The Obama administration’s budgetary Machiavellianism has backfired.
Seeking to avoid a direct up-or-down vote on a proposal to send $108 billion to the International Monetary Fund, the administration, at the last moment, had the money stuck into a supplemental appropriations bill to fund the wars in Iraq and Afghanistan.
That maneuver turned out to be too clever by a turn.
Republicans in the House of Representatives — opposed to the process by which the IMF money was added, frustrated with the IMF unaccountability and critical of international institutions in general — have announced they will oppose the appropriations bill.
Meanwhile, 51 antiwar Democrats in the House voted against the appropriations bill when it was first under consideration, and 41 Democrats (overlapping substantially but not entirely with the 51 antiwar Democrats) have raised concerns about funding the IMF without attaching meaningful conditions.
This unlikely coalition is poised to defeat the supplemental, unless the administration can peel off 18 of the antiwar Democrats to support the bill. The administration may need more than 18 if other Democrats vote against the bill because of the IMF money (this might include Blue Dog Democrats who object to the budgetary impact of the IMF funding and the ways in which the IMF money will aid European banks, as well as progressives).
Defeating the bill will be a meaningful statement against the wars, and against unconditional money for the IMF.
The White House and Congressional leadership are pressuring Progressive Dems to support the supplemental, warning of the cost of dealing a legislative defeat to President Obama. Whether they can stand up to the pressure — and thus the outcome of the supplemental — will depend in significant part on how much the public mobilizes to urge a vote against the wars and the IMF. You can take action through this “Citizen Whip” site maintained by firedoglake.com.
Emanuel of course wields enormous power, but his arguments are misplaced. A defeat on the supplemental will be self-inflicted, not the work of progressives unsympathetic to the president.
If the administration and House leadership are unable to garner sufficient votes to pass the supplemental, they can pull the IMF funding. Republicans will support a war-only bill. But antiwar forces will have shown their seriousness and power.
And, the administration can seek funding for the IMF later this year, hopefully moving through normal legislative procedures. That would enable a legitimate debate over the merits of IMF funding. Critics would raise concerns that the money will be used to bail out European banks that lent recklessly in Eastern Europe. Appropriations Committee Chair David Obey has highlighted this issue, and noted the incongruity of aiding the European banks while Europe refuses to employ the stimulative measures adopted by the United States and China, among others.
Critics would also focus on the contractionary policies — primarily reduced government spending and higher interest rates — that the IMF is imposing on borrowing countries hit by a global financial crisis not of their making. These policies are the opposite of the stimulative policies that the IMF recommends for rich countries, and directly contrary to the global stimulus that was the rationale for the decision of the G-20 (the world’s most economically powerful countries) to increase IMF resources by $750 billion.
On the ground in borrowing countries, these policies deepen the harmful impact of the economic crisis, and translate into serious human depredations. Less money is available for health, education and other key government programs; unemployment skyrockets; and families struggle to subsist.
The IMF’s favored contractionary policies also conflict with the economic logic of providing loans in the context of an economic crisis. “The main purpose of providing balance of payments support to a developing country in a time of recession or approaching recession is to enable the government to pursue the expansionary fiscal and monetary policies necessary to stabilize the economy,” explains the Center for Economic and Policy Research in a recent paper.
To be clear, the IMF has a response to these arguments: It says it has changed, and is much more reticent about demanding borrowing countries adopt contractionary policies than it once was. And, it says it aims to protect social spending in crisis-affected countries.
And, if the IMF takes the position that it only imposes contractionary policies when absolutely necessary, then it should be receptive to the top-line requests from IMF campaigners. These include demands that no contractionary conditions be included in IMF programs absent a quantitative showing that such conditions are necessary and cannot be delayed, and that health and education spending be exempted from IMF-mandated budget restraints.