Rep. French Hill (R-AR) joins Yahoo Finance's Kristin Myers to discuss the new bill he's introducing to block IMF SDRs for COVID-19 relief.

Video Transcript

KRISTIN MYERS: I want to bring on Arkansas Congressman French Hill now to chat more about this, as well as a new bill that he's proposing that would address Treasury Secretary Janet Yellen's support of special drawing rights. That's SDRs at the IMF.

So Congressman, I do want to start on that point of stimulus. We just heard Yahoo Finance's Jessica Smith giving us an update on that. Now, we have seen a lot of bipartisan support on this bill. Of course, some Republicans, your counterparts in the Senate, dragging their feet a little bit.

But I want to ask you about further rounds of stimulus since stimulus is largely expected to clear the Senate. Do you think that there might be another or further economic aid-- further stimulus packages that could be coming?

FRENCH HILL: Well, thanks for having me. I think the challenge with the $1.9 billion that was proposed by President Biden and that has passed the House is that it's too large. It's not targeted sufficiently. And it's not oriented just toward fighting the virus and getting the economy open.

In my view, I hope the Senate is focused on that in reducing the amount, targeting it specifically, and giving it some public health focus rather than the long progressive wish list that passed the House. In regard to additional stimulus, let's start with where we are.

Last year in 2020, we passed nearly $4 trillion of extra spending to fight the virus and get our economy protected. That's about what we spend in the entire year for the entire federal budget. And according to estimates, some $1 trillion of that $4 trillion are not yet spent and injected into the economy.

And that's why Republicans are pushing back on the $1.9 trillion number and while Larry Summers, Democratic treasury secretary, Democratic economic advisor, also warns the Senate, this number is too big, not focused.

KRISTIN MYERS: Yeah, we have heard some concessions being made on that point to make some of this relief far more targeted. Even in previous bills, we did see, for example, when it comes to small businesses, a lot of folks being left out of some of those loan programs that really did need assistance.

Where do you think the points of compromise can be made where the points of reconcili-- reconciliation-- excuse me-- that can be made between Democrats and Republicans to get some sort of package passed?

FRENCH HILL: Well, I think Jessica had the outline targeting the state support. There's $350 billion that basically goes to the states that are not well run and have not handled their finances very well during the pandemic. The money for schools in this proposed bill doesn't even get spent till 2022. And it's not even targeted at schools that are open.

In Arkansas, we have 80% of our schools open within classroom instruction and have had since August. They're discriminated against in this bill and the amount of money for pandemic unemployment. Back in '09 during that crisis, President Obama proposed an extra $25 per week of federal top on the state unemployment amount.

Here, Democrats, we were originally at $600. Now, we're at $400. So I think that's a possibility for compromise in the Senate. And finally, Jessica noted it. Perhaps fine-tuning the additional tax rebate or stimulus payment to families in a much more targeted income size and whether they're really actually harmed by right now without a job due to COVID-19.

KRISTIN MYERS: I do want to move on to this new bill that you are proposing. But I did want to very quickly just ask you here Congressman. On that point about aid to state and local businesses, we've had a couple of senator-- excuse me-- mayors from states with Republican governors that say, frankly, they do still need assistance. They do still need help.

And when it comes to that point about states that are badly run, exactly what do you mean there? Because when you look at a lot of-- and all the rankings, at least economically of all the states in this country, the ones at the bottom have Republican leadership, not entirely, not 100%, of course. But there are a lot of Republican leaders of states whose states are not doing well economically. So what exactly do you mean on that point that these states are not being well-run?

FRENCH HILL: Well, there's the issue of perpetual budget deficits and underfunded pension liabilities that you see in Illinois, for example, and some of the Northeastern states. Money is fungible. And so members of Congress are very concerned that this kind of COVID-19 support will go to support underlying systemic budget problems and pension problems in states.

I'm measuring success based on the level of openness and the fact that tax revenues in most of the states have exceeded forecast and that gap between projected last spring about what might happen with COVID-19 in state and local public finance. And what has actually happened is narrowed dramatically. And that's why I think senators are right to look at that money and make sure it's targeted in the right way.

KRISTIN MYERS: All right, so let's move on to SDRs just for everyone at home that perhaps does not know what they. They are an artificial currency that is typically used to supplement reserves. Now, Congressman, you argue that using special drawing rights doesn't help some of the neediest countries since they're allocated by shareholding weight in the IMF. And that is very much true.

The most money would not go to some of the poorest countries in the world. However, there's been an argument raised that, perhaps, the allocations of those SDRs should be changed instead, instead of scrapping, using SDRs for essentially funds throughout this pandemic and throughout this crisis. What do you say to that?

FRENCH HILL: Well, a general allocation, the IMF, you're right. It goes to all the members regardless. There are 189 countries. It's distributed based on their ownership shareholding percentage in the International Monetary Fund. And this is not targeted to helping poor countries.

It helps the rich countries. The Netherlands would get billions more support than Nigeria, for example. And rogue nations, like Syria, Venezuela, Cuba, Russia, Iran, all get billions of hard currency access through this move. It's not in America's interest or in our foreign policy to do this.

Republicans have a better way, which is to deliver targeted support both through the World Bank and the IMF to help the poorest countries struggling for adjustment through the pandemic.

KRISTIN MYERS: Now, you argued in an op-ed and instead of using these SDRs that there is the IMF Emergency Lending Program that a lot of these countries could tap into as a better alternative. Curious to know, then, what you say to the fact that, A, the IMF has stated repeatedly that it does need more resources to act in the times of crisis like the pandemic and that, B, that, frankly, the IMF is struggling to deploy the resources that they have. Only 10% of its capacity was deployed throughout the pandemic.

So that doesn't do too much good there when it comes to these struggling countries. What do you say to those criticisms and that criticisms that are made about those lending programs?

FRENCH HILL: Well, three key points. One, the World Bank is making concessionary loans. They've allocated $160 billion to the poorest countries, including about $16 billion for direct vaccine, preparation, delivery, and support in the poorest countries that are struggling on the public health side. And the IMF has suspended payments on many of its hard-hit client states. And the G20, the richest countries in the world, have suspended debt payments for many of the most struggling countries. So they are taking action.

I do recommend that the trust funds be used for this kind of a short-term help of the poorest countries. These are already exist in the IMF. I would advocate for more resources for them. One can do that through contributions through the member states or through exchanging, giving their SDRs-- their existing, surplus SDRs-- to support those trust fund operations.

By my estimates, there's $40 billion of excess SDR access among the European nations alone. So there are alternatives to a complete general allocation as being proposed by Secretary Yellen.

KRISTIN MYERS: Now, of course, Congressman, the issue of SDRs is a pretty complex and weighty topic. So I'm glad we were able to wade into it just a little bit in just a few moments. Hopefully we can have you back on again in the future to chat more about it. Arkansas Congressman French Hill, thanks so much for joining us--

FRENCH HILL: Thanks so much, Kris--