That funding for the IMF that's attached to the Senate’s supplemental spending bill is stirring up quite a hornets’ nest in Congress right now and could be dropped from the final bill. Democratic leaders might ultimately find that their best chance to save IMF funding will be to include much-needed reforms in IMF policies.  

Just before the House and Senate adjourned for the Memorial Day recess, the Senate approved emergency funding for the wars in Iraq and Afghanistan. Included was funding to extend the IMF’s line of credit by $108 billion, though the actual outlay for the U.S. is expected to be about $5 billion. Thanks to Sen. Sherrod Brown (D-OH), the IMF funding in the Senate bill contains a provision to roll back harmful IMF policies that place spending caps on health, education and other social safety nets. 

In the House-Senate conference on the supplemental bill, which was scheduled for Thursday, it was hoped that the Brown amendment would not only be preserved, but also strengthened with additional language from concerned members in the House. (More on that in a minute).  

As the conference committee prepared to iron out differences in the two spending bills, however, things got very complicated. House Republicans, led by Minority Leader John Boehner (R-OH)  threatened to vote against the  bill if IMF funding is included. “Let’s be clear: a troop-funding bill should found our troops, period,” Boehner said in an Associated Press article.  

With Democrats possessing a solid majority in the House, such a threat might seem idle, except for one thing: 51 anti-war Democrats voted against the supplemental bill the first time around. Should all Republicans vote against the bill and the 51 renegade Democrats stick with their original vote, the bill would be defeated.  

All this uncertainty prompted leaders on the conference committee to postpone deliberations until next week. They will no doubt want to get a more accurate head count before deciding whether to include IMF funding.  

I spoke to RESULTS’ global legislative director, John Fawcett, about developments this week on the Hill. His sense was that if House Speaker Nancy Pelosi is looking to win back some of those Democrats, her best bet would be to include language in the IMF funding that would bring long-overdue reform to the Fund’s counter-productive policies. Many of the anti-war Democrats who voted against the supplemental bill recently signed a letter, initiated by Rep. Maxine Waters (D-CA), calling on Appropriations leaders to include such language with IMF funding.  

Here’s the proposed language in Rep. Waters’ letter:  

• IMF Policy Approach to Countries in Economic Recession/Depression:

• The Secretary of the Treasury shall instruct the United States Executive Director at the International Monetary Fund to oppose and vote against any loan, project, agreement, memorandum, instrument, plan, or other program of the International Monetary Fund that

• (1) does not exempt increased government spending on health care, education or social safety nets from national budget caps or restraints, hiring or wage bill ceilings, or other limits sought by any international financial institution;
• (2) does not authorize countries to spend all foreign assistance in the year it is received, for the purpose for which it was designated; 
• (3) in case of a country experiencing an economic downturn, does not maintain prior levels of spending on health care, education or social safety nets;
• (4) in case of a country experiencing an economic downturn, includes contractionary conditions, including direct or indirect interest rate increases or other monetary tightening, or government spending cuts or other contractionary fiscal policy, unless the IMF can show quantitatively that such adjustments must begin immediately in order to avoid a more severe adjustment in the future, and cannot be postponed or implemented more gradually.  

The argument that could be made to balking Democrats is this: “The spending bill for Iraq and Afghanistan will be passed one way or another. You have a chance to change IMF policies that bring misery to the poor in developing nations by voting yes to a bill that contains these reform provisions. By voting no, you ultimately get nothing. What’s it going be?”  

Of course, Pelosi and the Democratic leadership would have to come through with the language in Rep. Waters’ letter. It’s the tastiest carrot they have to waive in front of the bucking Democrats. If they don’t, it’s likely that IMF funding will be doomed in this go-around.  

Don't touch that dial, this show just got very interesting.