WASHINGTON, (Reuters) – Trimming U.S. funding to the World Bank and other global lenders would reduce American influence in developing countries and give China a competitive edge, lawmakers were told yesterday.
With Democrats and Republicans haggling over raising the U.S. debt ceiling and spending cuts, Congress is now weighing cost-saving measures that could reduce the U.S. contribution to the World Bank and other development banks.
The Obama administration is requesting +ACQ-3.3 billion for multilateral development bank-related commitments for fiscal year 2012.
Already, the House appropriations committee, which sets the budget for government spending, has proposed slashing +ACQ-729 million from last year’s federal budget for multilateral assistance programs.
A bill under consideration by the House would eliminate U.S. funding for the World Bank-administered Clean Techno-logy Fund and Strategic Climate Fund, which promotes cleaner energy technology and greenhouse gas emissions cuts in poorer states.
+ACI-We’re definitely in a what have you done for me lately moment,+ACI- Ed Perlmutter, a Democrat from Colorado, told a House Financial Services Committee hearing considering whether World Bank and other programs are generating jobs.
With unemployment at a lofty 9.2 percent and economic growth at less than a two percent annual rate in the second quarter, lawmakers are eager to show economic gains before a general election in late 2012.
Gary Miller, a Republican from California, said while the United States recognized its role in helping developing countries its focus had to be on cutting the huge U.S. public debt burden and spending.
+ACI-We cannot lose sight of the fact that these requests (for funding) are coming at a time when our country must focus on getting our own massive debt under control,+ACI- Miller said.
Development experts testifying at the hearing noted that the U.S. spends less than 1 percent of its annual budget on foreign assistance and development banks are just a fraction of that 1 percent. James Harmon, chairman of Caravel Management and former president of the Export-Import Bank of the United States, said cutting funding to development banks to try to balance the U.S. budget would be a +ACI-short-sighted+ACI- and counter-productive for the U.S. economic recovery.
