Legislation Would Block IMF From Using $108 Billion in U.S. Taxpayer Money for Growing Bailouts

Vice Chair Will be on Kudlow Report at 7:30 PM EST Tonight to
Discuss EU Debt Crisis & U.S. Debt Negotiations

Washington, DC – Rep. Cathy McMorris Rodgers (R-WA), Vice Chair of the House Republican Conference, and Sen. Jim DeMint (R-SC) introduced legislation today that would stop the Obama Administration’s costly bailouts of Greece and other European nations.  Since the bailout money is being dispensed through the International Monetary Fund (IMF), their bill would rescind the IMF’s authority to spend up to $108 billion of U.S. taxpayer money which was made available to fund these disastrous bailouts. 

“At a time when the federal government is borrowing $5 billion every day on top of a $14 trillion national debt, I am gravely concerned by America’s growing involvement in the ‘gathering storm’ of European bailouts,” said Rep. McMorris Rodgers.  “The European debt crisis was caused by too much spending and borrowing and that crisis will not be solved by more spending and borrowing.  A ‘Euro-TARP’ is the wrong approach because it's creating a ‘moral hazard’ that will lead to larger counties — particularly Spain and Italy — standing in line for U.S. tax dollars tomorrow.  America should have no part in it.”

“We haven’t even begun to seriously address our own economic difficulties, so it makes no sense to continue bailing out failing European countries,” said Sen. DeMint.  “If we don’t reverse our reckless fiscal course, America will be the one in need of a bailout.  We need to stop the spending, stop the debt, and pass a balanced budget amendment.”

“American taxpayers have seen more bailouts than they can stomach, and the last thing they should have to worry about are their hard-earned tax dollars being used to rescue a foreign government,” said Sen. John Cornyn (R-TX) who introduced the Senate bill with Sen. DeMint.

In 2009, the Democratic Congress approved the Obama Administration’s request to increase U.S. funding to the IMF by $108 billion.  Republicans opposed the measure.  Today’s bill rescinds that authorization, returns any unobligated money to the U.S. General Fund, and specifies that the money be used for deficit reduction.  The House bill number is H.R. 2313.

The European Union charter requires that every EU member have a debt-to-GDP ratio lower than 60 percent and a budget deficit below 3 percent.  Virtually none of the EU members meet that standard. 

Since the European debt crisis broke in early 2010, the IMF has committed $353 billion to bailing out European governments, although most of that money hasn’t been dispensed yet.  The U.S. is the leading funder of the IMF. 

On March 24, 2010, Rep. McMorris Rodgers was the first Member of Congress to publicly oppose U.S. involvement in a European bailout.  Greece became the first country to receive an IMF bailout seven weeks later. 

A full compilation of the Congresswoman’s work on this issue can be found here.