The European Bailout Protection Act: A bill to protect U.S. taxpayers

Imagine the federal government was starting a bailout larger than the one we did for General Motors last year – about $50 billion – and yet there was no debate in Congress and the President never made a public statement about what he was doing with the taxpayers’ money and why he needed it.

Right now, the Obama Administration has committed tens of billions of American tax dollars to bailing out European governments whose failed socialist policies have become too exorbitant to pay. Former British Prime Minister Margaret Thatcher once said, “The problem with socialism is that you eventually run out of other people’s money.” Unfortunately, the Europeans have run out of money, but that hasn’t stopped them from collectively turning their eyes to the United States. And yet, at a time when America is running a $1.4 trillion deficit and accumulating a $13 trillion debt, one would think our government would respectively ask the EU to solve their problems without using U.S. tax money. Unfortunately, rather than stand up for American taxpayers, President Obama and Treasury Secretary Geithner have been working behind the scenes to facilitate a bailout of first, Greece, and then the entire European Union.

The cost of that bailout is increasing week-by-week. We know it’s at least $50 billion. But a few days ago, a key leader at the International Monetary Fund suggested it could be much higher than that. On June 4, the chairman of the IMF’s policy committee, Youssef Boutros-Ghali, said the IMF’s financial reserves would have to rise “very significantly” in the wake of the IMF’s $335 billion commitment to bailout Greece and the European Union. "If we are going to start including funds made available to Europe, then the IMF is not properly resourced," said Mr. Boutros-Ghali, while adding that IMF members were talking of doubling the amount of Special Drawing Rights (SDRs). In 2009, the IMF increased its SDR allocation from $34 billion to $318 billion. To help facilitate this process, the U.S. Congress – over the objection of most House Republicans – increased America’s commitment to the IMF by $100 billion. If the SDR allocation needs to be doubled – as Mr. Boutros-Ghali claims – that would mean U.S. taxpayers would probably be on the hook for an additional $100 billion, if not more.

This is very troubling to say the least. On May 8, Rep. Mike Pence (R-IN) and I wrote a letter to Secretary Geithner warning that U.S. participation in the Greek bailout would lead to a “gathering storm of European bailouts.” That happened a few days later. But in his May 21 response, Secretary Geithner wrote, “An IMF role in Europe’s stabilization efforts would help Europe’s and the world’s economic recoveries stay on track – at no cost to U.S. taxpayers.” In light of last week’s comments by Mr. Boutros-Ghali, it seems even the IMF acknowledges the cost will be very high indeed.

In response, Rep. Pence and I have introduced The European Bailout Protection Act. Our bill would protect U.S. taxpayers from becoming more involved in a “Euro-TARP” by requiring the EU nations to meet the fiscal requirements mandated by their own treaty before they can withdraw U.S.-provided bailout funds.

I’ve also introduced a Congressional resolution to oppose the use of U.S. tax dollars toward a European bailout. Should Congress approve our resolution, it would send a powerful message to President Obama that we cannot take this “too big to fail” philosophy to a global level. The only thing “too big to fail” is America itself.

I encourage my House colleagues to sign onto these bills. And I hope the American people will stay informed on this fast-changing, yet critical issue.

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