President Reagan, anticipating a close House vote this week on increased U.S. support for the International Monetary Fund, said yesterday that the fund is not a foreign aid "giveaway" but a critical cog in sustaining a worldwide economic recovery that will "keep Americans at work."
The House will vote on whether to add $8.4 billion to the U.S. contribution of $16 billion. Opponents argue that the extra funding for the IMF is a bailout for international banks and would increase the United States' own budget deficit, driving interest rates higher and imperiling the domestic recovery.
But yesterday, in his weekly radio address, Reagan denied increased spending on the IMF would add to the federal budget deficit and said maintaining "international economic stability" is worth the cost. "Some in Congress and a great many citizens think this is a giveaway which will increase our deficit," he said.
"The IMF is not foreign aid, and the $8.4 billion is not being given away . . . . In fact in its entire history the two countries that have borrowed the greatest amounts from the fund have been the United Kingdom and the United States.
"The sum we're asking Congress to approve does not increase our budget and is returned with interest as loans are repaid," he added. "In addition it creates jobs because it keeps the wheels of world commerce turning. Exports account for one out of five manufacturing jobs in the United States. The IMF and its programs help keep Americans at work."
Funding for the IMF, an international agency that lends money to nations with short-term debt problems, is an "off-budget" item and not included in calculations of the federal deficit.
The size of the fund is negotiated by member nations. The United States, which holds about one-fifth of the IMF's voting power, submits a request to Congress to pay for a fifth of the total cost.
Reagan is facing opposition from members of Congress who argue that the increase is really a bailout for major banks that have loaned tens of billions of dollars to countries, such as Brazil and Mexico, that are on the verge of defaulting because of internal economic problems. Opponents contend the banks should lengthen the terms of the loans.
Among conservative opponents of the bill, which passed the Senate in June in a 55-to-34 vote, are Rep. Jack Kemp (R-N.Y.), Rep. Tom Corcoran (R-Ill.) and "Save the Eagle," a group that has paid for advertisements asking citizens to lobby Congress to "stop this big bank bailout."
Liberals' opposition to the bill is couched in the same terms.
"All the money will go in an electronic boomerang from the Congress to Rio de Janerio, Mexico City and other Third World countries back to the New York banks," said Ralph Nader. "There will be no economic growth in those countries; no one will benefit but the big banks. It is just recycling money."
Opponents also point out that Reagan's support for added funding for the IMF puts him in the awkward position of supporting increased spending abroad even as he is advocating cuts in U.S. domestic spending.
And they contend that the conditions the IMF places on its loans, which often include wage controls, reduced imports and decreased food subsidies for the poor, unfairly hamper Third World nations trying to improve living conditions.
"These are the typical contradictions in Reagan's thinking between his ideals and the world of real politics. And here they are on a direct collision course," said Rep. Charles E. Schumer (D-N.Y.). "My basic problem with this and the problem of numerous liberal Democrats in particular is that the present IMF lending plan can be counterproductive because it imposes too much austerity on these countries as a condition for the loan."