Friday, May 21, 2010

Pence predicts EU bailout will cost U.S. an additional $50 billion

LTC Robert "Buzz" Patterson
Chris Dickson

By Jay Heflin - THE HILL

House Republican Conference Chairman Mike Pence (Ind.) predicts bailout efforts taking place in Europe could eventually cost U.S. taxpayers an additional $50 billion.

"If the European Union-wide bailout plan goes forward, American taxpayers could be on the hook for an additional $50 billion," he said Wednesday. "At a time of record unemployment in the United States of America, at a time of record deficits and debt, the American people should not be put on the hook to be bailing out the fiscal recklessness in Europe."

The United States is already on tap to pay roughly $7 billion of the $39 billion the International Monetary Fund (IMF) has pledged to help bail out Greece. The country will receive a total of $145 billion in loan guarantees from the IMF and the 15 nations that compose the European Union (EU).

Since Greece, other EU countries have come forward needing loan guarantees. The IMF and the EU are now looking at a $1 trillion bailout to handle these claims, an effort in which the United States would be a participant.

Republicans contend Congress will have to borrow the money to pay its share of the bailout.

"We should not be borrowing money from the Chinese to bail out Greece, and if you connect the dots we are precariously close to doing just that," said Rep. Jeb Hensarling (R-Texas). "We can't even afford the bailouts in America, much less the bailouts in Europe. What's next? Intergalactic bailouts?"

House Republicans have devised the European Bailout Protection Act, a bill that prohibits any funds that have been drawn by the IMF from financing a European Union bailout until all EU nations are in compliance with their debt-to-GDP-ration requirement. It also requires the Treasury secretary to oppose any IMF loans until all EU countries abide by that ratio.

Under these requirements, the United States would be prohibited from participating in the bailouts recently proposed by the EU.

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