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Tuesday, April 20, 2010
When the president and the speaker of the House recently reached into taxpayer pockets for a trillion-dollar wealth-redistribution exercise under the guise of containing our health care costs, at least the recipients were, by and large, fellow Americans. As an encore, within the next month, billions of U.S. tax dollars will be spent plugging budget holes within the European Union's core eurozone. Evidently with Nancy and Barack's blessing.
I am, of course, writing about the International Monetary Fund's (IMF) recent commitment to participate in the inevitable bailout of Greek national debt. The initial tab is $50 billion, and consensus is that this is just for triage and the patient ultimately will require much more. With the United States having the largest IMF quota, it is the largest donor country. While this unfolding story is getting daily media attention in Europe, including heads of state speaking out, President Obama and Speaker Nancy Pelosi seem to have decided just to let it happen. Except for specialty financial media, it seems as if the media also is giving a free pass to this story.
What is most galling is that the EU openly declares it has the money to handle this bailout internally within the eurozone. It's just that it prefers to use other people's money, and the IMF is ready to deliver under its director, Dominique Strauss-Kahn, a career French government bureaucrat. Plugging budget holes in the eurozone (an economic superpower) hardly is in line with the IMF's intended role of backstopping Third World countries during times of crisis in return for structural free-market reforms. But Mr. Obama and Mrs. Pelosi seem happy to let even U.S. taxpayer dollars flow for this purpose.
Let's take a closer look. As recently as January, France's position, pumped up by its legendary pride, was that the eurozone has more than enough resources to manage this internal problem and that the EU would no more consider asking IMF participation to bail out Greece than the U.S. would consider asking IMF support to bail out California. The eurozone plan was to have member countries proportionately pool necessary funds, which meant Germany and France would carry the heaviest burden.
But then the German equivalent of the Tea Party movement revolted against using German taxpayer money to bail out the Greeks, whose problems obviously are self-inflicted through a decade-plus orgy of spending and flagrant violation of EU and eurozone budgetary obligations. Angela Merkel, the German prime minister, and her coalition listened to the loud protests of fiscally conservative German taxpayers and made a U-turn in March, declaring Germany will not participate in the Greek bailout unless the IMF ponies up about half the cash and takes the lead in dictating and enforcing the terms Greece to which must commit.
The other EU members, France, et al., were shocked at first, but after hearing no push-back or shaming from the IMF, the U.S. Congress or Mr. Obama, quickly warmed up to the idea. And why not? Why reject what will be tens of billions of dollars from others, starting with U.S. taxpayer cash?
In short, when Germany's taxpayers said "no" to the bailout, Mrs. Merkel listened and said "no." The Europeans looked around and found the IMF and Mr. Obama, who has less of a problem saying "yes" to spending, regardless of how loudly his fellow citizens clamor for fiscal restraint.
America can easily put a stop to this misuse of the IMF. While the U.S. Congress and president don't have direct control over the IMF, they certainly have a very effective bully pulpit, given that America is the largest donor country. The IMF and United States should call Germany's bluff. Germany has far too much to lose, in fact, the most - if Greece were allowed to collapse and put the euro currency at risk. If that were to happen, German Tea Party movement not withstanding, any German government would contribute its fair share of an internal eurozone bailout.
Without delay, all Americans - red state, blue state, from Tea Party folks to Charlie Rangel fans - should be writing letters to their congressmen, senators and president, demanding that they push back and use America's bully pulpit. The blogosphere and radio/TV pundits should be mobilized. American taxpayers must toss this rotten egg back across the Atlantic to their German counterparts. We'll deal with our California, and they can deal with their Greece, thank you very much.
Mr. President and madam speaker, please make an effort to stop U.S. tax dollars from plugging holes in national budgets within the eurozone. We can't afford it, and the eurozone certainly can take of its internal financial issues. After all, the dollar has fallen more than 40 percent against the euro in the past decade because the markets believe our financial situation is even worse that the eurozone's. The Europeans think we are suckers for going along with this. Not one U.S. taxpayer penny should go, directly or indirectly, toward filling budget gaps in the eurozone.
Mark Jurkevich is an international executive in the high-tech industry and splits his time between the Washington area and Europe.
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