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Congress Protects U.S. Foreign Aid For Now but the Budget Wars Are Just Beginning

 

While overshadowed by news that House Republicans voted to repeal and replace the Affordable Care Act, last week’s signing of a $1.1 trillion omnibus spending bill to fund the government through September was a significant development in its own right. Overlooked in the budget post-mortem was the degree to which Congress – on a bipartisan basis – rebuked President Donald Trump’s foreign policy blueprint, which promotes hard power and an over-reliance on the military to solve an array of problems at the expense of diplomacy, development, and support for international organizations. The budget passed last week also reveals efforts by Congress to fence in what Trump can do vis-à-vis Russia, including establishing a Counter-Russian Influence Fund (CRIF) as well as ensuring funding to Ukraine is protected.

The result is a bill that with a few notable exceptions more closely hews to the funding levels and priorities of the previous administration than the current one. This deserves more attention, not only because it sustains traditional forms of U.S. international engagement that principally advance America’s own security interests, but also because it portends a protracted struggle between the executive and legislative branches over the appropriate role and resourcing of diplomacy and development in U.S. foreign policy.

To understand the significance of what Congress did in its funding bill, it is useful to consider the broader budget context.

In March, the Trump Administration released a “skinny budget” that articulated its spending priorities for fiscal year 2018, which begins in October. The skinny budget proposed to slash funding for the State Department, the United States Agency for International Development (USAID), and other international programs by over 30 percent. Beyond pure budget cuts, the Trump budget also directed State and USAID to pursue greater efficiencies through reorganization and consolidation. Consistent with White House guidance to downsize the federal government, Secretary Rex Tillerson is also reportedly considering cutting 9 percent of the State Department workforce.

The programmatic impact of many of the Trump Administration’s decisions will only begin to come into clearer focus when the Trump administration releases its full 2018 budget proposal on or around May 22, and, in the case of State’s reform proposals, much later. But the skinny budget, coupled with other data, including a leaked 15-page State table of proposed base budget funding allocations across the foreign assistance account, offer some important insights into the administration’s thinking. 

Topline Funding

Trump FY 2018 Budget: As mentioned above, the Trump budget would cut funding for State, USAID, and other international programs by over 30 percent relative to the levels of funding enacted by Congress in FY 2017.

Congress FY 2017 omnibus (passed last week): The omnibus bill provides a $396 million, or 0.7 percent increase to State, USAID, and other international programs relative to the FY 2016 enacted level; when combined with funding previously appropriated in December to address Counter-ISIS stabilization and humanitarian needs, the total increase grows to $4.6 billion, or 8.8 percent.

Regional and Country-Specific Funding Levels

Trump FY 2018 budget: The information provided in the skinny budget and in the leaked State table is insufficient to draw conclusions about regional and country-specific funding impacts because it does not include funding levels for all of the major State Department accounts (e.g. international security assistance), as well as for a number of other foreign aid agencies such as the Millennium Challenge Corporation. However, an analysis of base budget funding levels for the Development Assistance (DA), Economic Support Fund (ESF), Assistance for Europe, Eurasia, and Central Asia (AECCA), and Global Health accounts in the leaked State table show substantial funding decreases in every region of the world where the U.S. provides foreign assistance (see chart below), with Africa absorbing the deepest cuts on an aggregate basis ($777 million), and Europe and Eurasia on a percentage basis (57 percent), compared to FY 2016 enacted levels.

Congress FY 2017 omnibus: Consistent with past practice, Congress does not specify country and regional funding levels in all cases; a follow-on State report known by its section number in the Foreign Assistance Act (653(a)) will hammer out those details.   However, on balance, one would expect that the final country and regional allocations in FY 2017 would be significantly higher than those proposed by the Trump Administration in FY 2018 given the higher FY 2017 enacted topline.

Interestingly, the bill lays down a marker on U.S.-Russia policy, creating a Counter-Russian Influence Fund (CRIF) funded at no less than $100 million, setting a funding floor for Ukraine assistance at $410 million, and providing additional economic support to the former Soviet Union states. And in a rebuke to the Trump administration’s embrace of despots and autocrats, the bill increases funding for the State Department’s Human Rights and Democracy Fund (HRDF) by two-thirds, an almost $57 million increase.

Development Assistance

Trump FY 2018 budget: The Trump budget proposes a fundamental shift in the balance of power between State and USAID by wresting control of the Development Assistance account away from USAID in order to concentrate power within the State Department. Historically, USAID has directly implemented the DA account, which funds long-term, sustainable economic growth and stability in developing countries. The State Department, on the other hand, has historically controlled the Economic Support Fund account, which is a flexible funding tool to advance the Secretary of State’s more immediate diplomatic and political objectives. While there can be overlap between the activities supported by both accounts and necessary coordination between State and USAID is essential in order to avoid duplication, there is value to preserving USAID’s control over core development assistance programs.

The Trump budget proposes to defund the DA account and shift lower levels of funding to the ESF account. The development community is concerned that development assistance programs will suffer not only because there will be less funding overall in the consolidated ESF account, but also because these programs will be deprioritized by the State Department in a competition for scarce resources.

Congress FY 2017 omnibus: The omnibus increases development assistance funding by $241 million relative to FY 2016 enacted levels, signaling congressional opposition to the proposed DA-ESF shift specifically, and the administration’s posture toward USAID more generally. Of note, the spending bill also increases USAID operating expenses by $60 million and includes new language requiring that the USAID administrator consult with the oversight committees prior to engaging foreign governments in discussions regarding a potential USAID mission closure. This suggests that Congress will micro-manage any White House attempts to reduce USAID’s footprint.

Food Aid, Disaster Response, and Refugees

Trump FY 2018 budget: The Trump budget would likely reduce the U.S. global share of funding for food aid, disaster response, and refugees. While the Trump budget pledges “significant funding” for these purposes, the State Department budget table shows, for example, a two-thirds funding reduction relative to Fiscal Year 2016-levels for the USAID Bureau of Food Security, which supports country-driven strategies to build resilience in the face of major food crises.   This cut would come at a time when 20 million people worldwide are at risk of starvation – the highest level since World War II. Additionally, the Trump budget would eliminate funding for the Emergency and Migration Assistance (EMRA) account, which the Trump budget characterizes as “duplicative” and “stovepiped.” The Obama administration, in contrast, defended ERMA as a flexible tool to provide humanitarian assistance for “unexpected and urgent refugee and migration needs,” particularly in areas that have not historically received funding from the supplemental war funding bill, which is called the Overseas Contingency Operations (OCO) account.

Congress FY 2017 omnibus: The omnibus crucially provides $3.8 billion in humanitarian assistance funding for the International Disaster Assistance (IDA) account, including an additional $990 million to address famine conditions in Nigeria, Somalia, South Sudan, and Yemen. Additionally, the bill straight-lines funding for the Migration and Refugee Assistance (MRA) account relative to FY 2016 enacted levels and preserves the Obama administration’s $50 million request for ERMA.

Global Health

Trump FY 2018 budget: The global health accounts in the leaked State table would be reduced by 25 percent relative to FY 2016 levels. While these cuts are applied to both State and USAID, they are disproportionately weighted in the programs the USAID administers, which include fighting malaria and infectious disease, supporting reproductive and vulnerable children’s health, preventing stunting in young children, and strengthening national health systems around the world. As former Office of U.S. Foreign Disaster Assistance director Jeremy Konyndyk has observed, if the Trump budget cuts global health programming in countries whose health systems are particularly fragile, it could increase the likelihood that an infectious disease such as Ebola or Zika would reach U.S. soil. One potential way the Trump administration may be able to mitigate this risk in the short run would be to use some of the remaining funds from the Ebola emergency appropriation.

Congress FY 2017 omnibus: The omnibus bill by contrast increases global health funding by $221 million relative to FY 2016 enacted levels. It matches the Obama Administration’s FY 2017 request for the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR) and the Global Fund to Fight AIDS, Tuberculosis and Malaria, provides $275 million for Gavi, the Vaccine Alliance, which increases access to life-saving vaccines for the world’s most vulnerable children, and provides targeted bilateral increases to combat malaria and tuberculosis – sending an important signal that sustained U.S. global health leadership should continue.

Multilateral Programs

Trump FY 2018 budget: The Trump budget would drastically reduce funding for multilateral programs. Funding for the United Nations could be cut by as much as 40 to 50 percent relative to FY 2016 enacted levels, both on an assessed (including for peacekeeping) and voluntary basis. As former Assistant Secretary of State for International Organization Affairs Sheba Crocker has written, these cuts would erode U.S. support for UN political missions to conflict zones, human rights monitors, nuclear watchdogs, global health first responders, humanitarian aid workers, and economic and development programs. This matters, not just because of the impact these cuts would have on the ability of the UN to help prevent conflict, starvation, disease outbreak, and nuclear proliferation, but also because it would give license to other international donors to shoulder less of the burden themselves. The Trump budget also previewed that funding for multilateral banks (MDBs), including the World Bank, would be cut by approximately $650 million over three years relative to Obama administration commitment levels. By leveraging shareholder resources, MDBs have traditionally been a cost-effective way for the U.S. to influence the global development agenda and promote international financial stability.

Congress FY 2017 omnibus: The omnibus maintains funding for $339 million for an account that provides voluntary U.S. contributions to the UN and other international programs relative to FY 2016 enacted levels. Significantly, it also includes $32.5 million for the United Nations Population Fund (UNFPA), the UN’s family planning agency. However, initial estimates suggest that UN programs will be cut by about 20 percent in the aggregate, with international peacekeeping accounts hit the hardest. While the closure of UN peacekeeping missions in Haiti, Liberia and Cote d’Ivoire should generate some budget savings, underfunding U.S. contributions to larger UN peacekeeping missions in Congo, South Sudan, Darfur and Mali could have a destabilizing and ultimately more costly impact on the ground. With regard to Treasury international programs, funding levels are generally down, in large part due to Congress’s elimination and the sunset of precursor Treasury climate funds, but also on account of the elimination of funding for the North American Development Bank, which helps to finance projects intended to improve environmental conditions for people living along the U.S.-Mexico border.

Educational and Cultural Exchange Programs

Trump FY 2018 budget: The Trump budget would reduce funding for State’s Educational and Cultural Exchange (ECE) programs. While the skinny budget does not provide specific program-level detail, it suggests an emphasis on sustaining the Fulbright program, implying that funding for other global exchanges, such as the Young Leaders’ Initiatives, might be curtailed or eliminated. The Obama administration saw strategic value in diversifying the applicant pool for U.S. exchanges to promote civil society around the world and advance U.S. interests, particularly by building new partnerships with the next generation of African and Southeast Asian leaders.

Congress FY 2017 omnibus: The omnibus increases funding for educational and cultural exchanges by $43 million relative to FY 2016 enacted levels. In particular, the bill adds funding for the Fulbright Program, Citizens Exchange Program and Young Leaders Initiatives, and places a floor on funding for academic programs and professional and cultural exchanges with countries of the former Soviet Union, Eastern Europe, and the Nordic region at not less than the 2017 Congressional Budget Justification (CBJ) levels.

Smaller Agencies

Trump FY 2018 Budget: The Trump budget would eliminate funding for a host of other foreign assistance and international development agencies, including the United States Institute of Peace (USIP), Overseas Private Investment Corporation (OPIC), East-West Center, the Inter-American Foundation, the African Development Foundation, and the U.S. Trade and Development Agency (TDA). While these agencies are comparatively small, many of them punch well above their weight. For example, USIP has the capacity and expertise to cultivate strategic, long-term relationships with important stakeholders in conflict zones, earning it praise from military commanders. And OPIC, which helps U.S. businesses invest in emerging markets, mobilizes $2.60 from outside sources for every $1 it spends on project commitments, and has returned $1.6 billion to the U.S. Treasury since 2010.

Congress FY 2017 omnibus: The omnibus ignores the White House budget’s proposal to eliminate funding for a number of smaller agencies. The bill increases funding for USIP (+$2.6 million), OPIC administrative expenses (+$7 million), and TDA (+$15 million) and maintains flat funding for the East-West Center, the Inter-American Foundation, and the African Development Foundation.

Past Performance May Not Be Reliable Indicator of Future Outcomes

Undoubtedly, last week’s budget deal provided some good news. But advocates of strong and sustained U.S. foreign assistance levels – which include current and former military officers, humanitarian aid organizations, global health, and faith-based groups – should not rest on their laurels. If a new budget deal isn’t reached, the austere budget caps imposed by the 2011 Budget Control Act will return in FY 2018. Trump, stung by the perception that he got rolled in the funding bill, has shown no indication to date that he is willing to compromise to lift these budget caps for non-defense spending, threatening “a good shutdown” if Congress ignores his priorities for spending and cuts. Given these dynamics, proponents of robust foreign assistance levels will have a steep climb to maintain level funding for key accounts and reverse key setbacks. It will be particularly difficult to fulfill the remaining two-thirds of the Obama Administration’s $3 billion pledge to fund international climate mitigation and adaption programs as part of the Paris accords, given that Congress provides neither the authority nor funding for the Green Climate Fund in the FY 2017 omnibus and the Trump budget requests no additional funding in FY 2018.

In the meantime, the Trump administration’s proposed cuts and downsizing initiatives already are having a chilling effect on how the State Department conducts business.   For example, according to the New York Times, Tillerson will not fill nearly 200 vacant senior State Department positions until he completes “a listening tour and restructuring of State Department operations,” a process that is likely to last well into 2018.   This decision has stunned veteran diplomats, who question how the State Department will be able to respond to a foreign policy crisis like North Korea or effectively represent U.S. interests around the world without virtually any senior political appointees.   Additionally, State and USAID offices continue to operate under a department-wide hiring freeze. From an execution perspective, this could mean that a bureau may not be able to implement a program expansion appropriated by Congress because it lacks the human resources to do so.

Lastly, all the funding in the world cannot compensate for poor foreign policy choices. As Hal Brands has argued, Trump’s conduct of foreign policy to date has been a blend of incoherence and incompetence. This does not augur well for the future.

By the same token, the Trump administration should realize that they need to work on a bipartisan basis with Congress if they want to secure lasting and meaningful reform to how foreign aid agencies are organized, operate, and spend money.   If they don’t, Congress has made it quite clear in this bill that they won’t stand idly by.

Image: Getty/Mark Wilson

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About the Author

served in the Obama Administration from 2009 to 2017. From 2014 to 2017, he was the Associate Director for National Security Programs at the Office of Management and Budget, where he helped to oversee the preparation of the President’s Budget for defense, foreign assistance, intelligence, and veterans programs, and represented OMB on the National Security Council’s Deputies Committee. You can follow him on Twitter (@jonlachman)