President Reagan delivered a well-deserved kick to Congress yesterday for its recalcitrance in strengthening the International Monetary Fund. Here's one issue that's pretty simple: the president is right and Congress is wrong. Congress, and particularly the House, has allowed itself to be intimidated by a cuckoo alliance of the least reliable elements of right and left, united in a dim populist resentment of the banks and isolationist hostility to the rest of the world.
The rest of the world is currently well represented here in Washington at the annual meetings of the IMF and the World Bank, which Mr. Reagan was addressing. But it would be a great mistake for congressmen to think that the reasons for expanding the IMF's resources are mere sweet charity, to help other countries and to make the United States more popular abroad. The reasons for lending that $8.4 billion to the IMF lie much closer to home, and Mr. Reagan put them well. The basic purpose of a sound financial system is to support trade, and more than 2 million American jobs--one out of every eight jobs in manufacturing--depend directly on U.S. exports.
If the United States defaults on its responsibility, no other country has the economic power to take it up. There would be an imminent threat of the whole financial network's coming unraveled--the "economic nightmare" of which Mr. Reagan spoke. Congressmen might usefully remind themselves that it's not a hypothetical case. It's what happened in the years after 1929.
Congress, in the 1940s, remembered the Depression with bitter clarity and worked strenuously to build the bulwarks against any repetition. The system has worked so well that a later generation's congressmen have forgotten what the danger was. Fortunate lives make short memories. The congressmen of the 1980s--with some notable exceptions--have grown careless. They seem to think that American economic strength is now so great that the country doesn't have to worry about exports, or credit, or the stability of the banking system. But of course that's what the congressmen elected in 1928 thought too.
Mr. Reagan's vigorous endorsement of the IMF-- the "linchpin," he called it yesterday, of the world's financial system--shows a clearer understanding of it than he had three years ago. As a candidate, he was no particular friend of the IMF or the World Bank. But in office, working close to the practical necessities of the moment, he has changed his view. He knows that, without the IMF, Latin America's trade might already have collapsed with terrible repercussions in this country. Upon closer acquaintance he has come to a warmer appreciation of the job that the IMF is doing. It's a message that Congress will ignore only at the country's peril.