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View Diary: Simon Johnson: U.S. isn't in fiscal crisis, but we're on our way (52 comments)

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  •  A+ subject choice. D on the diary. (0+ / 0-)

    Johnson makes three main points, all of which get missed by the diary.

    1. "Doom Loop" risk taking is still running free on Wall Street.

    Of the national-level politicians now pushing for spending cuts, almost none showed up to fight to contain the fiscal risks posed by our largest banks. The Brown-Kaufman amendment to Dodd-Frank — which would have placed a limit on the size and debt (relative to equity) — was supported by 33 senators, only a handful of whom were Republican.

    But then again, the Obama administration also fought hard against Brown-Kaufman. Treasury Secretary Timothy F. Geithner argues that the TARP bank bailouts will end up costing the taxpayer very little. He is forgetting the broader fiscal damage done by the collapse of the real economy and the loss of eight million jobs.

    That is what merits extended discussion. Cowardice makes for LOL moments in the Monty Python films, but it is out of place a Treasury.

    2. "...we need to control health care spending...."

    Of course. The only institutions that do control health care costs are TriCare and Veterans Health Administration. On a per procedure basis they function at between 1/3 to 1/2 greater efficiency than "insurance" paid for-profit or non-profit care systems.

    Socialized systems do not steal money by generating phony tickets -- the "referrals" -- that double America's costs for chronic care treatment.

    3. Tax system modernization.

    My take on it is different from Johnson and much closer to Bowles-Simpson:

    -- Eliminate loop holes.

    -- Lower the base rates as offset.

    Unfortunately, loop holes are obtained by bribing the politicians in hundreds of ways. Bribes flow. Loop holes remain.

    Bowles-Simpson takes this on full steam. Option # 2 of Bowles-Simpson has a first rate layout for getting it done.

    *****

    Read the original. Good stuff. Johnson is an economist, not some talking-head goof ball.

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