[Congressional Record Volume 149, Number 107 (Friday, July 18, 2003)]
[Extensions of Remarks]
[Page E1520]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   LEGISLATION TO WITHDRAW THE UNITED STATES FROM THE BRETTON WOODS 
                               AGREEMENT

                                 ______
                                 

                             HON. RON PAUL

                                of texas

                    in the house of representatives

                        Thursday, July 17, 2003

  Mr. PAUL. Mr. Speaker, I rise to introduce legislation to withdraw 
the United States from the Bretton Woods Agreement and thus end 
taxpayer support for the International Monetary Fund (IMF). Rooted in a 
discredited economic philosophy and a complete disregard for 
fundamental constitutional principles, the IMF forces American 
taxpayers to subsidize large, multinational corporations and underwrite 
economic destruction around the globe. This is because the IMF often 
uses the $46.7 billion line of credit provided to it by the American 
taxpayers to bribe countries to follow destructive, statist policies.
  Just last year, Argentina was rocked by an economic crisis caused by 
IMF policies. Despite clear signs over the past several years that the 
Argentine economy was in serious trouble, the IMF continued pouring 
taxpayer-subsidized loans with an incredibly low interest rate of 2.6 
percent into the country. In 2001, as Argentina's fiscal position 
steadily deteriorated, the IMF funneled over 8 billion dollars to the 
Argentine government!
  According to Congressman Jim Saxton, Chairman of the Joint Economic 
Committee, this ``Continued lending over many years sustained and 
subsidized a bankrupt Argentine economic policy, whose collapse is now 
all the more serious. The IMF's generous subsidized bailouts lead to 
moral hazard problems, and enable shaky governments to pressure the IMF 
for even more funding or risk disaster.''
  Argentina is just the latest example of the folly of IMF policies. 
Five years ago the world economy was rocked by an IMF-created disaster 
in Asia. The IMF regularly puts the taxpayer on the hook for the 
mistakes of the big banks. Oftentimes, Mr. Speaker, IMF funds end up in 
the hands of corrupt dictators who use our taxpayer-provided largesse 
to prop up their regimes by rewarding their supporters and depriving 
their opponents of access to capital.
  If not corrupt, most IMF borrowers are governments of countries with 
little economic productivity. Either way, most recipient nations end up 
with huge debts that they cannot service, which only adds to their 
poverty and instability. IMF money ultimately corrupts those countries 
it purports to help, by keeping afloat reckless political institutions 
that destroy their own economies.
  IMF policies ultimately are based on a flawed philosophy that says 
the best means of creating economic prosperity is through government-
to-government transfers. Such programs cannot produce growth, because 
they take capital out of private hands, where it can be allocated to 
its most productive use as determined by the choices of consumers in 
the market; and place it in the hands of politicians. Placing economic 
resources in the hands of politicians and bureaucrats inevitably 
results in inefficiencies, shortages, and economic crises, as even the 
best-intentioned politicians cannot know the most efficient use of 
resources.
  In addition, the IMF violates basic constitutional and moral 
principles. The Federal Government has no constitutional authority to 
fund international institutions such as the IMF. Furthermore, Mr. 
Speaker, it is simply immoral to take money from hard-working Americans 
to support the economic schemes of politically-powerful special 
interests and third-world dictators.
  In all my years in Congress, I have never been approached by a 
taxpayer asking that he or she be forced to provide more subsidies to 
Wall Street executives and foreign dictators. The only constituency for 
the IMF is the huge multinational banks and corporations. Big banks 
used IMF funds--taxpayer funds--to bail themselves out from billions in 
losses after the Asian financial crisis. Big corporations obtain 
lucrative contracts for a wide variety of construction projects funded 
with IMF loans. It's a familiar game in Washington, with corporate 
welfare disguised as compassion for the poor.
  Last year's Argentine debacle is yet further proof that the IMF was a 
bad idea from the very beginning--economically, constitutionally, and 
morally. The IMF is a relic of an era when power-hungry bureaucrats and 
deluded economists believed they could micromanage the world's economy. 
Withdrawal from the IMF would benefit American taxpayers, as well as 
workers and consumers around the globe. I hope my colleagues will join 
me in working to protect the American taxpayer from underwriting the 
destruction of countries like Argentina, by cosponsoring my legislation 
to end America's support for the IMF.

                          ____________________