IMF Funding Under Attack, But It’s Safe for Now

Friday’s Hill article that Senator Tom Coburn (R-OK) was planning an amendment to direct the U.S. to vote against any IMF bailouts became a hot topic of conversation among international investors despite Coburn’s admission that his amendment had little chance of enactment. On June 29, 2011, on a 44-55 vote, the Senate rejected Senator Jim DeMint’s (R-NC) amendment No. 501 to rescind the U.S.’s $100 billion line of credit to the International Monetary Fund to keep it from being used to bail out European Union countries. In late July, the House Appropriations State Foreign Operations Subcommittee approved same rescission, but it hasn’t moved beyond there. It may resurface in the omnibus appropriation to fund the government beyond December 16.

On June 24, 2009, when President Obama signed the supplemental appropriation establishing the U.S.’s $100 billion IMF line of credit, he asserted Congress has no authority to tell him how to vote at the IMF in this signing statement. That was after White House officials begged and promised their way to getting that line of credit and quickly repudiated those promises in the signing statement as recounted in this Wall Street Journal article. No wonder Mr. Obama ducked calls for additional funding for the IMF at last month’s G-20 summit in Cannes, France because that would require congressional approval, which it would be difficult to get. So there’s little chance of rescinding that $100 billion IMF line of credit before 2013, but that could change quickly if the Republicans win the White House and majorities in both houses of Congress in the 2012 election.

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