Sen. Jim DeMint (R-S.C.) and two House Republicans want European Union countries to pass a credit check before the U.S. offers them loan guarantees.
DeMint, House Republican Conference Chairman Mike Pence of Indiana and Vice Chairwoman Cathy McMorris Rogers of Washington are pushing legislation that would prohibit the International Monetary Fund from drawing down U.S. dollars for loan guarantees to any EU nation until a specific ratio is reached between the receiving nation’s debt and gross domestic product.
Pence, the third-ranking Republican in the House, said the loan guarantees to Greece could leave American taxpayers on the hook for $50 billion. Not only should Congress tighten its belt at home, Pence said, it should also give EU nations “some tough love” to force them to make difficult fiscal decisions too.
“The American people don’t want to see the European Union fail,” Pence said. “But all this European bailout that’s been proposed, all this Greek bailout that’s been implemented will do is postpone the hard decisions that the people of Greece and the people of Portugal and Spain and Italy need to make. The real answer for the fiscal crisis in Europe is the kind of fiscal discipline, tough choices and reform that truly would restore the European economies and restore world markets.”
The legislation would also direct Treasury Secretary Timothy Geithner to oppose any IMF loans until EU nations reach specific debt to GDP ratios.
U.S. financial markets in recent weeks have been rocked on concerns about Greece’s debt. The markets skyrocketed when an agreement to provide monetary assistance was reached, but the Dow has still seesawed as the worries linger about the financial stability.