U.S. lawmakers weigh value of development aid

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.

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