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Jubilee Act Gives Taxpayers Nothing to Celebrate
April 10, 2008
Dear Minority Leader Boehner:
On behalf of the 362,000 members of the National Taxpayers Union (NTU), I urge you to oppose a fiscally irresponsible bill moving through the House of Representatives. H.R. 2634, the so-called Jubilee Act for Responsible Lending and Expanded Debt Cancellation, would make significant changes to American policy regarding the cancellation of foreign debts owed to the United States -- debts that are indirectly owed to our members and to millions of other American taxpayers.
Allow me to explain why the Jubilee Act is ill-considered and detrimental to the interests of our country and the people it claims to help. To begin with, this bill greatly expands the number of developing countries eligible for 100 percent debt relief; a total of 67 countries would be able to apply for a cancellation of international loan liabilities. While it seems "kind" to erase the debts of poorer nations, we'd like to point out that the United States government requires many cash-strapped taxpayers to fulfill their tax debts, even in the face of severe financial adversity. Before we look abroad and forgive the foreign debts of national governments, we should look to reduce taxpayer burdens here at home.
The United States already has in place numerous programs designed to aid poor countries with overextended borrowing, such as the Heavily Indebted Poor Countries initiative that aims to ease burdens while encouraging prudent -- and often badly needed -- reforms within debtor nations. The Jubilee Act recklessly jettisons this established, reform-prompting method in favor of unconditional debt cancellation. The results would be disastrous for taxpayers. What's to stop these nations from applying for more development "loans," only to ask for complete forgiveness later on? Individuals can choose to privately donate to international welfare causes; taxpayers should not be forced into such a scheme.
We also believe the legislation lacks reasonable accountability standards that would require low income nations to responsibly manage their debt. Moreover, it eliminates the secondary free markets for certain sovereign debt, which will harm Western interests and further restrict low income countries' access to capital.
Ultimately, policymakers should move away from funneling government aid into poor nations, and concentrate instead on trade and tax reforms that will enable more private investments overseas. In the interim, NTU is interested in promoting accountable, pragmatic, market-oriented reforms to international lending practices. By our measure, the Jubilee Act fails to meet the taxpayer standard. Votes on H.R. 2634 and any amendments will be significantly weighted in NTU's 2008 Rating of Congress.