Under Article 1, Section 9 of the Constitution, “no money shall be drawn from the Treasury, but in consequence of appropriations made by Law.” And yet in 2009, Congress under the leadership of then-House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid adopted legislation that boosted the U.S. quota at the International Monetary Fund by $8 billion and created an open-ended $100 billion credit line to the organization.
The $64 billion quota is money the IMF already has at its disposal, while the $100 billion credit line is like a home equity loan or credit card limit that has not been tapped.
To access the funds from the $100 billion credit line, called “New Arrangements to Borrow,” the IMF does not need to return to Congress. That will be true even if the monies are used for controversial bailouts of troubled governments and financial institutions in Europe that bet poorly on the sovereign debt of bankrupt socialist states like Greece.
In fact, the IMF — with U.S. funding — is already engaged in a bailout of Europe, having already committed up to Û78.5 billion, or about $100 billion, to propping up Greece, Ireland and Portugal. This is more than 39 percent of the IMF’s total commitments worldwide of about $254 billion. Already, the European crisis is eating up a disproportionate portion of the IMF’s funding, and the IMF is just getting started. This illustrates that the IMF was never intended to be used to solve a debt crisis of this magnitude.
To date, according to the IMF, $22 billion of our nation’s $64 billion quota has been tapped. On top of that, the IMF has already accessed and used $7.2 billion of the $100 billion credit line.
That means $29 billion of U.S. taxpayer money is already being use by the IMF to finance outstanding commitments worldwide.
As the $100 billion credit line is increasingly tapped, the nation’s stake in the IMF will become dramatically larger — and U.S. taxpayer funds will be put increasingly at risk of European defaults. That is why what remains of the $100 billion credit line needs to be pulled back as soon as possible.
Fortunately, legislation has been offered by Rep. Cathy McMorris Rodgers, R-Wash., to roll back the $100 billion credit line — before it is all wasted financing unsustainable Greek pensions and insolvent Irish banks.
The Obama administration never should have promised the $100 billion credit line to begin with at the April 2009 G-20 meeting, and Congress certainly should have never approved it.
That it is now being used to bail out Europe would be deeply disturbing to the majority of Americans, as the IMF lacks the resources to prop up all of the consolidated debts of Portugal, Italy, Ireland, Greece and Spain, which total more than Û3 trillion, or about $3.8 trillion. The IMF was never intended to be used to prop up major financial powers, and certainly not in the West.
With a rash of European credit downgrades by rating agencies, now is the time for the U.S. to get back its $100 billion credit line — with the help of McMorris Rodgers’ legislation — before it is too late and it is poured down the drain.
It is time Congress had its say. This open-ended commitment to the IMF must come to an end, and the power of our representatives to approve all appropriations be restored.
Bill Wilson is president of Americans for Limited Government.
