April 24, 1978
Page 11149
Mr. HARRY F. BYRD, JR. Mr. President, may I ask several questions, after which I shall probably call up an amendment.
I ask the Senator from Oklahoma, and it has nothing to do with the amendment I plan to call up, to look at page 2 of the legislation, line 22, the international affairs item. In most of these items, the new budget authority figure and the outlay figure are roughly the same. There is not a great deal of difference between them.
Mr: BELLMON. Is the Senator referring to the committee report?
Mr. HARRY F. BYRD, JR. No, I am referring to page 2 of the printed concurrent resolution.
Mr. BELLMON. I believe I am with you.
Mr. HARRY F. BYRD, JR. In most of the items listed in the concurrent resolution, there is not a great deal of difference between the new budget authority and the outlays. There is some difference, but not a tremendous difference. But in the international affairs section, we find that the new budget authority is $12,800 million, with the outlays being $7,200 million. That is a 70 percent difference. I am wondering why there would be such a large differential between outlays and new budget authority.
Mr. BELLMON. Mr. President, it probably would be well for someone who is a little more expert in the international category than I am to respond fully, but I can say part of that discrepancy is due to the fact that we are making provision here for establishing this new so-called Witteveen Facility. This international monetary program will help governments with balance-of-payments problems and to support their currencies. That amounts to $1.8 billion in budget authority. We will soon have a chance to debate and vote on an authorization bill recommended by the Senate Foreign Relations and Banking Committees.
In addition, there is a provision for adding to the loan authority of some of the international development banking establishments. Just part of that loan authority will be used in 1 year.
I believe the answer to the question is primarily in those two areas. If the Senator would like, I shall be glad to provide a breakdown of just where this is.
Mr. HARRY F. BYRD, JR. This budget resolution, then, envisions a very large increase in authorizations and appropriations for the international banking institutions, I take it.
Mr. BELLMON. Our chairman has come back. He may want to respond more fully.
I think the answer to the question is that it is not necessarily a large expansion so much as in the budget authority figure making provision for future year use of the funds which, in many cases, is not necessarily expansion, the size of the program, but that the past money has now run out.
Mr. HARRY F. BYRD, JR. In any case, those additional tax funds would be used for that purpose.
Mr. BELLMON. That Senator is correct.
This is, of course, all tax money.
Mr. HARRY F. BYRD, JR. I am wondering whether the Congress is justified in such tremendous increases as proposed by this resolution for these international financial institutions.
The foreign aid program already is tremendously high. Yet, this budget resolution would provide huge additional sums to the international institutions over and beyond the economic aid that will be provided in other areas of the budget.
Does not the committee feel that this is an unusually heavy increase? And why should we be increasing these international financial institutions to the extent that we are?
Mr. MUSKIE. Mr. President, I am sorry I was not on the floor when the Senator raised his question. I will try to respond.
Mr. HARRY F. BYRD, JR. Does the Senator want me to go over the background again?
Mr. MUSKIE. Let me make two points, and then, if I have not covered the Senator's question adequately, I will be glad to have him repeat his question and I will respond.
There are several major elements in the international affairs function which has raised the level of budget authority for fiscal 1979. One is the so-called Witteveen facility created to help countries with balance-of-payment problems generated by the five-fold increase in energy costs and the imbalance in their foreign exchange which resulted.
The administration asked that our contribution be funded off-budget. The Foreign Relations Committee also supported off-budget funding.
If we kept it off, the $1.8 billion would not be here at all. We would not see it. The Budget Committee pinpointed that program and voted to put it on-budget in fiscal year 1979. It was argued, pursuant to the Budget Act and our constitutional responsibilities to share in policy decision making, that when we undertake diplomatic and financial responsibilities of that kind, we ought to put them on the budget.
In times past, this kind of national effort would not be on-budget and not in these numbers. So that makes the function larger by that amount.
Second, our contributions to international financial institutions is increasing. We did not recommend 100 percent funding at the President's requested level. Instead we recommended 90 percent funding of these obligations. In addition, there were arrearages of contributions due but several years delayed to the World Bank group, the Inter-American Development Bank, and the Asian Development Bank. As long as there were commitments, the committee voted to meet them.
Mr. HARRY F. BYRD, JR. Commitments by whom? Not by the Congress.
Mr. MUSKIE. Yes. Commitments in the sense the United States is a vital part of these institutions and members in them. This country made agreements with the other members of the banks as to the funding levels and we have not met those.
Mr. HARRY F. BYRD, JR. Is the Senator from Maine saying that the Congress has an obligation to appropriate whatever funds the representatives of that Government agree to with other countries as to what they will get?
Mr. MUSKIE. These agreements were made by the previous administration.
Mr. HARRY F. BYRD, JR. Regardless of what administration, they cannot bind Congress, as I understand it.
Mr. MUSKIE. In the literal sense of the word, that is true.
Mr. HARRY F. BYRD, JR. Does the Senator believe it is a moral obligation to accept whatever
Mr. McNamara says we ought to put up?
Mr. MUSKIE. No, I suppose not.
It is true we are members in these international financial institutions and that membership has been recognized in the past by the Congress. And the Presidents — using the plural — have undertaken to represent us and enter into those agreements with other countries that are essential if the institutions are to operate.
We have tried to take the leadership in these institutions in order to be of assistance to developing countries, to support export growth in various countries, as well as our own. Strengthening the economies of the so-called middle-income countries, I might add the fastest growing market for American products, is helpful on both sides of the equation. These international development institutions have served a useful purpose.
Mr. HARRY F. BYRD, JR. I am not suggesting they have not, in some cases, served a useful purpose. I am concerned as to whether, No. 1, Congress has any obligation whatever to accept whatever figure Mr. McNamara, or somebody else in one of these organizations, says it ought to be.
Mr. MUSKIE. Congress has no obligation to support any part of this budget, whether it is a foreign affairs function, or the defense function, or any of the domestic functions. The Congress, of course, in the literal sense, makes its own commitment. I suppose we could even ignore the social security laws, if we wished.
Mr. HARRY F. BYRD, JR. Oh, no. It has nothing to do with that. That statement was prompted, I might say to my friend from Maine, by the statement—
Mr. MUSKIE. But the Senator is asking me, cannot Congress ignore these commitments? Of course, it can.
Mr. HARRY F. BYRD, JR. That was not what I was asking. What I am asking—
Mr. MUSKIE. The Senator asked if just because President Ford entered into these agreements, whether Congress is obligated to meet the commitments. I am answering the Senator in the way I thought he wanted me to. Of course, we are not obligated.
Mr. HARRY F. BYRD, JR. It is not President Ford, and it makes no difference to me which President it was.
Mr. MUSKIE. The particular obligations to which I am referring were negotiated by him, and I am trying to give the Senator the origins.
Mr. HARRY F. BYRD, JR. I thought they were negotiated by the international banking institutions.
Mr. MUSKIE. The United States is a member of several of these institutions.
Mr. HARRY F. BYRD, JR. I understand.
Mr. MUSKIE. And, as a member, we are part of the negotiation which establishes the funding shares of the various member countries, and other countries have met the commitments they made under those agreements. We have not with respect to the $350 million of arrearages and it is now proposed we meet them.
If Congress does not want to meet them, that is its prerogative in our form of equal and separate branches of Government.
Mr. HARRY F. BYRD, JR. May I ask the Senator, what is $350 million we did not meet?
Mr. BELLMON. Will the Senator yieldfor one comment? .
Mr. HARRY F. BYRD, JR. Yes, I yield.
Mr. BELLMON. If the Senator from Virginia will look on page 67 of the report, there is a table at the bottom of the page that discusses foreign military assistance and sales. He will notice that of the, roughly, $5.6 billion of budget authority over outlays, that $2.4 of that is intended to cover the foreign military assistance and sales.
So, about half of the figure that concerns the Senator from Virginia I think is explained by the fact that we are trying to make provision for the recommended increase in military sales that President Carter has suggested.
Mr. HARRY F. BYRD, JR. That is thefirst time I heard of the military sales being involved in this particular item.
Mr. BELLMON. This function does cover the foreign military assistance and credit sales.
But I am concerned, as the Senator from Virginia is, that that does seem to be a large chunk. But I believe this explains about half of it.
Mr. HARRY F. BYRD, JR. I thank theSenator from Oklahoma.
Mr. BELLMON. I might point out that this is a jump over 1978, but in 1975 and 1976 we have been at that level in the past. There has been a reduction in recent years, because grant military assistance have been down.
Mr. HARRY F'. BYRD, JR. I thank the Senator.
Mr. MUSKIE. We are concerned here with three banking institutions, the World Bank, the Inter-American Development Bank, and the Asian Development Bank. Moneys were all authorized. They have not been fully appropriated, and that is what the arrearages are.
Mr. HARRY F. BYRD, JR. Will the Senator mention all the figures as to what this $350 million in arrearages is?
Mr. MUSKIE. These three banks.
I wish to correct a statement I made earlier. The $350 million does not fully meet the arrearages. The arrearages, as of now, are $834.7 million for the various international development banks.
Mr. HARRY F. BYRD, JR. Those are arrearages from the figures sought by the banks?
Mr. MUSKIE. They are arrearages from the commitments the U.S. Government has made with other countries as our share of funding levels for these financial institutions.
Mr. HARRY F. BYRD, JR. Is it not appropriate for Congress to review those figures and reduce those figures if it feels that the figures are too high?
Mr. MUSKIE. This, of course, is what has happened. This is why there are arrearages of $834.7 million.
Mr. HARRY F. BYRD, JR. Let me see if I understand the Senator. The Senator says that Congress in the past has refused to.approve those arrearages. Now we want to come back in this and give up the arrearages.
Mr. MUSKIE. We are not picking up all the arrearages: There are arrearages totaling $734.7 million, and what is included in this resolution is $350 million.
Mr. HARRY F. BYRD, JR. The resolution proposes, then, to pick up $350 million of what these international institutions previously sought but were not granted by Congress. Is that it?
Mr. MUSKIE. Let me see if I can state it in another way.
We have entered into agreements with other member countries in the past for funding shares — shares of funding levels — and we have not fully met ours. It is not a case in which each year there is a formal request from the bank to us. The fact is that we have made a commitment.
Mr. HARRY F. BYRD, JR. It has been each year for the last 10 years or 12 years. Each year, the banks have come in for a replenishment. We just had afourth replenishment last year for one of these banks.
Mr. MUSKIE. There is a distinction between replenishments and arrearages.
I have a statement from the Treasury on this arrearage problem, which I will have printed in the RECORD, but I will read part of it:
As part of the FY 1979 foreign assistance appropriations request the Administration is requesting appropriations for $834.7 million—
That is the figures I gave the Senator:
— in unfunded past pledges for the international development banks. This consists of $375 million for IDA, IV, $139 million for the Inter-American Development Bank's capital, $125.3 million for the IDB/FSO—
That is the soft loan program of the Inter-American Development Bank:
— $35.6 million for the Asian Development Bank's capital, $10.5 million for the Asian Development Fund, $143 million for the IBRD and $6.6 million for the International Finance Corporation.
These amounts are needed by the banks to continue effective operations. In the case of IDA, all contributor countries to the fourth replenishment other than the United States have made their full contributions available for drawdown when necessary. By the end of FY 1979, IDA will need approximately $340 million for disbursements from the $750 million we are requesting.
The remainder will be drawn down, as needed, during the following three fiscal years.
In the case of the IDB U.S. failure to provide the amounts previously pledged would cause serious and immediate consequences. The 1978 foreign exchange lending program calls for loans totaling $780 million.in the FSO and $930 million in the capital window. Presently FSO availability in convertible currencies — approximately $200 million — will be exhausted by about June 1978. Similarly, with regard to the hard capital window, present availabilities of $280 million will permit normal lending only through about May of this year. After these dates, no loans could be formally approved until further funds are received; all approvals would have to be on a contingent basis. In neither window would there be any reasons to expect action by other donors to offset the U.S. shortfall. To the contrary, the prospects for replenishment, on which calendar 1979 operations depend, will further deteriorate without U.S. action on the shortfalls.
Moreover, our shortfall blocks the use of contributions already made by other member countries by virtue of a charter provision which provides that the U.S. share of capital cannot be less than 34.5%. This provision was inserted at U.S. insistence to maintain our veto power in the FSO. The contributions of others, which are now ready to be subscribed, can be accepted only if we either make good on past pledges or give up the veto.
In the case of the ADB, these funds are needed to regain our parity in voting power with Japan. This parity has been our aim from the beginning of the Bank in 1966. When the second general capital increase became effective on September 30, 1977, our voting strength fell to 8.6 percent, considerably less than that of Japan. If we are to maintain our influence on important policy matters in the ADB, these funds must be appropriated as soon as possible.
The threat posed by the funds cut last year for the IBRD is in the reaction of other donors. The internationally agreed U.S. share of the Selective Capital Increase now in progress is only 19 percent — a lower share than many other donors find warranted by U.S. economic size and strength. When the U.S. reaches an agreement with other donors and then, after other contributions are fixed, further cuts its share, the credibility of the U.S. in subsequent negotiations is seriously eroded. Other donors may then try to drive up the U.S. share by curtailing their own contributions in the expectation that it will subsequently be cut by Congress.
Mr. HARRY F. BYRD, JR. I think it is very desirable to have in the RECORD the figures to which the Senator referred.
Mr. MUSKIE. May I add this, for the Senator's information:
During the course of the Budget Committee's consideration of this item, Members were interested in knowing what the rock-bottom figure on meeting arrearages would be, in terms of the obligations of the banks.
I discussed the matter with Secretary Blumenthal; and after some discussion, he said that he thought they could get by with half of the $834.7 million in fiscal 1979. We provided something less than that. We provided $350 million. The Secretary said he hoped Congress would appropriate the remainder in fiscal 1980.
As the Senator will recall from my reading of this document, some of the requirements would fall in the second and third year from now, so that to some extent we have taken advantage of an opportunity to further delay payment of these arrearages.
And the administration understands that. in a tight budget, we do have to look at those options, but we think we have brought this figure down to a tight figure.
(Mr. MOYNIHAN assumed the chair.)
Mr. HARRY F. BYRD, JR. The figure arrearages, so-called, and I object to that term, but the figures on the so-called arrearages have gone down but the total figure is way up, up tremendously.
I think it is important to have in the RECORD the Treasury communication because it points out the vast amount of money that we are throwing around all over the countryside to all of these international financial institutions, and I am glad to get it in one sheet of paper there in the RECORD.
Mr. MUSKIE. I am trying to say to the Senator I know how vigorous he is in opposition to these programs, because I have heard him before and I am certainly not going to try to cool his indignation on this point. What I am trying to point out is that the obligations covered by this function, to which we are addressing ourselves, are not new obligations; they are obligations we assumed with respect to these international banks. We regarded it in our national interest to be members of these banks.
Many Members over the years I have been here in the Senate have preferred to see foreign aid handled through multilateral institutions like these banks rather than bilateral aid programs administered by AID. These multilateral banks have been regarded in the national interest.
All we are talking about in that part of the function is meeting a part, not all, but a part of our past pledges to these banks.
The Senator may still oppose it, but that is still the explanation.
The Witteveen facility is new. Our share of $1.8 billion expands that function considerably. I could have eliminated it and taken it out of the sight of the Senator by going the off-budget route which we were urged to do by the Treasury and a few Senators.
Mr. HARRY F. BYRD, JR. That would not eliminate it.
Mr. MUSKIE. No, it would not eliminate it, and I wish to get some credit for insisting that it be included in the budget where we can see it. In response to the Senator's indignation, when he says why is it so much bigger, a reason the function is so much bigger is that this year it is included on budget and not off budget.
Mr. HARRY F. BYRD, JR. Last year: it was not included at all.
Mr. MUSKIE. It was not included at all because it was not authorized yet.
Mr. HARRY F. BYRD, JR. It was not involved at all.
Mr. MUSKIE. I understand, but there are other off-budget activities that we are bringing back on budget, and I just wish the Senator to recognize when that happens budget implications are going to be inflated. Whether or not we need the Witteveen facility, whether the Senator thinks we should be involved in that additional international responsibility, is an issue he can address when that legislation comes to the floor. But to make room for it in the budget so that it could be considered on its merits, we included $1.8 billion, and that does make the figure larger.
A further item in function 150 that makes the level larger than last year is foreign military assistance and sales. That used to be in the national defense function. You cannot absorb $2.4 billion in budget authority and $600 million in outlays in a small function from a huge function without it resulting in larger numbers.
First, the Witteveen facility; second, these payments to the international financial institutions; and third, foreign military assistance and sales are the three major elements of the foreign affairs function. They are identified. Identifying them does not mean the Senator from Virginia is going to support them, but he has asked the question as to what is included, and those are the items.
Mr. HARRY F. BYRD, JR. I thank the Senator from Maine, and I commend the Senator from Maine and the committee for not permitting these items to be considered as an off-budget item. I think it is very important that they be placed in the budget just as the Senator from Maine has urged and the committee has approved.
So I commend the Senator from Maine(Mr. MUSKIE) for that action. But I think it is certainly the proper course for Congress to take to have all of this as a part of the budget process rather than have the administration, whatever administration it might be, whether it be the Ford or Carter administration, or some other administration, go to the back door and bypass Congress; which has been done, as the Senator pointed out in the past, and has been done in the past.
I still am not clear on it. If the Senator does not mind, I think he mentioned some figures there about the International Development Association. How much is involved in that?
Mr. MUSKIE. May I apologize to the Senator. I am not exposed to these institutions as a member of the Foreign Relations Committee, so I sort of have to brush up my recollection of the details as the Senator's questioning proceeds. With respect to the International Development Association, we now owe $800 million under current policy to IDA V.
Mr. HARRY F. BYRD, JR. Excuse me just a minute. The Senator says we now owe?
Mr. MUSKIE. That is our replenishment obligation on IDA V.
Mr. HARRY F. BYRD, JR. IDA V.
Mr. MUSKIE. IDA V.
Let us take IDA IV first. There is $375 million; that is the arrearage on IDA IV.
Mr. HARRY F. BYRD, JR. How much did Congress appropriate for IDA IV last year?
Mr. MUSKIE. Nothing.
Mr. HARRY F. BYRD, JR. I am wondering how we got that $375 million figure as the arrearage that we allegedly owe IDA IV.
Mr. MUSKIE. We did not appropriate the replenishment amounts as they came due. In other words, each year we have gone through some of the same exercise that we are going through now, determining how much we can delay and postpone out of our replenishment obligations, so that they begin to catch up, of course. For future scheduled replenishments to IDA V, our full commitment will be another $1,175 million. The Senator should have, and I do not have the original commitments, what was the starting point in terms of the agreements we entered into and the shares to which we and other countries committed ourselves.
If you have that beginning point, these can fall into place more readily. All I have before me here are the numbers identifying an obligation for the IDA V, a remaining obligation for IDA IV, and the future scheduled operations. I can give the Senator those four figures.
Mr. HARRY F. BYRD, JR. This is the first year for IDA V, is it, not?
Mr. MUSKIE. It is the second year.
Mr. HARRY F. BYRD, JR. The second year for IDA V?
Mr. MUSKIE. Second year.
Mr. HARRY F. BYRD, JR. What was appropriated last year for IDA V?
Mr. MUSKIE. The entire $800 million was appropriated last year for IDA V.
Mr. HARRY F. BYRD, JR. There is no so-called arrearage for IDA V?
Mr. MUSKIE. No; there is no arrearage for IDA V, but there is for IDA IV.
Mr. HARRY F. BYRD, JR. Then IDA IV must go back to 3 or 4 fiscal years?.
Mr. MUSKIE. This would be its fourth year, I understand.
Mr. HARRY F. BYRD, JR. So, is the Senate to understand then that although the Senate refused in the past to authorize these funds for IDA IV, we are going to come along now, 3 or 4 years later, and say that we neglected to do something 3 or 4 years ago and now we are going to appropriate this additional money; is that correct?
Mr. MUSKIE. I am not sure my recollection is clear to judge whether or not it was a refusal altogether or whether it was a postponement of a part. I think it was a postponement to be picked up later rather than a refusal to meet our commitment. I mean just as in this year, if we approve the budget here, we will not be approving the payment of all the arrearages, but only part of them, so I do not interpret that as meaning a refusal to pay the rest.
Indeed, the conversation I had with Secretary Blumenthal 2 weeks ago was to the effect of how much must we meet this year and how much can we postpone; not how much can we refuse.
Mr'. HARRY F. BYRD, JR. Does the chairman of the Budget Committee take the position that we cannot or should not refuse — that we should appropriate whatever they submit and not have any discretion to refuse?
Mr. MUSKIE. I do not think that phrase describes the nature of the commitment I am talking about "whatever they submit." These shares are shares that were established under agreements involving ourselves and other member countries. We are talking about meeting our word, our previous commitment which Congress has already fully authorized but not fully appropriated. It is for the Congress to decide whether or not we just walk out on those agreements, not for the Budget Committee.
We are trying to schedule the funding in accordance with what our obligations are, what our commitments are, and what we can afford to fund of the institutions' requirements.
Mr. HARRY F. BYRD, JR. This is going to take a little longer than anticipated.
Mr. MUSKIE. You see in effect what we are doing, Senator, with respect to the arrearages is postponing those 1 more year just as they were postponed before.
Mr. HARRY F. BYRD, JR. That certainly was not what the Senate did last year. By a recorded vote the Senate cut $150 million out of the World Bank, out of IDA, cut it out by recorded vote here.
It was sustained by the House. It is now law. Yet we are being told now, as I understand it, we have got to come back and make that up although the Senate, by recorded vote, refused to appropriate.
Mr. MUSKIE. It was not on the budget resolution.
Mr. HARRY F. BYRD, JR. I beg pardon?
Mr. MUSKIE. There was not a vote on the budget resolution.
Mr. HARRY F. BYRD, JR. It was not on the budget resolution but it was on the appropriation bill.
Mr. MUSKIE. I do not believe that vote is being negated by this provision in the budget.
What happened was, as I understand, the contribution of IDA IV in the appropriations bill was struck from that appropriations bill last year. That did not go to the question of rejecting our total commitment to IDA IV.
Mr. HARRY F. BYRD, JR. No, of course, it did not.
Mr. MUSKIE. That would have to be done by legislation, I would assume.
Mr. HARRY F. BYRD, JR. What was done, I may say to the Senator, was the request was for $950 million, and the Senate reduced that by $150 million, reduced it to $800 million, which I assumed, and I though most Members of the Senate assumed, that the Senate had the responsibility, not only the right but the responsibility, to do that if the Senate felt the figure was too high.
What happens is when the Senate does that, whether it be a committee doing it, as has been done in the past, or the Senate itself, as has been done in the past, the administration, whichever the administration is, then adds that up and comes in at a later date and says, "Oh, wait, you did not pay us as much as we wanted last time so that is an arrearage we have to take up this year." So we have to fight the battle every year.
Mr. MUSKIE. I guess what the Senator ought to have then is legislation withdrawing or reducing our commitment to these institutions. If we delay, as we do here, payment of a commitment that is one thing. But to actually cancel it out, I would think, would require positive legislation because the fact that we reduced the amounts appropriated before or there is a reduction in the amounts appropriated, have never been interpreted as a legislative repeal of the authorization from which the request for the appropriation came.
Mr. HARRY F. BYRD, JR. Of course, all of us—
Mr. MUSKIE. Often in appropriations bills we try to influence legislation. Although we are not supposed to, we do. If the Senator seeks to permanently reduce our commitment to these institutions, or one of them, then he ought to seek legislation with that objective. But to ask the Budget Committee to act as though it were a legislative committee with power to treat a commitment of this kind as no longed valid legally, I think is to go beyond our mandate and role.
Mr. HARRY F. BYRD, JR. Well, that is not what the Senator is asking at all. I can see it is going to take a great deal of time on this, so, if it suits the Senator from Maine, I would like to leave this subject temporarily because, as I understand it, we have 50 hours of debate on the budget resolution, and I would like to—
Mr. MUSKIE. I hope we do not take all50 of them, Senator.[Laughter.]
Mr. HARRY F. BYRD, JR. I would like to come back to this matter of international—
Mr. MUSKIE. Of course, any time it would suit the Senator's convenience.
Mr. HARRY F. BYRD, JR. I thank the Senator.