Later On

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Mark Weisbrot in the Huffington Post:

The Obama administration and House Democratic leadership can’t seem to muscle the votes they need to pass a $108 billion appropriation for the International Monetary Fund (IMF). The stakes are high for both the administration and the world.

The battle is taking place primarily under the radar, with the major media mostly ignoring it, and avoiding the substantive issues in the few reports that have surfaced. The details are very interesting for what they reveal about politics in the United States.

The cast of characters: the U.S. Treasury Department, an opaque institution that is kind of a permanent government; the anti-war movement, which has more clout and representation in Congress than you would know from reading the newspapers; groups concerned about global justice and the IMF’s abuses; the Republican congressional leadership, which hopes to score some political points in opposing the IMF funding; and the various Members of Congress and their personal beliefs and constituencies.

The plot: the Obama administration is trying to get $108 billion for the (IMF) as part of a commitment that President Obama made at the G-20 meeting in April, led by the G-7 (high-income) countries, to raise $500 billion for the IMF from member countries.

But, from the beginning, the administration has faced tremendous obstacles to getting a majority members of the House of Representatives to vote for the money in an up-or-down vote. This is because many members of both parties are afraid that it would be seen as another taxpayer bailout for the financial industry – and foreign banks at that.

Which it appears to be, actually. This unprecedented increase in the Fund’s resources, with a goal of $1 trillion, is vastly higher than anything the institution has ever seen. It happens to coincide with huge expected losses by Western European banks in Eastern Europe, where these banks have at least $1.4 trillion in exposure. To make the issue even more delicate, some of these banks, like France’s Societe Generale, have already received U.S. taxpayer dollars through AIG under the TARP program.

Some of these taxpayer handouts to domestic and foreign financial institutions have been difficult to justify, not least the billions that have ended up as dividends for shareholders or bonuses for executives who helped crash the economy. So it is easy to see why the Administration wanted to avoid an up or down House vote on the IMF money.

This was done by attaching the IMF money to a supplemental war spending bill in the Senate. The House had already passed its war spending bill without the IMF money. But the normal procedure is for the two chambers to reconcile their differences and present a bill – which would presumably include the IMF money – to both Houses, with the idea that "funding for the troops" must be passed.

Enter the anti-war movement: Fifty-one House Democrats had already voted against the war spending when it passed the House. Should they now vote in favor of it in order to give the IMF money? The Democratic leadership says yes, but anti-war Dems are saying no…

Continue reading.

Written by LeisureGuy

14 June 2009 at 7:12 pm

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