jg – July 15, 2009
JULY 15, 2009
Obama's Fiats Anger Lawmakers
Wall St. Journal
By JONATHAN WEISMAN
WASHINGTON -- With $108 billion in International Monetary Fund loan guarantees in jeopardy last month, White House economic officials begged, cajoled and cut deals with Democrats to secure passage of legislation boosting the fund's power. Days later, President Barack Obama announced he wasn't bound by any of the agreements.
The ensuing flap over the president's June 24 signing statement is the latest in a series of clashes between the White House and Congress over an issue Mr. Obama once fought against himself: presidential fiat.
As a candidate, Mr. Obama pledged that he wouldn't abuse the presidential signing statement, a declaration issued by the president when he signs a bill to give his interpretation of that law. President George W. Bush used so many signing statements -- more than 750 -- that the American Bar Association criticized it as an abuse of power.
After Mr. Obama's issuance of his second signing statement last month, even some Democrats say he isn't keeping his word on reining in unilateral presidential actions.
"Of course there's a broader issue here," said House Financial Services Chairman Barney Frank (D., Mass.), referring to the brewing battles with Mr. Obama over presidential prerogative. "It's outrageous. It's exactly what the Bush people did."
A White House official said the signing statement was issued "out of an abundance of caution" to preserve "core presidential prerogatives" in the area of foreign policy. "The administration negotiated in good faith on this bill and has every intention of living up to our commitments undertaken in the legislation," said White House deputy press secretary Jen Psaki.
The House last week reinstated the restrictions on the IMF that were undone by the president's June signing statement, by a vote of 429-2, in a foreign-operations appropriations bill.
In a letter slated for delivery on Wednesday, Mr. Frank, House Appropriations Committee Chairman David Obey (D., Wis.), and New York Democratic Reps. Nita Lowey and Gregory Meeks will inform the president that if he issues another signing statement on IMF and World Bank funding, Congress will cut off the funds he wants.
Mr. Obama needs good relations with congressional Democrats to help pass his agenda on health care, energy and financial-markets regulation.
At the London summit of the Group of 20 largest economic powers in April, Mr. Obama had promised to secure large increases in loan guarantees for the IMF. With the Group of Eight summit kicking off soon, failure to make good on that promise would have been an embarrassment.
Many Republicans opposed the IMF loan-guarantee language, which had been inserted in a war-spending bill making its way through Congress last month, calling it a bailout for international bankers.
The White House needed to win over balking Democrats. Rep. Brad Sherman (D., Calif.), negotiating for some Jewish lawmakers, said he told White House National Economic Council Director Lawrence Summers they needed stronger guarantees that IMF loans wouldn't go to Iran.
Senate Foreign Relations Committee Chairman John Kerry (D., Mass.) and ranking committee Republican Richard Lugar of Indiana said they wanted more transparency from, and oversight over, the World Bank and IMF. Mr. Frank, bargaining for a group of House liberals, wanted assurances that the lenders wouldn't demand that poor governments cut education, environmental and other social programs as a prerequisite to getting emergency loans.
Mr. Frank said his talks with Treasury Secretary Timothy Geithner couldn't be described as negotiations. Mr. Geithner, he said, was begging. He said Treasury assurances that it would accept these restrictions persuaded him to switch his vote, and that he, in turn, won over several other Democrats.
Mr. Kerry's account was similar, saying for the past several months, he had worked with the Senate and Treasury "to encourage financial institutions such as the IMF to become more transparent and accountable."
Mr. Obama's signing statement said the IMF and World Bank provisions "would interfere with my constitutional authority to conduct foreign relations."
Ted Truman, an international economist who recently left the Treasury, said some of the lawmakers' requirements weren't feasible. The U.S. doesn't have the power to block a particular country from obtaining IMF loans, he said. "You either allocate them to everyone or no one. You can't pick and choose."
Mr. Frank has long been angered by the World Bank's "Doing Business" report, which ranks countries according to such measures as the ease of starting businesses and enforcing contracts there. The report ranks Saudi Arabia ahead of Sweden.
Mr. Frank, whose support would be critical if the White House is to win passage of its plan to impose stronger regulation on financial markets, wanted language explicitly saying assistance shouldn't be based on the report's findings. He got it. Mr. Obama negated it.
Write to Jonathan Weisman at firstname.lastname@example.org