US Initiatives Support Israel’s Economic Stability and Growth

As part of this week’s meetings of the U.S.-Israel Joint Economic Development Group (JEDG), U.S. Treasury Secretary Tim Geithner and Israeli Finance Ministry Director General Doron Cohen today marked the extension of the U.S.-Israel Loan Guarantee program in an event in the Diplomatic Room of the U.S. Department of the Treasury. The officials signed a Memorandum of Understanding (MOU) establishing a new framework for administering the recently extended U.S.-Israel Loan Guarantee program, which is designed to help the Israeli government access financial resources from private capital markets at affordable rates, in order to promote the country’s economic growth and stability. Along with the Loan Guarantee Commitment Agreement administered through the U.S. Agency for International Development, the new framework affirms the United States’ confidence in Israel’s strong economic fundamentals and the Government of Israel’s solid track record of policy implementation.

“Israel is a vital partner and ally of the United States,” said Treasury Secretary Tim Geithner. “The continued availability of this loan guarantee will allow Israel to continue to enjoy access to capital markets at affordable rates in the years to come.”

On July 27, 2012, President Obama signed legislation extending the U.S. loan guarantee program for Israel to 2016. This will allow the U.S. to provide access to up to $3.8 billion in future loan guarantees as part of a $9 billion commitment made by the U.S. in 2003.  The loan guarantees, together with effective management by the Israeli government, have helped support Israel’s strong economic recovery.  

“Israel appreciates the longstanding extraordinary support of the United States for Israel and the relationship between two countries that have so much in common,” said Israeli Finance Ministry Director General Doron Cohen. “The JEDG and Loan Guarantees program have contributed to the security and stability of the Israeli economy, and the JEDG will continue to enhance the relationship between our countries.”

More after the jump.
The JEDG, which is being held in Washington on October 24-25, is the primary economic dialogue between the United States and Israel.

The Israeli economy grew by 4.6 percent in 2011, and the Bank of Israel projects the economy to grow by 3.3 percent in 2012, making Israel one of the region’s strongest economies.  The Bank of Israel has been successful in keeping inflation on target, maintaining an inflation rate of 2.1 percent in September. Israeli officials have also been successful in reducing the country’s debt in recent years.

New Measures Against Iran

— Rep. Brad Sherman (D-CA)

I applaud the Treasury and State Department for adopting additional measures against Iran today, but the measures in place are still too timid to cause the Iranians to abandon their nuclear weapons program.

I am pleased the President has adopted an explicit policy providing for sanctions against companies that provide goods, services and technology for — as opposed to investment in — Iran’s oil and gas sectors, and to provide for sanctions against those that help Iran’s Petrochemical sectors.

While investment was clearly covered by the Iran Sanctions Act, whether the mere sale of goods, services and technology alone is sanctionable was left vague by the statute.  This is a change I had urged during the deliberations on the Comprehensive Iran Sanctions Accountability and Divestment Act last year, and the President finally addressed it in this new order.

More after the jump.
The designation of additional entities under the existing Executive Order targeting proliferation is also welcome, but we still have only designated a relative handful of the entities warranting such sanction.  Far more is necessary.  Also, foreign companies that continue to do business with those Iranian entities designated need to face tough penalties.  That still is not the case under the President’s orders, but is addressed by language I authored in the legislation currently being considered by Congress.  

The designation of Iran under Section 311 of the Patriot Act as an area of money laundering concern could have a significant impact, but we need to actually punish those foreign financial companies that continue to do business with Iran’s banks, including the Central Bank.  The action announced today will only require that US banks take greater measures to ensure that their foreign partners do not allow the Iranians to access the US financial system through them.  

Congress still needs to enact tough Iran sanctions legislation, sooner rather than later, including the Iran Threat Reduction Act and legislation that I introduced, the Stop Iran’s Nuclear Weapons Program Act.    

Geither: Debt Ceiling is Unconstitutional

The United States is the only country in the world with a “debt ceiling”.

Congress has approved a budget in which revenues are insufficient to cover expenses (thanks in part to extending Bush era tax cuts to Millionaires and tax loopholes for hedge fund managers, oil companies, ethanol producers and companies which ship jobs overseas). Simple arithmetic tell you that if Congress commits to a level of expenses without providing adequate revenue, then the debt will as a consequence expand. By denying the expansion of the debt already implied by the budget Congress has passed into law, Congress defies not only logic and mathematics, but the United States Constitution itself.

Treasury Secretary Tim Geithner was asked by Mike Allen about the negotiations over default and the debt ceiling. According to Geithner, a debt ceiling requirement is unconstitutional:

Geithner: I think there are some people who are pretending not to understand it, who think there’s leverage for them in threatening a default. I don’t understand it as a negotiating position. I mean really think about it, you’re going to say that– can I read you the 14th amendment?

Geithner whipped out his handy pocket-sized Constitution. Allen tried to brush it aside.

Allen: We’ll stipulate the 14th Amendment.

Geithner :No, I want to read this one thing.

Allen: It’s paper clipped! [Geithner’s copy of the Constitution was clipped so that it would open directly to the passage in question.]

Geithner “The validity of the public debt of the United States, authorized by law, including debts incurred for the payments of pension and bounties for services in suppressing insurrection or rebellion” — this is the important thing — “shall not be questioned.”