News has come from Europe of an agreement to bail out Greece if global investors ever stop financing Greek debt. Included in the deal was a promise of “substantial help” from the International Monetary Fund. The closer this deal comes to fruition, the closer we get to another hit for the American taxpayers.
Last year I raised concerns about the Obama administration’s request for an additional $100 billion loan for the IMF. At the time, the president claimed that it would come at no cost to the American taxpayers, crazy as that sounds. Despite my warnings, the administration pushed the bill through. and our exposure to the IMF grew.
The Greece proposal sets a dangerous precedent, because several European countries are following in Greece’s footsteps. Portugal had its debt downgraded earlier this week. Spain and, to a lesser extent, Italy, France, and Belgium, all face dark clouds ahead. While Ireland appears to be working things out, it still faces a pile of debt. And that’s just in Europe. Is the IMF going to provide “substantial help” if the outlook for these countries worsens?
The IMF has a notoriously poor track record when it comes to addressing sovereign-debt problems. Over the years, it has developed into a dependence-inducing crutch used by weaker countries to avoid making the tough decisions necessary to get their fiscal houses in order. In Greece’s case, that means (among other things) countering massive tax evasion. More than 70 nations have depended on IMF aid for 20 or more years; 24 countries have received IMF credit for 30 or more years. The IMF has been as much part of the problem as part of the solution.
As we watch, our exposure to potential losses grows along with the IMF’s involvement in sovereign-debt issues. Besides, we do not have money to lend in the first place. What is the sense in our borrowing money to lend to the IMF to dole out to other countries?
While the left hand of the Obama administration is asking the taxpayers to clean up the messes created by governments around the world, the far-left hand is shoveling trillion-dollar entitlement programs and unstimulating stimulus packages down their throats.
Enough is enough, Mr. President. We need to end the pork-barrel spending, cut back our exposure to the IMF, and rein in our deficits. Global appetite for our Treasury debt is waning. The current path is unsustainable. Can we really afford not to act?
– Rep. Ed Royce, Republican of California, is the senior member of the House Financial Services Committee.