White House Tries to Strong Arm Progressive Dems -- We Can't Let That Happen

Here's the lesson I want Rahm Emmanuel and Timothy Geithner to learn. To paraphrase another President from Illinois: you can piss on all of the progressive Democrats some of the time, and some of the progressive Democrats all of the time, but you cannot piss on all of the progressive Democrats, all of the time.

What makes the present situation particularly outrageous is this: the White House and the House leadership now want progressive Democrats in the House to abandon their constituents, their commitments, and their principles and vote for the War/IMF supplemental. But when progressive Democrats tried to have input into the process earlier, they were locked out by the leadership, on orders from the White House and Treasury.

Representative Jim McGovern tried to introduce an amendment on the war supplemental requiring the Pentagon to submit to Congress an exit strategy from Afghanistan. But McGovern's amendment was not even allowed to be considered. As a freestanding bill [H.R.2404], McGovern's amendment has 85 Democratic and Republican co-sponsors.

Representative Maxine Waters and forty other Democrats presented a package of commonsense reforms to U.S. policy at the International Monetary Fund. But they were not allowed by the House leadership to offer any amendments -- that was the whole point of sneaking $108 billion for the IMF into the Senate version of the supplemental -- to evade normal legislative process in the House.

On Thursday, House-Senate conferees made their deal on the war supplemental. They agreed to include Treasury's request for $108 billion dollars for the International Monetary Fund, the bulk of which will almost certainly be used for full bail-outs of European banks from their risky bets in Eastern Europe.

But in the conference report, the House-Senate conferees did not agree to any of the four demands for IMF reform put forward by 41 House Democrats, led by Representative Maxine Waters.

On June 3, 40 other Democrats joined Waters in sending a letter to the House appropriators, asking for IMF reform language to be included in any IMF appropriation.

Specifically, the 41 Democrats asked for:

- language to ensure that the funds allocated by Congress for global stimulus are used for stimulatory, and not contractionary, purposes. [That is, the money should not be used as leverage to demand austerity policies such as government budget cuts and high interest rates.]
- language requiring the U.S. Executive Director to the IMF to ensure that some of the revenue from the planned gold sales and/or other sources of income will be used to provide at least $5 billion in non-debt-creating assistance to the world's poorest countries - either via debt relief or grants.
- language requiring the U.S. Executive Director to the IMF to ensure parliamentary approval of all IMF loans. [So that IMF agreements can't be used to undermine democratic process in recipient countries.]
- language to ensure greater transparency and public availability of documents within a reasonable time period. [So that people can see what government officials - from developed as well as developing countries - are doing in IMF board meetings and in negotiating agreements mandating changes to government policy in recipient countries.]

A summary of the conference report is here. The full conference report is here.

Here's what the summary says about the IMF:

International Monetary Fund (IMF)

1. To enable the IMF to respond to grave threats to the stability of the international monetary system, particularly in developing countries severely impacted by the financial crisis, the bill provides an increase in the U.S. quota in the IMF of roughly 5 billion in Special Drawing Rights valued at about $8 billion. The bill also provides for loans to the IMF, as requested, to enable the U.S. to increase its share of the New Arrangements to Borrow, which establishes a set of credit lines extended to the IMF, from approximately $10 billion (6.6 billion in SDRs) to the equivalent of $100 billion.

2. The bill authorizes the Secretary of the Treasury to agree to the sale of nearly 13 million ounces of IMF gold which will finance an endowment the return on which will fund a portion of IMF administrative expenses and expand the IMF's investment authority. A portion of the sale of gold (at least $4 billion) would also be used to address the short-term financing needs of low-income countries.

As you can see, there is no mention in the summary of policy reforms on ensuring that IMF funds go for stimulus rather than economic contraction, no mention of transparency, no mention of parliamentary approval. [There's no mention of these issues in the full conference report either -- the IMF part starts on page 142.] Regarding low-income countries, the summary refers to "short-term financing," implying loans that would add to poor country debt, rather than debt relief and grants, as 41 Democrats called for in their June 3 letter. Moreover, even this figure is $4 billion, 20% less than called for in the June 3 letter.