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THE BUSH ADMINISTRATION'S tentative proposal for a new savings plan for families reminds us of the speedy wide receiver who turns to race upfield before he gets firm control of the easy pass thrown his way.

Awkward fundamentals and clumsy timing fatally flaw what in another context might be an attractive idea.

If there's going to be tax cutting, the White House family-savings plan is clearly superior to Bush's plan for a capital gains tax cut, which would chiefly benefit the rich. But this isn't the right time for either one.

The administration plans to propose a thrift program that would encourage American families with incomes below $120,000 a year to save up to $5,000 a year in special accounts. Interest or dividends would be free of taxes. After the money had remained in the account for seven to 10 years, it could be withdrawn and spent without penalties or paying additional taxes on its earnings.

That ought to spur savings among families, as well as individuals, although some economists dispute this. America's savings rate, at about 4.4 percent of after-tax income, is now much too low for a healthy and growing economy.

But like the fleet receiver, the White House is turning to run upfield without the ball. The administration has conveniently overlooked the ugly budget deficits.

Closing them and honing the real muscle of the American economy is best done, from Washington, by cutting spending and raising
revenues. The deficits really hurt the economy and savings. The huge amounts of debt, swollen by endless annual deficits, require Washington to borrow billions of dollars each year. This soaks up private savings of American creditors that could otherwise go into more productive investments.

The borrowing also makes Washington more dependent on foreign creditors. It tends to push up interest rates. Higher interest rates alone can stunt economic growth.

Moreover, the swamps of red ink in the federal budget worsen the trade deficit. End the budget deficit, many economists say, and you will dramatically reduce or end the trade deficit as well.

The family savings plan would not help close the alarming budget gap. Indeed, it could widen the gap.

At another time under more favorable conditions, a plan for tax-free interest on special savings by frugal American families could be impressive.

But today America has an accumulating debt that mortgages our children's financial future. Three years after the drastic tax reforms passed by Congress is no time to re-open an IRS code that every special-interest lobbyist in the world wants a shot at.

Washington got itself into this deficit mess. It must begin to extricate itself from the mess as well -- not through fancy tax gimmicks but through hard, determined policies of adequate taxation that are then faithfully and fairly enforced.

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