Daniel J. Mitchell

…a brewing election year fight with congressional Republicans…could restrict the IMF’s finances at a time when agency officials say they need a substantial boost to protect the world economy. The dispute centers on Republican opposition to increasing the United States’ financial contributions to the agency, reflecting anger over IMF rescue programs in Europe that some GOP lawmakers argue have become too expensive and have put U.S. taxpayers at risk. …opposition is growing to a permanent increase in U.S. government support for the IMF, as well as to a $100 billion credit line the United States provided in 2009 as part of an international move to help the IMF respond to the global financial crisis. The IMF has been dipping into that credit line for emergency loans to Portugal and elsewhere… Planned changes at the IMF, which would shift seats on the fund’s governing board from Europe to the developing world, cannot proceed without congressional approval. For practical purposes, neither can a related doubling, from $370 billion to $740 billion, in the total permanent contribution that IMF members make to support the agency.

As you can see from the excerpt, Republicans in the House of Representatives have the ability to stop this global boondoggle. The interesting question, though, is whether they defend the interests of ordinary people or whether they cater to the whims of the political elite.

By the way, I’m irked by the Post’s biased presentation. They refer to IMF “rescue programs,” yet all the evidence seems to suggest that the international bureaucracy is simply making the debt bubble bigger. We certainly don’t see any evidence that problems are getting solved. Greece is still in trouble, as are the other nations that stuck their hands in Uncle Sam’s pocket.

But that could be excused as a bit of sloppy reporting. Here’s a part of the story that is hopelessly biased.

The potential for a stalemate over the issue in the United States has the IMF and other international officials worried that it could put broader agency reform efforts at risk. IMF officials say that to backstop the global economy they need about $500 billion in addition to the increase in permanent contributions.

Since when is it appropriate to use the term “reform efforts” to describe policies that subsidize moral hazard and reward profligacy? And how is it accurate to say that IMF actions “backstop the global economy” when the bureaucrats don’t seem to achieve anything other than encouraging more debt?

But this isn’t a post about media bias, even though I sometimes can’t resist pointing out sloppy or dishonest journalism. Let’s get back to the main point. Giving the IMF more resources would be like giving the keys to a liquor store to a bunch of alcoholics.

Republicans have the ability to stop this raid on the Treasury by saying no. What they decide will reveal a lot about whether they’re still part of the problem.

Some GOPers in the House, such as Cathy McMorris Rodgers of Washington, already are fighting against expanded bailout money for the IMF. The real key, though, will be whether the Republican leadership does the right thing.


Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.