THE CONGRESSIONAL struggle over the International Monetary Fund and the bill to strengthen it is not over arcane financial details. It comes down to trade and jobs.
Over the past quarter of a century, the rich industrial countries have built an enormously productive international economy that has raised standards of living dramatically. It depends on trading in very high volumes across national borders, which requires a sturdy, reliable system of financing. The purpose of the IMF is to keep that financial network operating smoothly. But the network is now threatened by enormous debts of several countries that are major customers of American exporters. That is a particularly urgent reason to pass promptly the bill to increase the IMF's resources by $8.4 billion. It passed the Senate last month. It is to come to a vote in the House Thursday.
This $8.5 billion is not foreign aid. It would not be spent. It does not add to the deficit. It would be lent, if needed, and it would earn interest.
Congress has passed similar bills repeatedly over the years, and these bills sometimes become targets for riders to enforce changes on IMF policies. Earlier this year Stephen L. Neal, the chairman of the House subcommittee on trade, added an amendment to prevent the IMF from issuing more special drawing rights without a vote by Congress; the point is that creating those rights can be inflationary. That restriction drew a sharp objection two months ago from Paul Volcker, the chairman of the Federal Reserve Board. In an emergency--a default, for example, by a heavily indebted country--special drawing rights might be essential to stabilizing the world's monetary system, and the IMF would have to move fast. Mr. Neal says that since Mr. Volker wrote his letter the question has moved toward a compromise that will be worked out in the conference on the bill. It will probably call for more consultation with Congress, a reasonable solution.
Mr. Neal is a man who understands the connection between the IMF and American jobs. That description does not apply, unfortunately, to everyone with an amendment to offer.
The opposition to the IMF bill is a mixture of populist right and populist left--people hostile to big banks, people hostile to foreign imports, people hostile to foreign anything. Some of the amendments attempt to loosen the rules for IMF lending to virtuous countries, while other amendments attempt to tighten the rules for the unvirtuous. Anything but a uniform standard would destroy a cooperative international agency like the IMF, but to the authors of these amendments, in their zeal, that is secondary.
The world's monetary system is under strain. The IMF is the central stabilizer, and it needs to be strengthened. The recovery from a worldwide recession may be at stake. A vote against the IMF bill is a vote for economic isolationism. A vote for the bill is a vote for economic growth.