Hullabaloo

Friday, June 12, 2009

 
Underground Drama

by digby

For some reason, the mainstream media don't seem to realize this is even happening:

The Obama administration and House Democratic leadership can't seem to muscle the votes they need to pass a $108 billion appropriation for the International Monetary Fund (IMF). The stakes are high for both the administration and the world.

The battle is taking place primarily under the radar, with the major media mostly ignoring it, and avoiding the substantive issues in the few reports that have surfaced. The details are very interesting for what they reveal about politics in the United States.

The cast of characters: the U.S. Treasury Department, an opaque institution that is kind of a permanent government; the anti-war movement, which has more clout and representation in Congress than you would know from reading the newspapers; groups concerned about global justice and the IMF's abuses; the Republican congressional leadership, which hopes to score some political points in opposing the IMF funding; and the various Members of Congress and their personal beliefs and constituencies.

The plot: the Obama administration is trying to get $108 billion for the (IMF) as part of a commitment that President Obama made at the G-20 meeting in April, led by the G-7 (high-income) countries, to raise $500 billion for the IMF from member countries.

But, from the beginning, the administration has faced tremendous obstacles to getting a majority members of the House of Representatives to vote for the money in an up-or-down vote. This is because many members of both parties are afraid that it would be seen as another taxpayer bailout for the financial industry - and foreign banks at that.

Which it appears to be, actually. This unprecedented increase in the Fund's resources, with a goal of $1 trillion, is vastly higher than anything the institution has ever seen. It happens to coincide with huge expected losses by Western European banks in Eastern Europe, where these banks have at least $1.4 trillion in exposure. To make the issue even more delicate, some of these banks, like France's Societe Generale, have already received U.S. taxpayer dollars through AIG under the TARP program.

Some of these taxpayer handouts to domestic and foreign financial institutions have been difficult to justify, not least the billions that have ended up as dividends for shareholders or bonuses for executives who helped crash the economy. So it is easy to see why the Administration wanted to avoid an up or down House vote on the IMF money.

This was done by attaching the IMF money to a supplemental war spending bill in the Senate.

It goes on to discuss the recalcitrance among anti-war members in the House along with those Democrats who are properly skeptical of the IMF in general and who recognize that these bailouts have become politically toxic. Which brings us to the Republicans:

Now come the Republicans, who supplied 168 votes for the war spending in the House. If you attach the IMF money, they say, we will vote against it this time. "Against funding for the troops?" asks the Democratic leadership, daring them. That's right, say the Republicans, unless you put the IMF money to a separate vote.

Interestingly, the Republicans are not trying very hard to get the IMF money removed. They are not saying anything on television or in the media. This indicates that they may want this money to pass with only Democratic votes, so that they can attack the Dems - especially those in conservative districts - when the money ends up bailing out the European banks in Eastern Europe.

So far, the Administration has failed to peel off enough anti-war or pro-social-justice Democrats to get a majority for a bill which includes IMF money.

This story is being ignored because I assume the mainstream media believes the administration will ultimately get its way and pass the supplemental with the IMF money attached. But it's just possible that it won't. And the Democrats who stand in the way will be doing the party a great favor politically. These continued giveaways to wealthy, elite institutions are political poison, which is why the Republicans are positioning themselves (completely disingenuously) on the other side of the big money boyz.


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digby 6/12/2009 11:30:00 AM |