Campaign Promises

Cabinet/Departments -> Treasury -> International Programs

International ProgramsGrade
The Promise: "...creating an international tax haven watch list of countries that do not share information returns with the United States (and potentially enacting sanctions against those countries)..."
When/Where: Interview with Tax Policy Center of Urban and Brookings Institutions dated 08/15/08.
Status:The G-20 meeting of 04/03/09 led the United Nations Organization for Economic Cooperation and Development (OECD) to publish its most recent report on countries that agree to exchange tax information.

The OECD report includes a listing of countries that exchange such information, countries that agree to exchange tax information but have not yet implemented the process, and countries that have not committed to share tax information such as Malaysia, Philippines, Costa Rica and Uruguay.

But the OECD tax haven monitoring initiative has existed since the G20 Finance Ministers meeting held in Berlin in CY2004.

What is still missing is a U.S. international tax haven watch list, which would come under the purview of the Department of the Treasury and the Securities and Exchange Commission. Reference to such a list is made in the country-by-country reporting requirements contained in the "Stop Tax Haven Abuse Act" (S. 1346) introduced by Senator Carl Levin (D-MI) on 07/12/11, and H.R. 2669 by the same name introduced by Congressman Lloyd Doggett (D-TX) on 07/27/11. No action was taken on either of these bills and they expired with the 112th Congress at the end of CY2012.

Further, no action was taken on the "Cut Unjustified Tax Loopholes Act" (S. 2075) introduced by Senator Levin on 02/07/12 which also had country-by-country tax haven listing requirements. It too died with the 112th Congress.

This promise has not been fulfilled.
The Promise: "...want to see 100 percent debt cancellation for the world's heavily-indebted poor countries. They are committed to living up to the promise to fully fund debt cancellation for Heavily-Indebted Poor Countries (HIPC)."
When/Where: Obama-Biden Plan: "Strengthening Our Common Security by Investing in Our Common Humanity", dated 09/11/08.
Status:Pre-dating this promise at the 07/05 G-8 Summit in Gleneagles, Scotland, G-8 leaders pledged to cancel the debts of the world's most indebted countries, many of them located in Africa. Following this declaration, the Board of Governors of both the International Monetary Fund (IMF) and World Bank endorsed the principles of the 100% debt cancellation deal, formally called the Multilateral Debt Relief Initiative (MDRI), in 09/05. The MDRI provides 100% debt cancellation on eligible multilateral debts to countries that have completed the Highly Indebted Poor Country (HIPC) Initiative process.

There are two major milestones that must be reached before an HIPC country's debt can be cancelled:

Decision Point: when a country is considered to be eligible for HIPC initiative assistance by (1) having a track record of macroeconomic stability, (2) having prepared an Interim Poverty Reduction Strategy Paper (PRSP), and (3) having cleared any outstanding arrears. As of end-CY2010, Chad, Comoros, Cote d'Ivoire, and Guinea had reached the Decision Point and were between that point and the Completion Point.

Completion Point: a country can receive full reduction in debt available under the HIPC initiative and the Multilateral Debt Relief Initiative (MDRI) by (1) maintaining macroeconomic stability under an International Monetary Fund (IMF) Poverty Reduction and Growth Facility (PGRF) supported program, (2) carrying out key structural and social reforms as agreed upon at the Decision Point, and (3) implementing the provisions of their PRSP satisfactorily for one year.

For FY2011, the Treasury Department requested $1.235B for the second of three installments of $1.235B plus $50M to clear a portion of U.S. pledge arrears for a total of $1.285B payable to the IDA, representing 20.12% of pledges made to the MDRI by the donor community. Only $1.235B was appropriated by Congress under State Department funding.

In FY2010, the estimated amount of eligible country debt was approximately $75B. The U.S. appropriated amount for the HIPC Trust Fund was $56M, far below the $90.63M Administration request. An amount of $20M was diverted to allow developing countries to redirect funds from debt payments to forest conservation programs under the Tropical Forest Conservation Act (TFCA).

For FY2011, the estimated amount of eligible country debt was approximately $72B. The Administration's budget proposal for the HIPC Trust Fund was $50M (with another $20M going toward forest conservation under the TFCA). Treasury Department documentation indicates that this $50M in FY2011 was "to be used to make a substantial contribution towards meeting the $75.4M in pledges to the HIPC Trust Fund that have not yet been fulfilled," thereby acknowledging that the U.S. was in arrears in honoring its HIPC Trust Fund pledges.

For the African Development Fund (AfDF) in FY2011, the Treasury Department requested $155.9M to cover the third of three installments. Congress appropriated only $110M under State Department funding.

100% debt cancellation for HIPC-eligible countries is a multi-decade untaking involving not less than 35 donor countries. Some of these countries such as Greece, Ireland, Spain and Portugal are experiencing their own severe budget deficits. Their sustained contributions to the HIPC Trust Fund is therefore questionable.

On 12/16/09, Congresswoman Maxine Waters (D-CA) introduced the "Jubilee Act for Responsible Lending and Expanded Debt Cancellation of 2009" (H.R. 4405) for "expanded cancellation of debts owed to the United States and the international financial institutions by low-income countries." This did not progress beyond initial committee review and expired with the 111th Congress at the end of CY2010. It was not renewed during the 112th Congress.

As of end-CY2013, 35 of 39 eligible countries reached the Completion Point and received debt relief under both the HIPC Initiative and MDRI. MDRI contributions are made through the International Development Association (IDA) and the AfDF). Three countries remain potentially eligible for debt relief as of end-CY2013: Eritrea, Somalia and Sudan. One country is classified as being between the decision and completion points: Chad.

In view of the extreme national debt and budget deficit the U.S. has experienced since CY2010, full funding of the HIPC Trust Fund did not occur during President Obama's first term in office and likely won't during his second term.

This promise has not been fulfilled.