Federal Reserve Vice Chairman Alice M. Rivlin said Tuesday that tax incentives alone will not increase overall savings.

Speaking at a Credit Union National Association conference, Ms. Rivlin said tax incentives cost the government more in lost revenue than they generate in increased investment. As a result, the government must borrow more money to finance its budget. This depletes the amount of capital available to private companies.

"We are just trading private savings for public dis-savings," she said.

The solution, she said, is for Americans to return to the practices of their grandparents, who put stressed saving over consumption. "We need to somehow change the mind set of Americans so they think about saving for retirement and for education," she said.

Ms. Rivlin also criticized analysts who compare economic growth today with the 1950s and 1960s. Baby boomers' joining the work force in those decades leading to higher-than-normal economic growth, she said. "It is not possible to grow as fast when labor markets are as tight as they are now."

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