NRD Editor’s Note: This article appeared in The Washington Examiner on March 16, 2012.
By Bill Wilson — Yesterday, the International Monetary Fund (IMF) approved a whopping $36.7 billion bailout of the banks that are owed money by the government of Greece. Shockingly, U.S. taxpayers are on the hook for approximately $7.5 billion of the total.
Currently, the U.S. has a total exposure to the IMF of $165 billion. Although taxpayers fund 17.72 percent of the IMF, they are currently paying for more than 20 percent of its outstanding loans.
Part of the reason for that is because of an additional $108 billion the Pelosi-Reid Congress approved to the IMF in 2009, which included $100 billion in New Arrangements to Borrow (NAB) that the U.S. disproportionately funds.
Overall, including the new Greek bailout, taxpayers are already $20 billion deep into bailing out European financial institutions that bet poorly on sovereign debt of failed socialist states — and counting.
$13 billion of that has gone to Greece alone. To put that amount into perspective, that’s almost as much as the $14.3 billion the U.S. Department of Labor gets on an annual basis.
This outrage, however, has been lost in the horserace coverage of the GOP primary contest, but it is something candidates ought to be talking about.
So far, it is unclear whether the U.S. representative on the IMF’s executive board, Meg Lundsager, voted in favor of the bailout or not. If she voted yes, the Obama Administration is complicit in pouring U.S. tax dollars into the Abyss of European socialism. If she voted no, but the money got spent anyway, then the U.S. has ceded its fiscal sovereignty to the international bank cartel.
Either way, it is time for taxpayers to close the bank vault on the IMF. Legislation offered by Rep. Cathy McMorris Rodgers and Sen. Jim DeMint that would rescind the $108 billion additional funding to the IMF it received in 2009 when Democrats had a majority in both houses of Congress.
American taxpayers should not be forced to subsidize the foolish lending practices of foreign banks. Greece has already defaulted on as much as $138 billion this year alone, and now is putting U.S. taxpayers at risk.
Although no country has ever technically defaulted on an IMF loan, times could be changing. Ukraine has a $3 billion loan with the IMF coming due later this year, and wants to have payment extended — until 2022. Greece’s debt burden is far larger, and so far has not made much progress in reducing its deficits.
Likely, the only way Greece will be able to repay its current debt burden will be to roll it over with refinance loans. In fact, that is the way most sovereigns “repay” debt these days. For example, in the U.S. our $15.5 trillion national debt has increased every single year since 1958 because we never actually pay any of it back — we refinance it.
Where Greece got into trouble was losing the ability to access that funding privately as its budget got out of control.
But if Greece can no longer borrow freely at low interest rates without IMF, central bank, and government interventions, that is not any concern of U.S. taxpayers. Default, debt restructuring, and perhaps leaving the Euro are the solution, not bailouts.
It’s time to move the McMorris Rodgers and DeMint legislation. All the IMF is accomplishing is propping up the financial institutions that lent the money to Greece and other troubled sovereigns by assuming the risk they took — and the American people have had enough of bailing out bad banks.
Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.
