Clinton, Facing Fight On Mexican Bailout, Drafts Rescue Plan
WASHINGTON — PRESIDENT Clinton's decision to abandon his $40-billion loan guarantee plan to Mexico represents an attempt to still help that country's ailing economy - while avoiding a major confrontation with the Republican-led Congress.
His replacement of the rescue package with a plan to lend Mexico money by executive order and through international channels will allow him to bypass legislative opponents of the plan.
``We cannot risk any further delay,'' Clinton told the nation's governors here on on Jan. 31. While Congress whittled away at the loan-guarantee proposal, ``Mexico's situation continue[d] to worsen,'' he said.
The new plan, crafted by US Treasury Undersecretary Lawrence Summers, will provide Mexico with $20 billion from the Treasury Department's Emergency Exchange Fund.
It will also provide $17.7 billion from the International Monetary Fund, and another $10 billion in short-term financing from the Swiss-based Bank of International Settlements.
There is no implication for American taxpayers, as the money is already budgeted for, White House sources say.
``We will be able to have an even more aggressive action'' than with the previous $40-billion loan, Clinton said.
In overnight talks on the plan, a top administration source says, House Speaker Newt Gingrich was ``supportive,'' Senate majority leader Bob Dole was ``cautious'' and House minority leader Richard Gephardt said it would get Congress ``off the hook.''
During the past two weeks of negotiations between the White House and lawmakers, Mr. Clinton's rescue package seemed headed for a wreck.
In every major speech these days, President Clinton and members of his Cabinet invoked the need to stave off a steeper slide in Mexico.
On Capitol Hill, Federal Reserve Board chairman Alan Greenspan pleaded with legislators to accept the rescue package. But the harder the plan's supporters pushed, the stiffer the resistance became from legislative opponents.
The package wasn't lacking bipartisan support, it just didn't have enough to push it through. Both Speaker Gingrich (R) of Georgia and Mr. Dole (R) of Kansas supported the plan, but the Speaker wouldn't schedule a vote until he was assured of a reasonable chance of its passage.
The White House was clearly concerned that the plan's naysayers were gaining momentum.
Earlier this week, just when the White House was gearing up for a big promotion of the plan, Sen. Al D'Amato (R) of New York, chairman of the House Banking Committee, dealt Clinton a big blow.
On Jan. 31, he called upon Ross Perot to assess the impact of the loan guarantee. Mr. Perot, who still has on his boxing gloves from the bruising debate over the North American Free Trade Agreement, said the loan guarantee proposal would cost the US jobs.
Others agreed with Senator Richard Shelby (R) of Alabama who questioned whether $40 billion would be enough.
``Would this be the end of it? No, it's the beginning of it,'' says Mr. Shelby.
Clinton would soon be back on Capitol Hill asking lawmakers for even more money, he warned, and Mexico would soon have even bigger claims on US taxpayers.
Sen. Barbara Boxer (D) of California threatened to hold up the plan, citing Mexico's failure to stem the flow of illegal immigrants into the US.
Mr. Dole countered that claim by warning earlier this week that a failure to pass the loan guarantee package would result in a Mexican flood of ``cheap goods and a lot of immigrants'' to the US.
Clinton said his new plan is in the US interest, contrary to what critics have said, because it involves US jobs and billions of dollars in US exports.
The peso, which had plummeted to a new all-time low earlier in the day, rebounded on Jan. 31 on word of the president's new aid package.