rainy day savings account of one years wages suddenly loses his job, no problem. If a guy with no savings and nagging phone calls from his creditors suddenly loses his job, things could work out a little differently.
I guess it depends on how much of a "non-spending" hit one thinks our economy can withstand.
True, but remember that workers will have substantially more take home pay immediately. The tendency for Americans is always to spend, not save.
"If people are saving, they aren't spending. If spending drops, a recession can follow."
Does it really have to be all or nothing? Can Americans save only or consume only and not have a mixture? A recession when we make US produced goods much more competitive in an increasingly global economy is pretty far-fetched to me. That is what I meant, in part, when someone asked me if I really believed the FairTax's economic forecast. It makes sense that we could invigorate our economy by taxing consumption, which is really the only was to stop this insane disadvantage that we place on US producers.