Earlier this month, the International Monetary Fund (IMF) and members of the European Union agreed to a $145 billion (110 billion) rescue package for Greece, which has been gripped by economic turmoil and social unrest. Because the United States is the biggest contributor to the IMF, this had led Republicans in Congress to run wild with claims that American taxpayers are bailing out Greece. The GOP has even drafted legislation in an attempt to compel Treasury Secretary Tim Geithner to prevent the IMF from following through on its loan offers.

Over the last two days, a series of Republicans — including House Republican Conference Chairman Mike Pence (R-IN) and Conference Vice Chairwoman Cathy McMorris Rodgers (R-WA) — have gone to the House floor and onto television to condemn the IMF loans in the name of taxpayer protection. Watch a compilation:

First off, the IMF extends loans — not simply lump payments — using a line of credit extended by, among others, the U.S., for which the U.S. receives repayment. To date, no IMF borrower has defaulted on its obligations, so the odds that the U.S. actually loses money are very small. Having a severely weakened European Union — which, counted as a single economy, is the United States’ largest trading partner — would be far worse than extending these loans. Why do we even have the IMF, if not for this express purpose?

Plus, these Republicans refuse to acknowledge that the current mess in Europe is a glaring example of the failure of conservative economics. As my colleague Max Bergmann pointed out, the fiscal response to the economic crisis in Europe has been limited, largely thanks to the economically conservative leadership of Germany, while the European Central Bank “has resisted injecting any life into the broader European economy.” Thus, a problem that should have been headed off was allowed to fester and has now exploded.

Had policymakers in the U.S. followed the fiscal advice of Congressional Republicans — which involved implementing spending freezes of various degrees — the recession would only have been exacerbated and we would be looking much more like Greece. Instead, thanks to the economic stimulus package, the economy is very slowly starting to turn around. To his credit, earlier this year Geithner was urging the IMF to make a loan to Greece, which would have come with a much smaller $40 billion price tag. But Europe dithered, and now finds itself short of options.

Fortunately, the Obama administration doesn’t seem to be taking the GOP’s response seriously at all. Both President Obama and Vice President Joe Biden have offered their support to Europe’s fiscal response. After a meeting with Spanish Prime Minister Jose Luis Rodriguez Zapatero, Biden said that “we agreed on the importance of a resolute European action to strengthen the European economy and to build confidence in the markets. And I conveyed the support of the United States of America toward those efforts.”

When the House of Representatives was debating its financial regulatory reform bill last year, one of the more contentious aspects was to what extent, if any, the bill would preempt state consumer protection laws. Despite a push from the bank-friendly New Democrats, the House bill does not preempt state law, but instead allows states to put in place protections that are stronger than those at the federal level. It forces regulators to examine and preempt state law on a case-by-case basis.

This is an incredibly important distinction. During the buildup of the housing bubble, several states attempted to police predatory subprime lending. However, they were repeatedly preempted by federal bank regulators. In one instance, state regulators in Illinois tried to go after a subprime lending subsidiary of Wells Fargo, but “the company quickly reshuffled its legal paperwork and moved the offending sub-company under its nationally chartered bank,” exempting it from Illinois law.

Sen. Chris Dodd’s (D-CT) financial reform bill, which is currently being debated, adheres to the standard set by the House bill, rolling back preemption and ensuring that states can enforce their own laws. However, a group of “centrist” Democrats — led by Sen. Tom Carper (D-DE) — has offered an amendment giving national banks permanent immunity from state consumer protections.

The history of the economic crisis shows that this would be a big mistake. And in case Carper’s group — which also includes Sens. Mark Warner (D-VA), Tim Johnson (D-SD), Evan Bayh (D-IN), Bob Corker (R-TN), and John Ensign (R-NV) — needs more evidence, it can look at these two studies from the University of North Carolina’s Center for Community Capital

The first found that the presence of an anti-predatory lending laws (APLs) can “reduce the foreclosure rate up to 18 percent.” The second study, meanwhile, looked at states which had laws preempted, finding that “preemption resulted both in deterioration in the quality of and in the increased default risk for mortgages”:

More narrowly, [the results] show that OCC-preempted lenders increased their share of loans originated with risky subprime characteristics. Similarly, they show that loans originated by OCC-preempted lenders were more likely to default in APL states after the OCC preemption. Finally, the results show that in the refinance market the increase in default risk among OCC lenders often outpaced that of independent mortgage companies that remained subject to stronger APLs after 2004.

“Our research confirms that state consumer protection laws work, but that when one group of lenders is handed a regulatory free pass, they are going to take advantage of it,” said Roberto Quercia, the Center for Community Capital’s Director.

Proponents of preemption like to claim that ditching it will do away with 150 years of tradition in U.S. law. But even that claim is wildly inaccurate, as the Conference of State Bank Supervisors (CSBS) has pointed out. “In truth, the Dodd bill’s preemption provisions would instead roll back the abusive preemptive policies first implemented by the OCC in 2003,” the CSBS said. “The actions taken by the OCC since 2003 have enabled our biggest financial institutions to evade accountability at the local level. This is unacceptable and moves our nation closer to a dangerous financial oligopoly. That is clearly not an American tradition.”

When the House of Representatives passed its financial regulatory reform bill last year, it included an independent Consumer Financial Protection Agency (CFPA). However, an amendment to the bill exempted auto dealers from the agency’s authority, despite the unscrupulous lending practices in which auto dealers routinely engage.

Now that the financial reform debate has migrated over to the Senate, a similar effort is underway, led by Sen. Sam Brownback (R-KS), who has offered an amendment exempting auto dealers from the authority of Sen. Chris Dodd’s (D-CT) Bureau of Consumer Financial Protection. But Brownback is facing a powerful counterweight — the military.

In February, the Department of Defense penned a letter to the Treasury Department saying that it “would welcome and encourage CFPA protections…with regard to unscrupulous automobile sales and financing practices”:

We recognize Service members and their families are under increasing stress. When we have asked in surveys about the causes, Service members responded that finances were second only behind work and career concerns…Since auto financing represents the most significant financial obligation for the majority of Service members; particularly in the junior enlisted grades, we believe the intervention of the CFPA in overseeing auto financing and sales for Service members will help protect them and will assist us in reducing the concerns they have over their financial well-being.

The Military Coalition, a consortium of military and veterans’ organizations, has also expressed its opposition to the Brownback amendment, saying that “including the auto dealers’ financing and sales in the financial reform bill will provide greater protections for our service members and their families. Providing a ‘carve out’ for auto dealers does just the opposite.” Indeed, it makes little sense to set up a consumer protection regulator and then wall it off from protecting consumers from a particular financial product, particularly one that has been as abused as auto loans.

As the Cambridge Winter Center for Financial Institutions Policy has pointed out, “auto finance is demonstrably susceptible to unfair and deceptive practices” — including mark ups and a host of fees — “and those practices are demonstrably not held in check by private market forces alone.” The New York Times today profiled one instance of a dealer demanding more fees from a military member whose purchase was already completed, while blocking him into the dealership’s parking lot.

The National Consumer Law Center has also found that auto financiers routinely charge higher markups on loans to minority borrowers. “Analyzing data from all 50 states, the average auto dealer markup for African Americans was $656 compared to $245 for whites,” the Center found. While auto dealers accurately argue that they had nothing to do with the financial crisis, allowing these pernicious practices to continue right under the nose of a new consumer regulator would be highly irresponsible. The House already blew it on this front, but the Senate doesn’t need to follow suit.

A few weeks ago, Sen. Blanche Lincoln (D-AR), who is playing an instrumental role in the financial regulatory reform debate currently going on in the Senate, sought to reassure everyone that one of her other priorities — cutting the estate tax to reduce the tax bill for the heirs of multimillionaires — was still garnering her attention.

And according to Congressional Quarterly, Lincoln and her counterpart on the estate tax, Sen. Jon Kyl (R-AZ), have been hard at work trying to find ways to offset the cost of their huge tax cut for the wealthy, in order to comply with pay-go rules:

Key Senate negotiators are making significant progress toward resolving the tangled legislative mess known as the estate tax. Notably, Finance Committee members Jon Kyl, R-Ariz., and Blanche Lincoln, D-Ark., are finding revenue-raising offsets within the estate tax code to cover the costs of the more generous rate and exemption they want…If they can use estate tax offsets to bridge the estimated $60 billion to $80 billion gap between their proposal and the House-passed bill (HR 4154), Kyl and Lincoln could shield themselves from some class-based arguments about tax fairness.

Kyl announced yesterday that the full proposal is “near completion.”

This strikes me as absolutely crazy. We’re going to find $60-$80 billion in offsets and then spend it to partially cover the cost of a tax cut for the 0.2 percent of households that have to pay any estate tax at all? With unsustainable deficits in the coming years and a series of job creation bills languishing in the Senate (after being passed by the House of Representatives), cutting the estate tax is what Lincoln and Kyl are proposing we spend money on?

Sadly, the Lincoln-Kyl estate tax proposal — which cuts the rate from 45 percent to 35 percent and raises the exemption from $3.5 million to $5 million, compared to 2009 levels — seems to be gaining some steam. Just this week, Senate Budget Committee Chairman Kent Conrad (D-ND) suggested that the Senate make a “grand bargain” by passing a variety of tax measures, including the Lincoln-Kyl estate tax cut, in one huge bill.

It’s quite shocking that there is such a dearth of voices saying that cutting the estate tax now is simply nuts. Last year, taxes in the U.S. were the lowest they’ve been since 1950, while the labor market is still incredibly fragile. Yet, we would waste billions in offsets to cut taxes for those who need it the least, the Paris Hilton’s of the world.

We need to be looking at ways to responsibly raise revenues and find cuts in spending that won’t harm already vulnerable residents, not cut taxes for those at the very top of the income scale. Lt. Gov. Bill Halter (D-AR), who is running in a primary against Lincoln, made this point yesterday. “Folks, we don’t need more tax breaks for people with $10 million in wealth, especially at the expense of debt or deficits on the backs of your children and grandchildren,” he said.