International Earmarks, Too?

The Obama administration is beginning to impose new regulations on Wall Street and the financial industry. The “watchful eye” of government, of which the President spoke in his Inaugural Address, is being fed an endless supply of No Doz. With home prices down, unemployment up, retirement funds slashed, and investment fraud exposed, the public is hungry for action, and government expansion is the daily special.

Congress has already delivered the second half of Hank Paulson’s $700 billion. Next is the $825 billion “stimulus package.” After that is passed, new regulations will be implemented — domestically and internationally.

At home, hedge funds, structured for sophisticated investors, will be policed by Washington. Mortgage brokers and credit agencies will be heavily regulated. Proposals to nationalize banks and limit executive pay are being considered. The Federal Reserve will have new authority to conduct central planning. In short, the struggling economy gives Democrats the opportunity to super-size the federal government.

Global government is going to get bigger, too. Paul Volcker, one of the President’s key economic advisors, recently released a report through the Group of Thirty calling for a “comprehensive overhaul of the national and international financial systems.” Volcker is making good on Obama’s promise to “retrofit America for a global economy.”

On top of new domestic regulations, Volcker wants “much higher levels of…international policy coordination,” between the Federal Reserve, the Treasury and their foreign counterparts. This is problematic. While the Fed rightly considers foreign market conditions when formulating policy, its role is to provide stability to U.S. monetary and banking systems. Forcing it into a global “all for one, one for all,” mindset will only subordinate U.S. economic interests to that of other nations.

Likewise with the Treasury. There has long been an effort through the Organization for Economic Co-operation and Development (OECD), to “harmonize” tax rates among nations — that is, keep them artificially high. Doing so prevents competition among governments for investment and industry.

Volcker further recommends that “appropriate agencies” in each country “promote implementation and enforcement of international standards.” In the United States, that would include stock exchanges, commodities markets, banks, credit unions, and any number of government regulators — all beholden to laws and regulations written by foreign bureaucrats. Even before the markets crashed in September, the Securities and Exchange Commission was trying to eliminate the time-honored use of Generally Accepted Accounting Principles (GAAP) in favor of international accounting standards for the largest public companies in the U.S.

For private pools of capital — those notorious hedge funds — Mr. Volcker says it is “imperative” to create a “regulatory framework” that is “applied on an internationally consistent basis.” Then he sets that goal for the world financial system as a whole.

“National regulatory authorities and finance ministers,” his report states, “are strongly encouraged to adapt and enhance existing mechanisms for international regulatory and supervisory coordination.” Translation: new global institutions to police the financial markets are about to be created. They will undermine America’s sovereignty and the privacy and security of America’s citizens.

Volcker is not the first to clamor for universal financial policies. His friends at the United Nations exploited September’s stock market crash — which coincided with the opening of the General Assembly — to make their case. French President Nicholas Sarkozy demanded the UN “regulate capitalism.” The Secretary General said that the “global financial crisis” was a “call to collective action.”

This blubbering for a second Bretton Woods will only increase as April’s G-20 summit in London draws closer. Global government is what gives European leaders any relevance, and they are screaming to rebuild the international system.

British Prime Minister Gordon Brown has long wanted an International Finance Facility to administer global welfare, and is still advocating “a framework for the international governance that we currently lack.” His predecessor, Tony Blair insists that “international supervision” of the world’s economy is “unavoidable.” Germany’s Angela Merkel envisions an “Economic Council” in the United Nations which mirrors the Security Council — one that will supervise “an international architecture of institutions.” Now you know why George W. Bush so often ignored European sentiment.

We can’t afford the government we have now. Let’s not create even more through international earmarks and pork projects for Prime Ministers.