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“White House Burning” author Simon Johnson on the impact on the U.S. economy of the European financial crisis.
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Trouble is mounting in Europe again -- concerns over a possible Spanish bailout all growing but we have someone who says the instability across the pond as having a benefit on the US economy.
Simon Johnson is the former chief economist at the IMF and he's author of the book White House burning and he joins us now.
The benefits of the United States house of -- We're a little bond yields where the only safe asset too crazy to that it makes a pain in the world referring to 2%.
And that takes the pressure -- the politicians which is actually bad news because we should be moving on the fiscal deficit -- today everybody was is sounding the alarm bells about Spain potential of how the markets decide on any given day -- today I'm worried about it ahead.
But -- concerns are some argue with some of the other people who watch this very closely that Spain might be a worse situation than Greece.
Spain is serious situation so his fortune well I worry about Ireland but Italy is a big issue focus and Italy -- Italian bond yields that's the story if Italy's in deep trouble -- really.
Removed to a different stage -- to -- Europe but I crisis.
Now IMF chief Christina -- calling for more help how awful what sequels are very fragile recovery going on should the US get involved we will spend a lot of money US taxpayer money.
Goes towards the IMF should be get more involved no absolutely not the -- -- easily dismissed the console themselves that having the IMF involved in the way to madam regardless proposing would not be constructive -- This stage it poured billions of dollars not -- -- in the united states of course we do contribute so much of the IMF but overall.
The IM FS has put forth billions to make sure that certain European banks are propped up.
Will it be enough is that something insidious we're missing here Simon how bad could -- -- -- -- get -- Western European situation is is fundamentally broken they completely messed up in terms of the structure the monetary union they need -- proper fiscal unification that some countries -- have to leave the -- and -- to be some big deep debt restructurings that are long way from that realization the IMF should be pushing them towards -- -- really is realistic assessment of the broader eurozone prospects.
Come back to this side of -- -- and obviously you'll -- focus is a huge debt that this country has as -- sees the economic recovery what it is slowly gained traction how much -- higher taxes or more taxes hinder that growth.
Well I I think you have to be careful you need to look at -- and mom hi mom I'm actually more optimistic on the US recovery -- -- the -- blow themselves up a I think at the end of this year we should not extend bush era tax cuts if you fuel economy still weak -- -- help.
Let's have a temporary payroll tax cut linkage to employment relative to populations that fades away as the economy recovers for the bush -- -- -- was too big we we can't.
Make those happen we can't on the -- and -- we can't -- him what about a flat tax.
Well they're all kinds of fascinating -- yeah undoubtedly we go -- we go through many of them and in our book I think that one unfortunately.
Is and there's a bridge too far ahead at this stage.
-- it's Americans who.
Are watching election year battle.
Plus don't -- -- see more erosion in their paychecks than they already have really come around to this idea that you know what.
It's too expensive.
That that's the best didn't.
This book is not gonna win -- -- popularity -- I'm already promised no I'm not oss capital doubled the spaces we should be having -- -- -- politicians in the presidential -- -- how can we afford the role of government in providing social insurance Social Security at an air -- these -- but I spent these these are very expensive these -- important programs 40% of people who use Medicare don't think -- And it is -- benefit any government program you have to have a conversation people -- all phases of the honest you don't want it we can do without it but I think -- -- -- There was no private healthcare market for people in the -- it is nice to full Medicare that would be one if you scrap it we need to control health care costs more broadly.
And fund a reasonable level of social insurance -- responsible for love -- they don't touch my Medicare and yet they don't want their taxes raised well how are we going to pay for all of you want it both sentiments about cutting spending is also crucial.
You need to control spending we have -- about that in a book we're proposing -- payroll tax for Social Security Medicare but you'll need more tax revenue robust tax revenue is something we've given up in this country over the -- -- need to get a.
Thank you so you need to do a thing but here it is a might yeah that's up.
-- -- you know you want to do it would mortgage.
Interest about you -- have more government taxes to gasoline you're not gonna win the election you know that's that's not revenue you are right.
You know -- to be thought -- -- Johnson and author of White House frankly very right you're always welcome here.
