By J.D. Foster
The European Union (EU) has gone hat in hand to the International Monetary Fund (IMF) for assistance in bailing out one of its own. Greece is in a financial death spiral brought on by years of amazingly irresponsible deficit spending and similar behaviors often found in socialist states to the detriment of their economies. Greece also abandoned its national currency in favor of the Euro, in hindsight at least a stunningly bad move which for the EU makes this a major financial crisis and an embarrassment of the first order. What makes these otherwise somewhat removed events of immediate concern to the United States is that the IMF intends to use US taxpayer dollars to try to stave off Grecian disaster.
The relevant specifics of the Greek bailout are that the Eurozone (mostly Germany and France) is to chip in $106 billion while the IMF is to plus up this amount with another $39 billion. The IMF, of course, is tapping funds provided by its own member governments to participate in the bailout. As it happens, the Obama Administration convinced the Congress to give the IMF an extra $100 billion in play money last year. How convenient.
Suppose we suspend all credulity for a moment and imagine the Greeks will get their fiscal house in order, their economy won’t collapse under the now vastly higher taxes, workers will tire of striking in the streets and so return to work having seen their wages slashed, and that no other country (read, Portugal, Spain, Italy, Ireland, the U.K.) is caught up in the building financial contagion. In short, suppose we imagine the bailout works. Exactly why are U.S. tax dollars being used to bail out a European basket case?
And, of course, the odds are somewhere between slim and none that the Greek bailout will work. Having gotten the loan, will the perennially weak Greek government have the determination let alone the muscle to devalue the artificially elevated Greek standard of living? Fat chance.
Nor is Greece alone, but rather merely the first. A Mediterranean contagion is starting that is likely to sweep up many sad actors in the region. Are US taxpayer dollars to be used to bail out these countries, as well?
It was bad enough when the federal government bailed out AIG, and then Fannie Mae and Freddie Mac, and then many of the mega banks, and then GM and Chrysler. At least these had the modest merit of being US companies with US workers. Even if US government finances were in pristine shape, US taxpayer dollars should not be used to bail out a perennially dysfunctional state. But as spending-driven trillion dollar budget deficits and a Presidential debt commission starkly evidence, the US is seriously risking its own Greek-style sovereign debt crisis. Fortunately, the US doesn’t need an IMF bailout. It only needs a President willing to acknowledge that he has led the country on a Grecian spending binge it cannot afford.
Fortunately, Congressman Mike Pence (R-IN) and Congresswoman Cathy McMorris Rogers (R-WA) share this view and are circulating a letter to Treasury Secretary Geithner to urge him to protect American taxpayers from such nonsense. If European leaders wish to be Greek patsies then that’s their business. American taxpayer dollars should have no place in this foolishness.