McMorris Rodgers and Pence Oppose Taxpayer-Funded Bailouts for Europe

“Obama Administration Should Take Action to Protect U.S. Tax Dollars”

Washington, DC – Rep. Cathy McMorris Rodgers (R-WA), Vice Chair of the House Republican Conference and Rep. Mike Pence (R-IN), the Conference Chairman, urged their House colleagues today to sign a letter to U.S. Treasury Secretary Timothy Geithner, calling on the Obama Administration to block any American taxpayer-funded bailouts of Greece.  Greece is seeking funding from the International Monetary Fund (IMF), due to the country’s debt, and other European countries, including Portugal and Spain, may soon make similar appeals.

“At a time when America is experiencing its worst economy in 30 years and is burdened by a $1.4 trillion deficit, it is simply unfair—as a matter of principle—to force American taxpayers to use their hard-earned money to prop up failed policies in relatively wealthy nations,” said Reps. McMorris Rodgers and Pence in their letter.

The IMF is expected to provide billions to supplement European Union funds in order to bail out Greece from its ongoing debt crisis and irresponsible spending.  The funding is expected to come from IMF’s pool of New Arrangements to Borrow (NAB), which the U.S. supplemented with $100 billion in the FY 2009 War Funding Supplemental bill.  The legislation was ultimately opposed by Rep. McMorris Rodgers and 201 other Members of the House, in part because of fears that taxpayer dollars would be used to finance an international bailout slush fund.  It now appears that the IMF is on the verge of turning those fears into reality.

“The Obama Administration needs to understand that bailing out Greece will not solve Greece’s problems; it will only create a moral hazard that gets America more involved in the gathering storm of European bailouts,” said Rep. McMorris Rodgers.

“A Greek bailout today will encourage larger countries, such as Spain and Italy – which have similar problems – to get in line for American tax dollars tomorrow and continually delay the fiscal reforms that are necessary for a long-term recovery.”

On March 24, 2010, BigGovernment.com published the Congresswoman’s article, Beware of Greeks Bearing Bailout Plans.  This made Rep. McMorris Rodgers the first Member of Congress to publicly oppose U.S. taxpayer dollars for a European bailout.
A copy of the letter from Chairman Pence and Vice Chair McMorris Rodgers is below.  

April 29, 2010

The Honorable Timothy F. Geithner
United States Secretary of the Treasury
Department of the Treasury 
1500 Pennsylvania Avenue, NW 
Washington, D.C.  20220

Dear Secretary Geithner:

The American people are tired of the bailouts.  After hundreds of billions of dollars in bailouts for financial firms, Fannie Mae and Freddie Mac, and car manufacturers, the American taxpayer is being asked to start down a road that could lead to tens of billions in new bailouts for foreign countries.

According to reports, the International Monetary Fund (IMF) is expected to provide billions to supplement European Union funds in order to bail out Greece from its ongoing debt crisis and irresponsible spending.

The funding is expected to come from IMF’s pool of New Arrangements to Borrow (NAB), which the U.S. supplemented with $100 billion in the FY 2009 War Funding Supplemental bill.  The legislation was ultimately opposed by 202 Members of the House of Representatives, in part because of fears that taxpayer dollars would be used to finance an international bailout slush fund.  It now appears that the IMF is on the verge of turning those fears into reality.

It is unlikely that Greece will be the last major European Union member nation to seek IMF assistance in the near future.  Worries about the impending debt emergencies in not only Greece, but Portugal, Ireland, Italy, and Spain have bogged down European markets.  Now larger European Union economies have pledged to come to the aid of Greece, setting a precedent for more rescues of other debt ridden countries.  What are the criteria for determining whether the U.S. should be obligated to join in these bailout efforts?

While it may be appropriate for the European Union to assist Greece, the U.S. is in the midst of its own debt crisis.  The Congressional Budget Office now predicts that our nation’s debt held by the public will reach an astonishing 90 percent of Gross Domestic Product within ten years.  By comparison, Greece’s current debt to GDP ratio of 112.5 percent has resulted in a lowering of their credit rating to junk status.  Without dramatic spending restraint, the U.S. is on a path toward the same crisis. 

At a time when America is experiencing its worst economy in 30 years and is burdened by a $1.4 trillion deficit, it is simply unfair—as a matter of principle—to force American taxpayers to use their hard-earned money to prop up failed policies in relatively wealthy nations.

We urge the Administration on an ongoing basis to use any existing authority to protect American taxpayers from billions more in bailouts.  Propping up Greece and any other European Union nation that may face a similar crisis in the future should not be the responsibility of our taxpayers.

###

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