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Lummis Op-ed: Now We're Exporting America's Bailout
Rep. Cynthia Lummis (WY-AL)
There has been a lot of talk in Washington lately about government excess.
A stimulus proposal meant to be timely, targeted and temporary turned into a $700 billion spending free-for-all.
Congress just approved a $410 billion spending bill on top of that — growing the size of government by 8%. The president's $3.6 trillion budget for next year proposes to grow it even more.
These staggering numbers are leaving Americans feeling exasperated and angry. If they have to pay more attention to what they spend and how they spend it, why isn't their government doing the same?
In the midst of Congress spending more money than Americans give it to spend, Treasury Secretary Timothy Geithner is proposing yet another taxpayer fleecing.
Mr. Geithner has suggested tripling the International Monetary Fund's lending power to $750 billion — $100 billion of which will come from the United States. The IMF certainly does have a role to play in this global economic downturn, but even the IMF director has requested only doubling, not tripling, their resources.
The only thing we're growing here in Washington is government itself, including $250 billion in lending authority above what the IMF has requested.
This new authority would specifically focus on the 26 countries involved in the New Arrangements to Borrow (NAB). NAB is a credit line meant to give the IMF the resources to deal with systemic risks to the international monetary system.
I wonder if Mr. Geithner realizes that these 26 countries, including the United States, China and several European nations, currently have no intention of borrowing money from the IMF. It is worth mentioning that the current $50 billion of credit available to the IMF has not been used.
We have already put American taxpayers on the hook for the financial failure of certain private industries. Trillions of dollars have been handed out. Can we afford to take on new global problems as well?
If the international monetary system continues to falter, it will be difficult enough for the U.S. to prop up its own economy, much less the rest of the world.
Further, what kind of accountability will come with this funding? There are already plans at IMF to loan money with few strings attached.
Furthermore, IMF has activated its Emergency Financing Mechanism, in order to speed up loan approvals, to as little as 48 to 72 hours.
In actuality, if this money is truly needed, then we will be facing something much more troubling — an absolute crash in the global market.
While most IMF loans are not defaulted on, that's also because they are sound loans — something that cannot be guaranteed under the proposed new authority and rules.
As America learned from our own financial problems, loans that are not thought out often lead to default and quick bailouts often lead to money not accounted for.
Congress needs to be asking questions, not blindly following another policy created with scare tactics of a financial collapse. Europe is asking these questions.
While supportive of an increase, they are considering only $100 billion of new lending authority on their end. They also have wisely rejected the call to "stimulate" their own economies by spending 2% of their GDP for 2009 and 2010.
We cannot spend our way into economic growth, as Europe knows from years of experience.
We already have a global economy, one that needs to be protected. As global leaders gather for the G-20 economic summit, we need to find the most efficient way of accomplishing this goal.
Continuing to grow government spending has been roundly rejected by the international community and should be rejected by the United States as well.
Lummis, a Republican, is the U.S. representative at large from Wyoming and a member of the House Budget Committee.
Online: Investor's Business Daily