'The idea that somehow we've grown away from being cyclical is not right.'.

• Position: FOR THE RECORD: SIMON JOHNSON - Interview

Simon Johnson, a former chief economist for the International Monetary Fund, currently is a professor at MIT's Sloan School of Management and a senior fellow at the Peterson Institute for International Economics.

Johnson co-authored two popular books on economics. "White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You," was published in April. His earlier book, "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown," was published in 2011. Both were written with James Kwak.

State Legislatures: What do you see as the greatest risks to the economic recovery in the United States?

Johnson: I think the European situation remains fragile, and they could have a big blowup. That would really damage us. That's the No. 1 risk.

SL: How specifically would the crisis in Europe affect the U.S. economy?

Johnson: It will be through exposure of our banks to their banks primarily. They have some very large banks and our banks don't have much capital so they're vulnerable to losses.

SL: What do you see as the single, most important thing Congress could do to get the country on the right fiscal track?

Johnson: I don't think they should extend the Bush-era tax cuts due to expire at the end of this year. That would provide not all the revenue needed to make fiscal adjustments, but a lot of it. And it's true the economy might be weak at the end of this year. But you could eliminate the tax cuts and then do a temporary payroll tax cut tied to employment relative to the population. So as the economy recovers that payroll tax cut would fade away. That combination would give you the fiscal adjustment we need to make in the next two decades, combined with enough support for the economy so you don't have a double dip.

SL: What do you think are the best economic ideas coming out of each party?

Johnson: I don't see a lot of economic ideas coming from either side. On the one hand, the GOP wants to cut taxes. This is just not a good time to cut taxes. You have budgets and shortfalls projected so you need to strengthen the revenue base. The Democratic side really doesn't want to engage people on what the government does. The federal government mostly manages Social Security, Medicare and the military. But if you don't have a lot of engagement with people you can't explain that cutting discretionary spending is really quite small and not enough to make a difference.

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SL: What do you think the unemployment...