The House Needs to Keep the U.S. Promise to the IMF
NOT LONG AGO, the International Monetary Fund looked very much like an institution without a mission. Then came the global financial crisis, and a series of countries around the world found themselves flirting with national bankruptcy. The potential ripple effect for the world economy was grave, and the IMF's available resources looked too small to meet the challenge. At a meeting of the Group of Eight countries on April 2, President Obama joined other leaders in pledging to triple IMF funds to $750 billion, including $100 billion in new U.S. money.
To speed the fulfillment of his promise, Mr. Obama attached his request for IMF money, which is not a cash outlay but a line of credit, to a supplemental appropriations bill for operations in Iraq and Afghanistan. The Senate has approved it, but the House is balking. At a time when many Americans are losing their jobs, the IMF is vulnerable to populist attack. Republicans have denounced the president's proposal as a "global bailout" and spread the canard that the IMF helps regimes that support terrorism. Yet the aid is also opposed by 41 liberal Democrats, who want the United States to oppose IMF loans that force countries to cut spending or raise interest rates.
These are old arguments; the fact that support for the IMF helps purchase a public good -- global financial stability -- gets less frequent mention. As the administration has argued, IMF support does not add to the projected budget deficit because it is more like a revolving loan than an expenditure. President Obama has correctly observed that "other countries are looking to the United States to deliver on our commitment"; Congress should not undermine him.