IMF head's scandal may affect U.S. budget debate

International Monetary Fund (IMF) Managing Director Dominique Strauss-Kahn participates in a roundtable discussion entitled Youth, Jobs, and Inclusive Growth in the Middle East and North Africa at the IMF/World Bank Spring meetings in Washington,DC on April 15, 2011.

/ NICHOLAS KAMM/AFP/Getty Images

After the Managing Director of the International Monetary Fund was arrested for an alleged sexual assault in New York City, the Obama Administration may reasonably be wondering if the scandal with fuel Republican opposition to IMF support for the world's struggling economies.

The impact of the scandal, whether Mr. Strauss-Kahn is found guilty or not, is to delay important and immediate negotiations for distressed economies, including Greece, Portugal, Ireland as well as politically-fragile Pakistan and for post-Mubarak Egypt.

The scandal comes at a time of vulnerability for the IMF, when a growing number of Republicans in Congress are questioning the bailout policies.

Rep. Cathy McMorris Rodgers (R-Wash.) opposes American money being used in some of the IMF bailouts, having said: "All across America, people are suffering from bailout fatigue. At a time when America is already borrowing 40 cents of every dollar it spends, does it make sense for us to borrow more money (much of it from China) to help bailout Europe?"

Republicans in Congress are also trying to take control of the economic steering wheel traditionally held by the President.

Lawyer: IMF head denies N.Y. sex-assault charges

An evolving Republican proposal - which the Democratic House leadership is unlikely to bring to a floor vote - would direct the Treasury secretary to vote against any I.M.F. assistance to European Union nations until every member of the EU brought its debt-to-gross-domestic-product ratio down to below 60 percent, Wall Street Journal blogger Bob Davis wrote.

The scene may be set for a bit of a showdown between Congress and the President. President Barack Obama has asserted in a signing statement after a House vote on an I.M.F. provision that he doesn't recognize Congress' ability to tell the administration how to vote at the I.M.F., Davis wrote.

The I.M.F. and the World Bank have been beset by more than their share of scandals related to both personal relationships and corruption. All too often there seems to be something about these institutions - funded by U.S. taxpayers and other countries - that make them places of bad behavior.

These institutions are classic sinecures, bureaucratic hiding places where, unlike the Department of Motor Vehicles in the U.S., these civil servants are paid hefty salaries for their work and have lavish expense accounts. That is why the scandal might just provide fuel to those who oppose the work of the IMF in the wobbly developing nation economies.

Strauss-Kahn, a potential presidential candidate in France, had brought the IMF to the front burner in overhauls of European economies that were reeling from the recent world economic downturn and he had received praise for his handling of troubled economies.

Treasury Secretary Timothy F. Geithner, the U.S. representative at the Fund, has to be worried about next steps in his effort to persuade Strauss-Kahn to pressure China to increase the value of its currency and help U.S. exports at a time when the world economies as well as the leadership of the IMF are wobbly.

[endurorob_5]

So the judge denied this guy bail. Either they fear he will flea the country or there is some very compelling evidence.

[stn_sage]

The USA shouldn't be putting up money to bail out other countries!
We're trillions of dollars in debt, or, am I mistaken about that?

The USA shouldn't be dealing with the IMF! It's a 'front' operation, and always has been! It's designed to hide who is putting up money, how much, where it goes, and WHO profits by it?!

The USA shouldn't be in the United Nations! It's claims sovereign authority over most nations of the world, that those respective peoples' have NEVER voted to give it!

And those presidents and world leaders, who have turned their countries' operations, functions, militarizes, and policies over to the UN, are,
traitors, and deserve to be shot! After indictment and trial, ob course!

[reluctantzealot]

No you are not mistaken about our debt...we reached our debt limit today so for now we can not officially borrow more money to give to foreign countries and leave the debt to our children....

Nice feeling to know that!

Too bad it won't last and soon they will be enslaving our kids even more.

[reluctantzealot]

DSK is just another typical left wing socialist....

[endurorob_5]

It is moronic to borrow money just to give it to someone else. We have enough problems of our own.

[OweninNJ]

The worldwide democratic- socialist world view and governing philosophy is in crisis. They have run out of other people's money. Nation-states are teetering on the edge of fiscal collapse; the few who can create wealth and/or jobs are holding back from hiring or expanding businesses in a climate that, unless reversed, will lead to higher and higher taxes, less revenue; and, if the IMF and world bank are any indicators, to the ultimate seizure of corporate and personal wealth. The handwriting is on the wall. Balance sheets don't lie. But, bankers sure do. Don't know if this Frenchman is guilty of raping a maid, but all these gangster-government types are guilty of collusion in the redistributionist theft of taxpayers treasure worldwide. If this accusation against Strauss-Kahn brings anything good, it will forestall the use of the west's tax dollars being wasted to prop up the failed policies of these European mini-states.

[gruven13777]

A raper-banker. What's so unusual about that? The US has thousands of them running free and not under arrest. Let's start with the big ones like Hank Paulson, Larry Sommers, Ben Bernanke, Turbo Timmy, Robert Rubin, Jamie Dimon, Alan Schwartz etc. and go down the list and get all of them arrested and charged with rape of the US taxpayer.

[reluctantzealot]

Why the heck would we borrow money on our children's backs to bail out other countries??

Why do my kids owe them anything?

We don't have money to bail out other people. We are debating raising our DEBT ceiling now so we can borrow more money and Obama want's to saddle America's next generation so that he can pretend to be some world savior and save all the socialist countries who have failed already!

Enough is enough.

America we MUST NOT ALLOW THE DEBT CEILING TO BE RAISED...

or we will be sending trillions to foreign countries while our children have no jobs, no energy, no future....

At some point we have to quit passing debt onto the unborn.

NOW IS THE TIME FOR REAL AMERICANS TO TAKE A STAND

[Jhihmoac]

I would think so, yes...Nothin' like responsible, trusting people on track...NOT!