Governors back IMF expansion

[Robert Weissman <rob@essential.org>]

                                                         Thursday,
February 26, 1998
                         Governors back IMF to
                         protect US economy

                         A National Governors Association meeting OK'd a
resolution
                         urging Congress to adequately fund the agency. 

                         BY ADAM ENTOUS
                         REUTERS

                         WASHINGTON -- Governors of U.S. states joined
President
                         Clinton's drive Tuesday to boost the resources of
the International
                         Monetary Fund amid warnings that Asia's financial
crisis would hit
                         the strong U.S. economy. 

                         The National Governors' Association, meeting in
Washington,
                         unanimously approved a resolution urging Congress
to fund the
                         international lending agency adequately to
stabilize troubled Asian
                         economies. 

                         Top administration officials said Asia's woes
could put the U.S. 
                         economy in jeopardy. 

                         "This (IMF) funding is absolutely necessary,"
White House Budget
                         Director Franklin Raines told the governors. "If
we don't get this
                         through it will have a very serious impact on
every single state that
                         you represent." 

                         Mr. Clinton wants Congress to approve $18 billion
in new money
                         to replenish funds drained by rescue packages
totaling more than
                         $100 billion for Indonesia, South Korea and
Thailand. 

                         The administration has won some support for the
package in the
                         Senate, and has been working with a coalition of
business groups to
                         sway opponents and undecided lawmakers. 

                         The U.S. Chamber of Commerce, America's largest
business
                         federation, plans to send letters to members of
Congress this week
                         urging them to approve the IMF funding. 

                         "It is part of a grass-roots effort to make sure
Congress knows the
                         importance of IMF funding," said Joe Davis, a
spokesman for the
                         chamber. 

                         But conservative and left-leaning lawmakers in
the House of
                         Representatives threaten to scuttle the plan. 

                         At a congressional hearing Tuesday, Timothy
Geithner, assistant
                         Treasury secretary for international affairs,
said estimates that Asia's
                         problems could knock half a percentage point off
U.S. economic
                         growth could prove too optimistic if the crisis
spreads. 

                         He said the bailouts left IMF resources at levels
approaching
                         historical lows. "The risks are truly global in
scale, and despite the
                         strength of our economy, we will not be insulated
from its effects," 
                         Mr. Geithner said. 

                         Federal Reserve Chairman Alan Greenspan also
endorsed the IMF
                         funding package at separate Congressional
hearings. 

                         "If we were to cede our role as a world leader,
or backslide into
                         protectionist policies, we would threaten the
source of much of our
                         own sustained economic growth," Mr. Greenspan
said. 

                         But lawmakers said the IMF package was in
trouble. 

                         "There are several major problems with existing
IMF lending
                         practices," said Rep. Jim Saxton, who chairs the
influential Joint
                         Economic Committee, highlighting a lack of
transparency,
                         excessive taxpayer exposure and subsidized
interest rates. 

                         "These are issues on which reasonable people may
disagree, but
                         they cannot be ignored," the New Jersey
Republican added. 

                         Rep. Bernie Sanders, a Vermont Independent, said,
"Some of us
                         believe that the IMF, by and large, has been a
failure.