Won’t let GOP link Ukraine aid, IRS rules, Reid says

WASHINGTON - Senate Majority Leader Harry Reid vowed Thursday to block House Republicans from using a Ukraine aid package to delay Internal Revenue Service rules governing political activity by some nonprofit groups.



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“This has been floating around the Senate for a while,” said Reid, D-Nev. He added that it was hard for him to “comprehend how, with a clear conscience” Republicans would seek to link the IRS rule delay to the aid.

House Republicans are insisting that a one-year delay in the IRS rule be paired with changes in U.S. financing for the International Monetary Fund that Democrats are seeking, a House Republican aide said on condition of anonymity.

New York Sen. Charles Schumer, the chamber’s third-ranking Democrat, said House Republican leaders made the demand directly to Senate leaders. A spokesman for House Speaker John Boehner declined to comment.

“I know for a fact that they talked to the leadership about it,” Schumer said. “This is so deleterious to our political system. There should not be a delay.”

Republican leaders have said the proposed IRS rule would wrongly suppress free speech.

Sparring over the IMF provision - and now over the push to delay the IRS rule - is slowing action on Ukraine aid. The Senate bill would allow about $1 billion in U.S. loan guarantees sought by Ukraine as Russian forces occupy the Crimean peninsula.

Senate action on the aid package is “more likely when we return” after a week-long recess that was beginning because “we need help from the Republican side,” second-ranking Senate Democrat Dick Durbin of Illinois said.

Boehner, R-Ohio, called on the Senate to pass the House version of the Ukraine aid bill before leaving for the break Thursday evening. The IMF money “has nothing to do with Ukraine,” he said. House Republicans have resisted proposals to increase funds for the IMF for years.

Ukraine faces $3.6 billion in debt repayments including interest through the end of June, according to data compiled by Bloomberg News.

The Senate on Tuesday adopted a resolution “condemning illegal Russian aggression in Ukraine.” A bill approved Wednesday by the Senate foreign relations panel goes further, allowing the loan guarantee and authorizing sanctions against Ukrainians and Russians deemed responsible for corruption and violence.

The measure also would restructure how the U.S. contributes financing for the IMF, which is leading the economic relief effort for Ukraine.

The House passed a Ukraine aid plan March 6 that would allow about $1 billion in loan guarantees to the Ukraine government. That measure didn’t include the IMF funding.

Sen. Rand Paul, R-Ky., pushed to eliminate the IMF language from the Senate measure, saying he was concerned that it would give Russia more voting power over the group’s decisions.

Paul was among three Republicans who voted against the Senate measure in the committee. Sens. James Risch of Idaho and John Barrasso of Wyoming also voted no.

The Democratic proposal would transfer some U.S. funding from a temporary account used for emergencies to the IMF’s core source of financing, according to a Congressional Research Service report. The share of U.S. voting power at the IMF would decrease slightly, although the U.S. would maintain its veto power over major policy decisions, the service said.

Secretary of State John Kerry told a House Appropriations subcommittee Wednesday that the IMF funds are a necessary part of aid to Ukraine.

“It’s only through the IMF, a reformed IMF, that Ukraine is going to get the help it needs to stand on its own two feet,” Kerry said.

House leaders have offered to work with the Obama administration on a separate package of proposed IMF changes, said House Foreign Affairs Committee Chairman Ed Royce.

“While we are moving a bill through on Ukraine and trying to convince [Russian] President [Vladimir] Putin not to move on eastern Ukraine, now is not the time for us to get into disagreements about the specific nature about how we reform the IMF,” said Royce, R-Calif.

Treasury Secretary Jacob Lew met with acting Ukrainian Prime Minister Arseniy Yatsenyuk on Thursday, and the two agreed that passing the IMF legislation is needed to maximize the international community’s support to Ukraine, the Treasury Department said in an emailed statement.

Information for this article was contributed by Roxana Tiron, Derek Wallbank, David Lerman, James Rowley, Richard Rubin, Kasia Klimasinska and Andras Gergely of Bloomberg News.

Front Section, Pages 7 on 03/14/2014

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