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Posts Tagged ‘White house burning’

White House Burning: Putting Out the Wrong Fire

Posted by Ram Kumar Shrestha on March 28, 2012

By Dean Baker, Co-Director of CEPR; Author, ‘The End of Loser Liberalism: Making Markets Progressive’

I have enormous respect for Simon Johnson. I first recall seeing him one late evening on a Bill Moyers segment in the middle of the financial crisis. I couldn’t quite believe that the former chief economist of the International Monetary Fund was complaining about the oligarchs in the financial industry using their control of the U.S. government to bail out their bankrupt banks. This was more likely attributable to too much alcohol or too little sleep than anything that could really be happening in this world.

Remarkably, it turned out to be true. Ever since the beginning of the financial crisis, Johnson, along with his co-author James Kwak, has been a tireless proponent of financial reform. Their blog, Baseline Scenario is an essential source for those following the debate over financial reform, as well as other issues. Their last book, 13 Bankers, is a great account of the growing concentration in the financial industry that left us with too big to fail banks.

Given their heroic role in the financial reform debate, I am not anxious to criticize Johnson and Kwak’s new book, White House Burning. But there are some important areas of difference that deserve attention.

The basic thesis of White House Burning is that the country is on an unsustainable fiscal path. Unlike some of the Chicken Littles leading the budget debate, Johnson and Kwak are responsible in how they lay out the case. There is no nonsense about runaway government spending. They explicitly refute this story. Most categories of government spending, except defense, have remained constant or fallen as a share of GDP since the budget surplus days of the late 90s. Read the rest of this entry »

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