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The Hearing Poll: Should the U.S. Do More to Prop Up the IMF?

This morning, the House subcommittee on international monetary policy and trade (part of the House Financial Services Committee) will hold a hearing on the implications of the Group of 20 summit for low-income countries.

One of the more controversial issues will be whether the United States should provide an additional $100 billion loan to the International Monetary Fund as part of a bigger increase in the IMF’s resources for lending to countries that get into trouble. (Vote on this above, and put your expanded answers in comments.)

The Obama administration says we need to do this, and a broader international deal around these numbers was an important part of the recent G-20 summit, but the idea has hardly been sold more broadly to American voters.

In addition, there will be questions about whether enough is being done by the United States, the IMF and others to help poorer countries. Amar Bhattacharya will be making a strong case for the world’s developing countries. (He helps run the G-24, which is an organization of the less rich.) Nancy Birdsall of the Center for Global Development will be supportive, but – based on past form – she is also likely to press hard for more reform in the governance of the IMF and the World Bank (who is in charge, how money is handed out, how much aid flows to poor countries).

Tim Adams, formerly of the U.S. Treasury (under President George W. Bush), is likely to be more skeptical of the idea that increasing aid flows will stimulate global growth. But he will probably support giving more resources to the IMF – this is an idea that the Bush administration pursued, hesitantly, at least toward the end of its term.

I will also testify, most likely stressing the need to beef up IMF operations. There was an unfortunate and ill-timed reduction in IMF staff about a year ago (just as the global crisis broke).

The staff who were let go need to be replaced; many of them should probably be rehired.

By Simon Johnson  |  May 13, 2009; 6:09 AM ET
Categories:  The Hearing Poll  
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Comments

Enhanced support should be combined with a provision that none of the US funds be used for offshoring. Many Americans have lost their jobs while IMF funds have gone to workers in India. If our taxes are used, our jobs should be protected.

Posted by: gbooksdc | May 13, 2009 9:16 AM | Report abuse

This country needs to look at the way money is spent by the IMF. In the past its funds have been used to enrich multinational corporations rather than to empower poor people to care for themselves. We should be looking at stabilizing the human population both by reducing forced migration and by limiting births. Building more dams or airports does nothing but destabilize the population forcing them to move to cities or to other countries. Our money should be spent to educate people to take care of themselves.

Posted by: AnnZ | May 13, 2009 9:21 AM | Report abuse

The IMF is the champion and the protector of the global market. However, Americans have served as the consumers of last resort for the world. We've largely spurned industrial policy -- other than that associated with the military industrial complex, agribusiness and finance. We've followed -- from Reagan to Rubin -- a high dollar policy that made imported goods a bargain and US exports expensive. We've allowed our global corporations and banks to define our trade policy, while borrowing $2 billion a day to cover record trade deficits. We've assumed that aiding multinationals in the global economy served the national interest. "That is how America became a debtor nation with its steadily weakening industrial base and stagnant wages. That condition became the predicate that led to financial crisis."

Now those days are over. Our trading partners must be put on notice that the old order isn't coming back. The US can no longer afford to borrow unsustainable amounts to buy stuff made abroad with the jobs our companies have moved there. We need to lower the dollar and balance our trade. We need to build things in America once more.

Posted by: strikethree | May 13, 2009 9:29 AM | Report abuse

Why provide such specific reasons the yes and no here?

For instance, I'm arguing that the US should pay in the money to the IMF simply because it agreed to do so. If stability is the goal, then international credibility for the US remains important, even if the IMF money itself is not used effectively.

Posted by: apumich | May 13, 2009 9:54 AM | Report abuse

The question as framed in the pole is far too narrow.

We would better ask, should the US borrow another $100B from the international banksters so they can receive interest from US taxpayers while they exploit the poor in third world countries who bear the costs of these funds the IMF too often passes to their overlords.

It's time to open our eyes and understand that we are being milked like cash cows while we're sheared like sheep by the banking class.

Posted by: ghkirsch | May 13, 2009 10:06 AM | Report abuse

I voted "no" in your poll, but not for the reason listed. The IMF has, for decades, insisted upon regulatory changes in the countries that "benefited" from its "assistance" which we now know have contributed to the global depression. To place more money in the hands of the bandits responsible for our predicament seems rather ludicrously foolish.

Posted by: wtwiner | May 13, 2009 10:13 AM | Report abuse

What's another one billion? Better it go to a struggling economy than a banker or wallstreeter.

P.S.
I do agree with wtwiner, but still, I did vote Yes.

Posted by: vaya | May 13, 2009 11:03 AM | Report abuse

We are broke, in debt to China. I see no reason to go deeper in debt for the IMF. Obama was wrong to promise the money given the financial state of the country. It merely proves that Obama is not as concerned about the welfare of this country as he is concerned about the welfare of the 3rd World Countries. I expect a President to put the US FIRST - NOT LAST. The Third World countries have gotten to used to feeding at the trough of the rest of the world. It is time they started to reduce their population and live with the resources they have and stop demanding handouts.

Posted by: Lavrat2000 | May 13, 2009 12:26 PM | Report abuse

From outside the US, the issue seems to be: "keep paying into the IMF or get bought out". And Obama does not want to get bought out. Even so, the Chinese want to do the buying: they want to IMF to issue bonds, purchasable by Central Banks, with a secondary market, at an interest rate higher than that for US T notes.

US survival (as world powerhouse) is at stake. Today was a big day, no matter which way the decision in Committee went.

Posted by: TomConnelly | May 13, 2009 4:54 PM | Report abuse

We must stop giving our money to the zombie banks, stop borrowing from China. I think we should give money to help world poverty... just not to the IMF. Only the Bechtels and Halliburtons of the world benefit from IMF.

Posted by: kimk2 | May 13, 2009 10:05 PM | Report abuse

I am in full support. This will likely be the best 100 billion we spend in this whole financial crisis. The money will go to good work mitigating things like trade and political collapse around the world. Given the many and growing stresses globally we are wise to help relieve some of the pressure.

Such assistance is also quite clearly the price of leadership, and it is a price that we would be foolish not to pay. If we want to sit at the head of the global table, then we must promote stability in ways just like this IMF injection.

Posted by: econisbio | May 13, 2009 11:22 PM | Report abuse

Funding the IMF is cheap, if not free, for the US since it amounts to a line of credit for which the US is paid interest as it is used. Other IMF member countries recognize that the US Congress could well turn this down, and they won't agree until the Congress acts. Many comments appear to confuse the IMF with the World Bank. The IMF only helps govenrment directly, when they are trying to stabilize their economies.

Posted by: cgardner3 | May 14, 2009 7:28 AM | Report abuse

Let's face it, the world economy is all about illusion. The illusion that people count as individuals with real lives, not just as some robotic consumers who flock wherever commerce sends them. The illusion that wealth is spread out fairly evenly instead of being further concentrated in the hands of the few. And the further illusion that somehow monetary wealth equates worthiness.

If mankind is supposed to be the pinnacle of all life on this earth why can't we get things right?

Posted by: boregush | May 14, 2009 2:33 PM | Report abuse

United States must support international currency for its own welfare. Currency is material representation of people right, of value coming from human desire. If we haven't international currency, we haven't international recognition of foreign value. So international trade and financial commitments are risky. Value sold or bought in dollar by United States is uncertain for the rest of the world, so uncertain for United States. Because dollar is representation of american people rights to value, not of Chinese, Indian, African or European right. Without international currency representing international common right to value, United States cannot measure the real value of its economy. If each person is single all over the world, for the place where it lives, the language it speakes, the people it likes, it is not realistic to make it use a currency of another country in its international relations. That's why American economy became unstable and so on world economy. IMF must become international central bank for international recognition of world common value. That's what Keynes recommended in Bretton Woods.
http://sdujonchay.neufblog.com/Textes/JusticeMonetaireInternationale.html
http://sdujonchay.neufblog.com/Pdf/ReformeFinanceMonnaie.pdf

Posted by: pierresartondujonchay | May 15, 2009 4:18 AM | Report abuse

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