Monday, January 23, 2012

Stop Bailing Out Europe

By Howard Rich

Contrary to the rhetoric of our leaders, U.S. taxpayers are still subsidizing an ongoing bailout of the flailing Eurozone. This expansive financial commitment — components of which have been cleverly disguised as currency swaps — comes at a time when our country can least afford it.

Entering 2012, the federal government’s debt stood at roughly $15.2 trillion — an amount that is projected to climb to at least $16.4 trillion in the coming year. This will be the fifth consecutive year in which the federal government has spent more than $1 trillion in money that it didn’t have – and yet lawmakers in both parties are still refusing to make long-overdue cuts. Even worse, they’re still refusing to address the unsustainable entitlement excess that's fueling this soaring debt.

In such an environment Washington simply cannot afford to pump more taxpayer money into bailouts at home or abroad — whether through loans, direct appropriations or clever “liquidity swaps” like the one exposed recently by Gerald O’Driscoll of the Cato Institute.

“The Fed is, working through the ECB, bailing out European banks and, indirectly, spendthrift European governments,” O’Driscoll wrote, noting that these swaps are nothing but thinly-veiled loans that the Federal Reserve has no authority to make.

Such opaqueness and hypocrisy is commonplace coming from this administration. Two months ago, White House spokesman Jay Carney told reporters that “we do not in any way believe that additional resources are required from the United States and from taxpayers” to prop up the Eurozone. Hours later, however, Barack Obama emerged from a meeting with European leaders pledging that America would “do our part to help them resolve this issue.”
“Our part?”
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