There are at least two schools of thought in economics. One of them - Keynesian economics - suggests that consumption is the most important element and therefore spending is the way to restore a faltering economy.
This is the theory that's been adopted by the spendthrift Obama administration and often the news media that have argued in favor of more government and personal spending.
But according to former treasury secretary Henry (Hank) Paulson, Jr. overspending was a "root cause" of the financial crisis.
Paulson told CNN's Christine Romans on Feb. 10, "One of the root causes of the crisis were the structural economic imbalances that really result from the proclivity of not just our nation, but Americans to save too little, to invest too little, to borrow to much, to spend too much."
Romans asked Paulson to elaborate on the "global imbalances" which she identified as the trade deficit. "This is still a problem," Romans said. "We're saving more, but we're still importing far more than we're exporting from China for example."
"I think we need to start at home with some of our policies at home," Paulson answered. "We have a tax system that really discourages savings and investment, and punishes them. And we have a tax system that really encourages consumption. We have housing policies that penalize renters relative to homeowners. So, and then you look at globally we have nations in Asia, China, Japan - others that don't have enough domestic consumption. They need to consume more and they need to save less."
What Paulson didn't mention was that the bailouts he himself helped engineer also punished savers. Washington Post business columnist Allan Sloan explained this on Oct. 20, 2009.
"The government is spending trillions to keep interest rates down to support the economy and prop up housing prices, and those low rates have inflicted collateral damage on savers' incomes," Sloan wrote.
Sloan also quoted Greg McBride, senior financial analyst at Bankrate.com, who said "It's a direct wealth transfer from savers and retirees to overly indebted borrowers." Sloan cited a 40 percent drop in returns for five-year CDs and much lower yields on Treasury securities compared to 2007.
Fox Business anchor Cody Willard criticized the "wealth redistribution trick" of targeted tax credits for "new home buyers" on his MarketWatch blog last year. In his view, it punished the renter in favor of the homeowner "who already doesn't have to pay his fair share of taxes because he gets a ‘mortgage write offs' while those of us who rent don't get ‘rental write offs'."