News: Analysis & Commentary: ASIAN CRISIS
NOW, THE IMF NEEDS A BAILOUT
Clinton faces a tough fight pulling $18 billion from Congress
Barely two months after a humiliating loss on "fast-track" trade legislation, worried White House staffers see another big global issue in peril on Capitol Hill. This one: a request for $18 billion for the International Monetary Fund, which has been depleted by its Asia bailout. Indeed, a coalition similar to the one that killed the trade bill--the Republican Right, the Democratic Left, environmentalists, human rights activists, and import-sensitive industries--is mobilizing again. The Clinton Administration is "really scared of how this one will come out," confides a Democratic Senate staffer.
True, the White House is bracing for another ugly fight that political observers expect it to lose. But this time the conventional wisdom may be wrong. The main reason: The stakes on resolving the Asia crisis are far higher than in the vote to renew President Clinton's authority to cut trade deals without Hill meddling. Rejecting fast-track was risk-free--no trade pacts were at stake and financial markets shrugged it off. And few voters cared. But with Indonesia, South Korea, and other Asian countries still ailing and possibly in need of more aid, financial markets around the world could sink if Congress refuses to bolster the IMF's reserves.
"SCARY STUFF." The Administration is already using such scare talk. "The alternative of doing nothing will lead to far deeper and far longer financial instability and economic duress," Treasury Secretary Robert E. Rubin warned in a Jan. 21 speech. Adds a Wall Street lobbyist: "This is scary stuff, and there's a lot of fear on the Hill. They're looking for reasons to vote for this."
The Administration is happy to note that organized labor, its most effective foe on fast-track, is not making a major offensive. The unions see merit in a healthy Asia because the region is a customer for U.S. goods. What's more, a sick Asia could threaten U.S. jobs by flooding the world with cheaper exports. Asia's crisis is "serious," acknowledges AFL-CIO President John J. Sweeney. "There's no question what effect it could have on the world economy."
Still, the Administration isn't taking any chances. Although Congress doesn't open for business until Jan. 26, Clinton has already assembled a group of heavy-hitters to lobby lawmakers. Along with Rubin, Secretary of State Madeleine K. Albright and Defense Secretary William S. Cohen have been making the rounds. In addition, Rubin and Federal Reserve Chairman Alan Greenspan will make a strong pitch for IMF funding when they testify before the House Banking Committee on Jan. 30.
REFORM COMING? To improve chances for passage, the White House has quietly signaled that it will shelve plans for a second push on fast-track this spring. And more deals are sure to come, including pork-barrel projects. "This is how we're going to spend the budget surplus," jokes one Administration official.
Clinton may also have to promise something harder to deliver: IMF reform. Many lawmakers want to change the way the IMF disperses loans. Their aim is to make sure the money isn't used primarily to bail out foreign banks and other creditors--as was the case with the 1995 Mexican rescue. "It's difficult to come up with a case for supporting IMF assistance if it goes in a nanosecond to pay off creditors," says Representative John J. LaFalce (D-N.Y.).
Other critics, such as conservative publisher Steve Forbes, contend that the IMF is offering the wrong medicine when it calls for austerity measures, and not stimulus. "When a doctor kills a patient through malpractice, you don't renew his license and raise his pay," says Forbes, a GOP Presidential wannabe, who favors tax cuts to revive the region.
Then there are U.S. companies that fear Asia will export its way out of trouble with a flood of cheap goods. "We're being asked to take our tax dollars and bail them out so they can put us out of business," frets Steven Appleton, CEO of chipmaker Micron Technology Inc. in Boise, Idaho.
The White House is betting that such complaints will be shrugged off in the face of possible global economic chaos without IMF support. When the stakes are raised this high, Congress always comes up with the votes.By Dean Foust, with Richard S. Dunham, in Washington, and Andy Reinhardt in San Mateo, Calif.Return to top