Treasury: No change in position on IMF bailout

The Treasury Department said Friday that the United States has not changed its position on contributing more funds for the International Monetary Fund to bail out Europe, despite comments from Secretary Timothy Geithner Friday that appeared to suggest otherwise.

A shift in position would have caused a head-on collision with congressional Republicans, who oppose using U.S. funds to fight the European financial crisis.

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Geithner, speaking at the World Economic Forum in Davos, Switzerland, appeared to suggest that the United States could support more funds for the IMF — something vigorously opposed by House Republicans — if Europe makes more progress in solving the euro crisis on its own.

The United States wants the European Union to build a “firewall” so that debt problems in troubled nations like Greece cannot infect the entire euro zone and threaten the global economy.

“So if Europe is able to find the political will to build a more effective firewall, then I think you are going to see the IMF and the shareholders of the IMF and the emerging economies very supportive of trying to reinforce those efforts but not as a substitute for a more effective European response,” Geithner said.

This line appeared to call into question the official Treasury position from last week that “we have told our international partners that we have no intention to seek additional resources for the IMF."

A Treasury official told The Hill Friday that there has been no change from the position, however.

The IMF is seeking up to $500 billion in additional funds from its shareholders to respond to the European debt crisis.

On Jan. 25, House Financial Services Committee Chairman Spencer Bachus (R-Ala.) and seven subcommittee chairmen, including presidential candidate Rep. Ron Paul (R-Texas), wrote to Geithner demanding that Treasury officially state that the United States will not support added resources.

“The European Union includes four of the ten wealthiest countries in the world. European counties have the ability to implement austerity measures to reduce their countries’ debt over the long term and they also have the means to restore confidence to the markets,” the letter states.

Geithner at Davos predicted that the U.S. economy would grow between 2 percent and 3 percent this year but said if Europe erupts into a crisis or Iran disrupts Middle East oil, this target might not be met.

Asked if any of the jobs proposals advocated by President Obama in the State of the Union can be passed this year, Geithner noted that the GOP appears more open to infrastructure investment and the payroll tax holiday than in the past. He also said that targeted investment incentives in the tax code have gotten GOP support in the past.

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