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Foreign Aid Budget Battle

The White House and the House Appropriations Committee have both released important budget documents in the last few days: the President released the 2012 Budget Request, and the House Appropriations Committee released the 2011 CR (Continuing Resolution).  These two documents highlight major differences between the budget plans from the GOP-controlled House and the administration.

Most of the foreign aid spending in the budget comes under the heading Department of State and Other International Programs.  This heading includes funding for USAID, the MCC, the Peace Corps, and other development initiatives in addition to funding directly controlled by the Department of State. 

The President’s 2012 Budget Request for the Department of State and Other International Programs

In the 2012 Budget Request, the President proposes a 1 percent increase from enacted 2010 funding levels in this heading, which is also a 1 percent decrease from the 2011 request.  You can find a fact sheet for the Department of State and Other International Programs on the OMB website here.  The President’s budget focuses on making investments in key areas, such as $1.4 billion to address the root causes of hunger and poverty, reducing malnutrition for millions of children under five years old by 2015 (one of the Millennium Development Goals).  It also makes cuts to certain programs and invests in reducing inefficiencies over time- the budget proposes eliminating foreign assistance to several countries, and changing USAID’s operating model to encourage local ownership, which would result in savings and more effective programs over time.  The budget request also reduces bilateral programs to Europe and Central Asia to focus on regions with greater needs such as in Africa, while cutting funding for the African Development Foundation and the Inter-American Foundation.

The House Appropriations Committee 2011 Continuing Resolution

By contrast, the House Committee on Appropriations introduced a CR (Continuing Resolution) with the “largest spending cuts in history” for the last 7 months of the 2011 fiscal year.  The CR makes large cuts to programs across the board, and the budget for foreign aid is not spared.  Here is the section on State and Foreign Operations from the Committee’s summary of the CR:

The State and Foreign Operations section of the CR contains a total of $44.9 billion in funding, which is $3.8 billion, or 8 percent, below last year’s level and $11.7 billion, or 21 percent, below the President’s fiscal year 2011 request.

In order to provide necessary and critical funding increases of $2.5 billion for national security priorities, including a total of $3 billion of military assistance to Israel and a total of $1 billion for the Pakistan Counterinsurgency Capability Fund, the legislation actually cuts a total of $6.3 billion in other programs bill-wide. The bill reduces almost all State and Foreign Operations Accounts, except for specific security assistance accounts. The bill reduces programs that have grown substantially since fiscal year 2008, scales back contributions to the United Nations and other international organizations and banks, and eliminates wasteful, duplicative and ineffective programs. Additional operational cuts are taken, which will force agencies to take substantial cost-cutting measures.

The CR supports civilian operations in frontline countries such as Iraq, Afghanistan and Pakistan and continues the fiscal year 2010 level of economic assistance to Egypt with the understanding that Egypt will undertake significant economic and democratic reforms. The bill also maintains long-standing pro-life provisions and includes new prohibitions on international family planning.

Compared to the President’s FY11 Budget Request, the 2011 CR would include cuts to the following foreign aid accounts: USAID operating expenses by $205 million; Global Health and Child Survival by $1.5 billion; Development Assistance by $1.2 billion; International Disaster Assistance by $431 million; Peace Corps by $115 million; Millennium Challenge Corporation by $490 million; and Food for Peace by $544 million.

If enacted, these spending cuts would have a huge impact on U.S. foreign assistance around the world, affecting millions of lives.  And the Department of State and USAID only account for about 1% of the total federal budget- so the overall cost savings are meager, while putting lives at risk.  See MFAN’s statement about the foreign aid budget here, written by MFAN co-chairs David Beckmann, George Ingram, and Jim Kolbe.

What Next?  The Budget Process

While the CR represents a very strong statement about the foreign aid budget from the House, it is by no means a done deal.  There are still many steps to this bill’s passage.

A CR, or continuing resolution, is a bill that continues funding for the federal government for a set period of time in the event that regular appropriations bills aren’t passed by Congress in time for the fiscal year.  This happens in Congress almost every year- sometimes appropriations bills are passed for some parts of the budget, and all the other parts get rolled into an omnibus CR.  We are currently in the 2011 Fiscal Year, which began in October 2010 and ends September 30, 2011.  There have already been 4 CRs this year, which will cover the federal budget through 3/4/11.  You can find a chart on the status of appropriations bills for FY 2011, including all CRs, here.

The latest CR, HR 1, was introduced by the House Appropriations Committee on Friday.  In order for it to pass, it will need to be passed by both the House Appropriations and the Budget Committee, and then the full floor of the House.  The Senate Appropriations Committee and the floor of the Senate will also need to pass this bill, and in the process they may make modifications to it.  After it has passed both the House and the Senate floors the bill will move into Conference, where members of the House and Senate will work together on a compromise between the two versions, which will then go back to the House and Senate floors for a vote.  After all this, the President must sign the bill in order for it to become law.
 

For a breakdown of the President’s budget request for international affairs and more information about the House proposal, see the USGLC analysis here.

USAID’s New Evaluation Policy

While the U.S. Agency for International Development is facing rising opposition in Congress, and the legislative reform process has virtually come to a halt, the agency responsible for implementing foreign assistance is proceeding with internal reforms. In a speech on January 19^th, Administrator Raj Shah announced a new monitoring and evaluation policy for USAID’s projects abroad. Committed to accountability to stakeholders and learning from past experiences to implement more effective strategies in the future, the new policy will do much to strengthen USAID.

As a part of USAID’s new reform agenda, USAID FORWARD, the new evaluation policy is critical to the knowledge of the agency and the efficacy of the projects. As Administrator Shah acknowledged in the preface to the policy, “this policy will make us better able to identify areas where we are more capable of achieving development results, and those where we have less success and therefore need to improve.” Given that official evaluations submitted to USAID fell by two-thirds and program funding has tripled since 1994, this policy will play a crucial role in revitalizing USAID’s evaluation capacity.

Apart from a clearly delineated organizational structure and hierarchy, the new evaluation policy sets forth new evaluation and monitoring practices as well:

• -The initial design of projects will now take into consideration the evaluations that will ultimately review the efficacy of the project. An average of 3 percent of the project funds will also be made available for the evaluation.

• -In an effort to dispel biased measurement and reporting, evaluations will be conducted by an external entity with no stake in the implementation of the project. However, internal evaluations will still be conducted to contribute to institutional learning.
• -In an effort to support local ownership of development projects, local entities with no affiliation to the projects will be called upon to implement the reviews.
• -To increase transparency, USAID will publish the results and findings of each project’s evaluation for public consumption.
• -Each evaluation will be designed to include both qualitative and quantitative review processes.

As another step along the road to reform, this new evaluation policy helps to make USAID more transparent and accountable, while supporting local capacity at the same time. However, in order to make USAID as effective as possible, more reforms will be necessary.

Global Development Aligns with Business Goals at Davos and Beyond

“Today, it is not surprising and is rather, somewhat expected, that CEOs devote a portion of their time in Davos to articulating what their companies are doing to advance the global development agenda. And that increasingly there is an inextricable link between that agenda and the prosperity of their own enterprises” writes Joe Cerrell, director of the Bill & Melinda Gates Foundation’s European Office.

In a recent Reuters blog post called “Global Development crashes the Davos party,” Cerrell discusses the increasing presence of a global development agenda at the World Economic Forum’s (WEF) annual meeting in Davos, Switzerland.

Cerrell briefly traces the history of this trend in Davos over the last 10 years starting when Bill Gates launched the Global Alliance for Vaccines and Immunization (GAVI) in 2000. While the forum has perhaps moved away from the years when celebrities like Bono, Sharon Stone, and Angelina Jolie could steal the Davos spotlight to push forward development issues, Cerrell thinks that these years have brought about a lasting shift; global development is now accepted as a normal part of the WEF’s conversation on business and economics.

Cerrell hopes to see global development “crashing” more and more gatherings to which it was previously uninvited. At Global Washington, we share his desire to explore these issues in diverse sectors. Our membership consists of nonprofits, foundations, businesses, and academic institutions in the state of Washington, all united in common goal of making the world a more equitable and prosperous place. As this kind of dialogue continues in prominent venues, we hope to also see innovative and mutually beneficial partnerships formed to address important needs in health, education, environmental sustainability, poverty alleviation and other global issues