|TRAFICANT, James A., Jr.,|
Thursday, December 4, 1997
TRAFICANT URGES SPEAKER GINGRICH TO SCHEDULE HOUSE VOTE
ON SOUTH KOREAN BAIL-OUT PACKAGE
Washington, D.C. -- U.S. Rep. James A. Traficant, Jr. (D--OH) is urging the Speaker of the House to schedule a vote on the recently announced South Korean financial bail-out package when Congress returns in late January. In a letter sent this afternoon to House Speaker Newt Gingrich (R--GA), Traficant expressed concerns over the negative long-term impact the $55 billion bail-out will have on South Korea's economy, and the constitutionality of the United States contributing to the bail-out without the authorization of Congress. "I am opposed to this usurpation of powers and am opposed to the bailout when less costly alternatives can be implemented to raise the value of the won and protect the dollar," noted Traficant in his letter to the Speaker.
Yesterday, South Korea agreed to terms of the largest financial-rescue package ever negotiated. The Clinton Administration said yesterday that the United States will contribute $5 billion in direct funding through the exchange stabilization fund (ESF). An additional $35 billion will be provided through three international financial institutions -- the International Monetary Fund (IMF), the World Bank and the Asian Development Bank -- to which the United States is, by far, the largest contributor.
In his letter to Speaker Gingrich, Traficant outlined two major reasons for the Congress to reject the bailout package. "First, to accept the IMF loan, South Korea will have to swallow the IMF's financial regimen of higher taxes, lower spending and less growth," said Traficant. "If this plan works, and the IMF's austere financial plans haven't always produced great success, economic recovery will be a long, slow process." According to Traficant, some financial analysts have proposed a less costly approach to resolving South Korea's economic crisis: instead of artificially propping up the won through a bailout, the South Korean government can direct the Korean Central Bank to sell its bonds to banks, making the won scarcer and more valuable. The South Korean government can also index tax rates and repeals capital gains taxes to spur economic growth. "By implementing this second approach, South Korea's economy could recover much faster. Furthermore, the United States would not have to shoulder the bulk of the financial risk and loss of a bailout," added Traficant.
"Second, the Constitution of the United States grants Congress the power to regulate commerce with foreign nations," asserted Traficant. "The ESF is managed by the U.S. Department of Treasury, an agency created, funded and overseen by the U.S. Congress. However, the Treasury's dispersement of $5 billion in ESF funding will not require congressional authorization. Since the inception of the Constitution, the Executive branch has continuously usurped the legislative powers of Congress."
Traficant wants the Speaker to schedule a House vote on the bailout package the week of January 26th -- the first week Congress returns from its current recess. Congress does have the authority, through the appropriations process, to deny funding for any U.S. participation in the bailout package.2009