[Guest post by Jarad Vary]
Any time you hear about a sensible idea to help keep the world economy afloat, you can bet on two things: First, Mitt Romney will probably give it a tepid thumbs up. Second, Republican lawmakers will make him sorry he did.
After all-night negotiations in Brussels, this morning International Monetary Fund chief Christine Lagarde made an encouraging announcement: EU countries had promised $267 billion to boost the Fund’s lending capacity. This European commitment satisfies world leaders’ expectations that the EU do more to help itself, and makes it much more likely that the Fund will commit some of its existing $390 billion to halt Europe’s spiraling debt crisis.
This is good news for European stability and the U.S. Economy. Unsurprisingly, Republican lawmakers are skeptical. In an op-ed in today’s Wall Street Journal, GOP Senator Jim DeMint warns that any IMF rescue of “Europe’s socialized economy” is a mistake, which will leave “US taxpayers” on the hook. Earlier this year, forty-four senators voted for a failed DeMint-led effort to limit IMF lending. DeMint promises to reintroduce his legislation.
But the Fund is the most credible lender on the planet. It always gets paid back. I asked former top Treasury official Ted Truman if the U.S. might lose money on an IMF bailout of Europe. “No chance,” he told me bluntly. But to the GOP, a bailout is a bailout is a bailout.
As a result, the news from Europe today puts Romney in a tight spot. As recently as November 9 at the CNBC debate in Rochester, Michigan, he endorsed an IMF role in solving the European debt crisis. “I’m happy to continue to participate in world efforts like the World Bank and the IMF,” Romney said, adding that he did not support “a TARP-like program to try and save U.S. banks that have Italian debt.”
Romney’s debate answer is just the latest in a string of carefully weighed and politically unfortunate statements about the financial crises. These prescriptions have energized the radical right—but not in the way Romney may have hoped. In October, Ron Paul produced an ad criticizing Romney’s tepid endorsement of stimulus measures. And last month, Rick Perry ran a 2008 clip of Romney calling TARP “something we have to do at this stage.”
It remains to be seen how much being out of step with his own party—even with a flimsy endorsement of a good idea like an IMF intervention in Europe—will hurt Romney’s campaign.