Beware of Greeks bearing requests for bailout money

“American taxpayers should not be forced to bear the risk for nations that have avoided making tough choices.” Congressman Mike Pence (R-IN) 5/13/10

As noted on my post Medusa is alive and well.. from several days ago, the US is already on the hook for $6.8 billion dollars to bailout Greece. We could be subsequently on the hook for $50 billion more to other European countries who can’t manage their euros correctly.

Mike Pence, Chairman of the House Republican Conference, joined Conference Vice-Chair Cathy McMorris Rodgers, Ranking Member of the House Appropriations Committee Rep. Jerry Lewis, Rep. Jeb Hensarling, and Rep. Kay Granger in introducing legislation to stop U.S. tax dollars from being used by the International Monetary Fund (IMF) for bailouts for European countries. Here is Mike on Cavuto discussing the legislation:

The GOP bill aims to ban US tax dollars for European bailouts. Cavuto poses the question: “Mike, in your eyes, is there any one country that is ‘too big to fail’?”

Pence responds: “Yes! The United States of America.”

The FoxNews screen points out the following:

  • Portugal’s deficit reached 9.3% of its GDP last year.
  • France’s deficit is expected to reach 8.2% of GDP in 2010.
  • Spain’s deficit was 11.4% of GDP last year.

Incidentally, the US is the largest contributor to the IMF (International Monetary Fund). Pence states:

We will be Greece at the rate we are spending money.

The European Bailout Protection Act would:

1) Prohibit any funds that have yet to be drawn by the IMF from being used to provide financing to any EU countries until all EU nations are in compliance with the debt to GDP ratio requirement in their own collective growth pact.

2) Require the Treasury Secretary to oppose any IMF loans to EU nations until all EU countries are in compliance with their debt to GDP ratio requirement.

The bill does not permanently prohibit the IMF from lending to these nations; it simply prohibits the U.S. from participating in the proposed European bailout.

In famous Cavuto style, Neil tells Pence to “be careful what you wish for.”

Somehow I think Pence, McMorris-Rodgers and the other Congressmen are right on this one.