Dissent Grows on Clinton Aid Plan for Mexico : Trade: Republicans and Democrats are lining up against the $40-billion plan. But the Administration is expected to win.
The Clinton Administration’s $40-billion plan to bail out the Mexican economy ran into mounting opposition Wednesday from both Republicans and Democrats, forcing President Clinton--supported by a phalanx of corporate executives and Administration aides--to begin a full-scale lobbying campaign on behalf of the program.
Despite the best efforts of Treasury Secretary Robert E. Rubin and Federal Reserve Board Chairman Alan Greenspan to round up congressional support, what had seemed a week ago to be an easily approved program of loan guarantees has developed into a battle. But it is one the Administration is still expected to win.
“Everyone (in Congress) wants to make sure they don’t walk over the cliff alone. In the end, it’s a difficult vote but not a difficult choice,” a senior Treasury official said.
As outlined by Clinton on Wednesday, failure to gain congressional approval of the plan would be more than an embarrassment in the world of international economic policy and domestic politics.
“This is not simply a financial problem for Mexico, this is an American challenge,” the President said to a small crowd of applauding business executives, senior White House officials and young Administration workers brought to the Treasury to provide an audience for the President’s message. “The livelihoods of thousands and thousands of our workers depend upon continued strong export growth to Mexico. That’s why we must reach out and not retreat.
“It is vital to our interests,” he said.
Mexican officials anxiously watched Clinton’s efforts to build support for the rescue plan, which has proved to be a key in stabilizing financial markets.
The peso slipped 13 centavos, closing at 5.43 to the dollar. The Mexican Stock Exchange Index dropped steadily throughout the day, closing down 53.36 points, or 2.42%, at 2,156.13.
Despite the favorable outcome of Tuesday’s government bond auction, Standard & Poor’s Corp. warned that Mexico’s debt remains under review for a possible downgrade as the ratings company determines the effect of the peso devaluation on that country’s ability to pay its debts.
The program would provide guarantees that private banks--lending as much as $40 billion to Mexico to support the peso--would be repaid by the U.S. Treasury if not by Mexico. Mexico would have to put up roughly 5% to 10% of the loans as a fee paid to the U.S. Treasury, an amount the Administration is portraying as a profit for the government as long as Mexico does not default.
The Administration embarked last week on a seemingly carefully paved path to win the necessary approval of the House and Senate, with the support of House Speaker Newt Gingrich (R-Ga.) and Senate Majority Leader Bob Dole (R-Kan.). But it has encountered growing opposition as the week has progressed. Some key Democrats have remained silent on the aid program and others apparently are ready to oppose it. Among their concerns are fears that the loan could increase U.S. interest rates.
The debate is particularly important for both the Administration and Congress because it brings to life the issues at the intersection of domestic politics, foreign policy and international economics that both Clinton and Gingrich see as the most important nexus of Washington policy in coming years.
Yet it is a politically difficult one.
Underlining the challenge facing the Administration and the loan program’s GOP supporters in Congress, a group of conservative Republicans mobilized by one-time--and possibly future--presidential candidate Patrick J. Buchanan decried what one of its number, Rep. Duncan Hunter (R-El Cajon), called “a Wall Street bailout, not a Main Street bailout.”
Seeking to counter such remarks, Clinton told the Treasury audience: “These guarantees . . . are not foreign aid. They are not a bailout. They are not a gift. This is the equivalent of co-signing a note.”
As the conservative Republicans spoke at a news conference, Vice President Al Gore and White House Chief of Staff Leon E. Panetta sought privately to coax visible signs of support from Democratic House members.
But--according to one source familiar with a meeting of the House Democratic Caucus--Minority Leader Richard A. Gephardt (D-Mo.), who is expected to support the plan in the end, and Minority Whip David E. Bonior (D-Mich.), who is likely to oppose it, remained silent. Of approximately a dozen Democrats who spoke at the meeting, according to this report, all expressed opposition.
With the Administration predicting that illegal immigration to the United States from Mexico would increase by 430,000 this year if the loan guarantees are not available to help boost the Mexican economy, some members of Congress are calling for Mexico to step up border patrols as a price for their support.
Times staff writer Juanita Darling in Mexico City contributed to this report.