WASHINGTON -- President Clinton and his top aides scrambled yesterday to build the case for the proposed $40 billion package of Mexican loan guarantees amid signs that congressional support was beginning to unravel.
"These guarantees . . . are not foreign aid," the president asserted in a speech aimed at wavering members of Congress. "They are not a gift. They are not a bailout. They are not United States government loans. They will not affect our current budget situation.
"Rather," he continued, "they are the equivalent of co-signing a note, a note that Mexico can use to borrow money on its own account."
The president, speaking at the Treasury Department, was attempting to counter a loose coalition seeking to block congressional approval of the package, which is intended to shore up the embattled Mexican peso.
The coalition is composed of freshmen Republicans opposed to foreign aid, more senior GOP members who are skeptical of recent U.S. trade agreements, and pro-labor Democrats.
Mr. Clinton argued that the peso crisis threatened more than Mexico, America's third-largest trading partner.
"It is also, plainly, a danger to the economic future of the United States," he said. "The livelihood of thousands and thousands of our workers depends on continued strong export growth to Mexico. That's why we must reach out and not retreat."
Opponents maintain that the loan deal would put U.S. taxpayers needlessly at risk, by bailing out a country with a poor credit history to protect the investments of Wall Street speculators who took a chance on the volatile Mexican economy.
Earlier, Mr. Clinton dispatched Vice President Al Gore, Treasury Secretary Robert E. Rubin and Federal Reserve Chairman Alan Greenspan to Capitol Hill to try to sell the package to a sharply divided House Democratic Caucus.
For Mr. Rubin and Mr. Greenspan, it was their second trip to the Hill in two days. Tuesday night they spent several hours with freshmen lawmakers of both parties to explain the details of the package and to answer questions.
For all the high-powered salesmanship, however, early indications are that Mr. Clinton may be headed for a pitched, emotional battle similar to the 1993 cliffhanger campaign for the North American Free Trade Agreement with Mexico and Canada.
"It's NAFTA all over again," said Rep. Bill Richardson of New Mexico, chief deputy whip for the Democrats, a leader in the trade bill battle that remained in doubt until the final days.
Negotiations with Mexico
Yesterday administration officials were engaged in negotiations with congressional leaders and Mexican officials over possible conditions that might be placed on the loan guarantees to make them more palatable to Congress.
One condition under discussion, according to lawmakers, would require Mexico to put up collateral, such as oil reserves or other assets, in the case of a default. Another possible condition calls for Mexico to pay a premium to the United States in return for the guarantees.
Just as with NAFTA, which had bipartisan opposition, the loan deal can succeed only with bipartisan support.
Leaders of both parties in the House and Senate have agreed to back the loan package. But GOP leaders say they are concerned that the Democrats won't be able to produce enough votes on their side to secure a victory for Mr. Clinton.
House Majority Leader Dick Armey, the Texas Republican, said yesterday that he wants the House Democrats to produce at least 103 votes out of their 204 total. "It's their president," he said.
But Mr. Richardson said only 76 of the 102 Democrats who voted for NAFTA in 1993 are members of this Congress: "I don't think we'll be able to hold onto all of them."
A new factor in the equation is the 73 House Republican newcomers, many of whom are staunchly conservative and flinch at anything that looks like foreign aid, which is highly unpopular with the new GOP majority.
By last night, more than a dozen GOP freshmen had signed a letter calling on House Speaker Newt Gingrich to withdraw his support for the loan guarantees. "The United States has no business bailing out a sovereign country," said Rep. Steve Stockman, the Texas Republican, one of those who signed the letter.
The anti-NAFTA forces have mobilized because they see the peso crisis and multibillion-dollar response by the Clinton administration as proof that they were right in opposing the trade agreement.
"First it was, 'NAFTA you hafta,' now it's, 'Mexico bailout or bust,' " said Rep. Marcy Kaptur, the Ohio Democrat who represents a highly industrialized district fearful of losing jobs to Mexico. "U.S. taxpayers should not have to become Mexico's insurance company."
Rep. Duncan Hunter, the California Republican who led the GOP opposition to NAFTA in the House, said he opposes the loan guarantees because he sees the main beneficiaries as Wall Street speculators.
"Those investors would not have seen fit to share their profits with American taxpayers," said Mr. Hunter. "I don't know why the American taxpayers should be expected to bail them out when they lose money."
In the Senate, Ernest F. "Fritz" Hollings, the South Carolina Democrat who fiercely opposed NAFTA because of its potential impact on the textile industry in his state, served notice yesterday that he would do all he could to block the loan deal as well.
"American taxpayers are being asked to make a $40 billion guarantee that the free market isn't willing to invest in," Mr. Hollings said. "And the irony of it all is that Mexico will have to stop importing American goods and start exporting to get the money to pay off their debt."