U.S. Taxpayers to Bailout Portugal Through International Monetary Fund
It is often said that Benjamin Franklin once wrote “in this world nothing can be said to be certain except death and taxes.” The dreaded Tax Day has finally arrived. Due to the District of Columbia observing Emancipation Day on Friday, Tax Day official lands on April 18th this year. This means that we are all forced to surrender our hard-earned money to the federal government by the end of the day today. Anyone who owes taxes has to pay up to Uncle Sam or ultimately end up behind prison bars.
Our tax dollars go to fund many senseless programs. According to a report released by Sen. Coburn (R-Okla.), taxpayers paid for poetry in zoos, studies on the video game World of Warcraft and Super Bowl commercials last year. No one should be forced to pay for any of these projects. Advocates of these projects should pay for them privately instead of looting taxpayers. As wasteful as these projects may be, they did go through our legislative process at the very least.
The dirty secret is that our tax dollars go to fund many things not even approved by our elected representatives. The International Monetary Fund comes to mind. Last year, the International Monetary Fund (IMF) sent $145 billion to Greece and $122 billion to Ireland. Neither of these bailouts was subject to congressional appropriations. This has opened up the floodgates to massive bailouts of European welfare states. Many people do not realize that U.S. taxpayers are the largest contributors to the IMF. We pay roughly 17 percent of the IMF’s total funding.
Recently, Portugal officially requested a $116 billion bailout from the European Union and the International Monetary Fund. The IMF has agreed to provide the country a bailout but the international bureaucracy is still hammering out the details of the loan. Rep. Cathy McMorris Rodgers (R-Wash.) states that “while the IMF refuses to provide a reliable number, we estimate that America’s contribution to a Portuguese bailout is equal to writing a check worth $600 for every man and woman in Portugal.”
Just like Greece and Ireland, Portugal is a country that spent well beyond its means for many years. Socialist José Sócrates has been the Prime Minster of Portugal since 2005. Portugal’s debt as a percentage of GDP will rise to 87.9 percent in 2011 and 88.1 percent in 2012. It’s no wonder that Portugal’s economic growth has averaged less than one percent a year in the past decade.
Why should U.S. taxpayers be on the hook for the mistakes of Portugal’s socialist government? U.S. Treasury Secretary Timothy Geithner met with José Sócrates over the weekend. With the highest voting share in the Fund, the U.S. is the only nation with the power to veto all major IMF decisions. Timothy Geithner is the one man who has the authority to put an end to the international bailout madness. We need to put pressure on him to veto these reckless IMF bailouts, which only encourage reckless behavior.
Government and banks are more willing to take risks if they know the IMF will grant them a bailout if they fail, something economists call “moral hazard.” The international bureaucracy has institutionalized too big to fail on a global scale. We ought to allow socialist countries to fail in order for them to correct their mistakes. The IMF would hurt Portugal in the long run by subsidizing their poor economic policies. It has been reported that Spain, Italy and Belgium may be next in line to seek funding. On Tax Day, it’s an unfortunate reminder that our tax dollars go to fund unconstitutional international bailout funds.
