As the Greek Debt Crisis continues, President Obama needs to stand firm: American tax dollars should not be used to bail out Greece – or any country – that engages in reckless government spending and deficits. And yet, a bailout paid for by U.S. taxpayers remains a real possibility.
This week, leaders of the European Union will be meeting to consider aid for Greece. But instead of using their own money to bail out Greece, it’s more likely the EU will adopt Germany’s proposal to use money from the International Monetary Fund. That way U.S. taxpayers – not just the European Union – will be on the hook for an international bailout.
U.S. tax dollars already pay for 17% of the IMF’s liquidity. And any bailout by the IMF would have to be approved by the U.S. government. According to the IMF’s rules, major decisions require an 85% supermajority. And the U.S. is the only country with the power to block a supermajority on its own.
Therefore, President Obama has the power to either approve or reject a bailout of Greece. So far, he has been quiet. But instead of waiting while storms gather, the President should be vocal that U.S. taxpayers will not bail out Greece. The European Union may be tempted to pass the buck to the U.S. by requesting IMF “help.” If the Presidents tells them ahead of time that such “help” will not be forthcoming, he will make it more likely that the E.U. will meet its responsibilities.
One note however: While Greece has been fiscally irresponsible, America hasn’t been much better. Greece’s national debt equals 113% of its GDP. By comparison, America’s national debt equals 64% of GDP, although it’s expected to grow to almost 100% in the next 10 years. Do we want to become like Greece? And if we do, who will bail out America? Let’s hope that’s a question we never know the answer to.
In the meantime, let’s be clear: If President Obama is considering bailing out Greece, American taxpayers need to send him a message. And our message is: “Just Say No.”
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