Conservatives Oppose IMF Bailout in Europe; Legislation Pressures Treasury to Block Funds

The Washington Times (Washington, DC), May 19, 2010 | Go to article overview

Conservatives Oppose IMF Bailout in Europe; Legislation Pressures Treasury to Block Funds


Byline: Patrice Hill, THE WASHINGTON TIMES

Conservative Republicans are trying to stop the United States from participating in the bailout of overindebted European countries through the International Monetary Fund.

Rep. Mike Pence of Indiana, chairman of the House Republican Conference, is hosting what he calls a Greek forum on ending European bailouts Wednesday on Capitol Hill and has introduced a bill that would require the U.S. Treasury to oppose any further IMF loans to stricken European countries until all European Union members are in compliance with their own constitutional limits on debt - very few of them are.

Sen. Jim DeMint, South Carolina Republican, has introduced companion legislation in the Senate and is considering offering it as an amendment to the financial reform bill pending on the Senate floor.

Just the threat of the legislation, which has populist appeal among tea party groups, prompted Senate Democratic leaders late Monday to agree to a less stringent amendment to the bill that would prohibit the U.S. from participating in bailouts that are not considered likely to be repaid.

That amendment, which passed by a vote of 94-0, requires the International Monetary Fund to certify to the Treasury that it expects its loans in Europe to be repaid. However, Republicans say that amendment gives too much leeway to the IMF to judge as sound loan programs like the one to Greece that many private analysts think eventually will end in default or restructuring of the country's debts.

America isn't even close to getting our own fiscal house in order and this is the worst time to ask taxpayers to borrow more from China to bail out other foreign nations, Mr. DeMint said.

The U.S. debt is equal to nearly 90 percent of our [gross domestic product] today and we need to stop the runaway spending and find a way to pay our own bills instead of bailing out other nations, he said.

The anti-bailout measure, if adopted, has the potential to be disruptive to European and global financial markets, which have continued to gyrate over Europe's burgeoning debt crisis this week but were at least temporarily soothed when the loan package was announced last week. The more limited measure adopted by the Senate sent ripples through the markets Tuesday.

Mr. DeMint said the bill aims simply to hold European governments to their own standards. The treaty that formed the European Union specifies that the gross debt of members should not exceed 60 percent of economic output, but nearly every European country has violated that limit at one time or another and most are in violation of it today. …

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