Budget bill includes small increase for foreign aid, but is it a win?

The U.S. Congress has finally approved 2020 spending. Photo by: REUTERS / Lee Jae-Won

WASHINGTON — While foreign aid funding saw a slight increase in the budget bill approved by the U.S. Congress Thursday, the negotiated numbers also reflect an unusual result — a final amount that is below what appropriators in both the House of Representatives and Senate had approved in their respective bills.

The total appropriated for the foreign affairs budget is $54.7 billion, up $467 million from what was enacted in fiscal year 2019. But the amount is lower than budget bills approved by the House and Senate, which included $56.4 billion and $55.15 billion, respectively.

Budget by the numbers

$7.8 billion: humanitarian and disaster assistance

$3.4 billion: development assistance account

$2.1 billion: multilateral assistance

$1.66 billion: USAID operating expenses and USAID Office of Inspector General (up $144.6 million from FY2019)

$1 billion: food security and agricultural development

$875 million: basic education, including $100 million for Global Partnership for Education and $25 million for Education Cannot Wait

$906 million: Millennium Challenge Corp.

$410.5 million: Peace Corps

It is “pretty unusual” for the negotiated appropriations number to be lower than both of the prior bills — typically the number ends up somewhere between the two after negotiations, a policy and budget expert told Devex.

“Foreign operations kind of got screwed and you have to wonder why,” said the expert, who asked for anonymity to speak freely.

With Democrats in control of the House, a budget deal that increased spending caps, and an appropriations committee chair who also leads the state and foreign operations subcommittee and advocates for aid, “there were real hopes for something stronger than this,” another development expert said. 

While some domestic priorities got budget increases of 5% or more, foreign aid saw only about 1% of an increase overall, with many accounts just retaining the same funding levels. This could be the result of political pressures, with the 2020 election looming — tipping the balance toward more domestic spending instead of foreign aid, the policy and budget expert said.

Others are pleased with the bill, which President Donald Trump is expected to sign into law on Friday. Tom Hart, the North American executive director of the ONE Campaign, told Devex the final numbers were “in line with our expectations and looked pretty good, with Congress yet again coming through and rejecting the proposed cuts and hammering out a deal that keeps these important development programs whole.”

The fact that the bill was passed in December is also significant and helpful “because it gives USAID and the State Department more time to spend the resources in an effective manner and lowers the chance of an unproductive rescission battle at the end of the year,” said Bill O’Keefe, executive vice president for mission, mobilization and advocacy at Catholic Relief Services.

Global Fragility Act passes as part of US budget deal

After being held up for months over one senator’s objection, the Global Fragility Act will become law after its inclusion in the overall fiscal year 2020 spending package.

Most funding levels remained relatively even with last year, though there was an increase for basic education and cuts to international peacekeeping. The bill does contain some language aimed at pushing the administration to spend the money appropriated, and provides specific direction on funding for Central America and the West Bank and Gaza — areas where the administration has withheld funding in the past year. Several experts also applauded the inclusion of the Global Fragility Act in the legislation.

Here is what is buried in the more than 2,000 page bill.

Global Health

Global health advocates were pleased that Congress approved the U.S. commitment made to the Global Fund to Fight Aids, Tuberculosis and Malaria at the replenishment earlier this year.

Funding for global health

$5.9 billion: PEPFAR, including $1.56 billion for the Global Fund

$3.16 billion: global health programs, including $575 million for family planning

$851 million: maternal and child health

Overall in global health, the Global Fund came out ahead, malaria funding increased slightly, but there was disappointment for some development experts.

The amount budgeted for family planning was the same as in the fiscal year 2019 budget, which was a “huge disappointment” to some organizations, especially because the House and Senate versions of the bill had included increases, the development policy expert told Devex. The bill authorizes $575 million for voluntary family planning activities and does not include any of the language from the House bill that would have removed the restrictions imposed by the Mexico City policy, although that was expected.

The bill also includes the End Neglected Tropical Disease Act, which directs USAID to continue investments in research and development of tools and approaches to control and eliminate NTDs and ensure that advances reach those in need.

Women and children

Funding for women and children initiatives

$100 million: Women’s Global Development and Prosperity Fund

$50 million: women's leadership

$165 million: gender-based violence

The funding bill has sections about both the Women’s Economic Empowerment Act and the Women’s Global Development and Prosperity Initiative, which one development policy analyst said shows appropriators truly care about the issue and that the focus is more than “just one-off initiatives, but becoming a bedrock.”

The bill also includes the Preventing Child Marriage in Displaced Populations Act, which directs the president to have the U.S. permanent representative to the U.N. push for the development of a comprehensive strategy to address child marriage in refugee settlements.

US International Development Finance Corporation

The U.S. International Development Finance Corporation — which has been waiting on the appropriations bill to be approved to be able to open its doors — received $299 million in appropriations, which several of the development experts said was a good outcome for the agency.

“People should feel positively about where it ended up. It’s a good start — it’s not perfect though.”

— Conor Savoy, executive director, MFAN

But the bill did not fix two key issues that proponents of the new agency were hoping to see: shifting how equity investments are scored and allowing the DFC to use the fees it earns to offset its operating expenses, which is what the Overseas Private Investment Corp. does today.

In its first year, the DFC will be able to invest $150 million in equity, with the clear message from appropriators being that they want to see some sort of track record or plan from the new agency before changing the scoring, the policy and development expert told Devex.

On the fee issue, it seems clear the White House Office of Management and Budget has interpreted the BUILD Act, which created the DFC, in a way that does not allow the agency to retain its fees. On both issues, congressional champions would have to step up, or high-level administration officials would need to get involved to make the technical fixes, the expert said.

“People should feel positively about where it ended up,” said Conor Savoy, the executive director of the Modernizing Foreign Assistance Network. ”It’s a good start — it’s not perfect though.”

The bill also appears to provide an exception for the DFC’s limitations on investments to upper-middle income or wealthier countries as part of the prioritization of efforts and assistance for energy infrastructure projects in Europe and Eurasia. The bill says the agency is granted an exception from the restriction and may support projects in countries with upper-middle income or high-income economies as part of those efforts, if the president certifies to Congress that the investments are in the foreign policy interests of the U.S. and will have significant development benefits.

Countering China

The bill includes about $300 million for the Countering Chinese Influence Fund, which requires congressional consultation. The funding cannot be used for any project or activity that directly supports or promotes China’s Belt and Road Initiative, supports the use of Chinese technology, or adversely impacts U.S. national security.

The bill also mentions China in some of its specific country allocations. For example, in the section about Cambodia’s funding, the bill stipulates that some of the funds should be used to help the country assert its sovereignty against interference by China.

Climate

Funding for climate change and environment

$136.56 million: Global Environment Facility

$315 million: biodiversity

$135 million: sustainable landscapes

$177 million: adaptation

$179 million: renewable energy

While there is no huge uptick of money for climate in the legislation, and still no funding for the U.S. commitment to the Green Climate Fund, there is some language in the bill related to climate finance.

The bill includes funding for the Intergovernmental Panel on Climate Change and the U.N. Framework Convention on Climate Change and has specific language on biodiversity, adaptation, and renewable energy funding. In past years, accompanying documents, but not the bill itself, have detailed the climate spending.

Country-specific allocations

In some cases, particularly with Central America, Congress added language to clarify objectives and push the administration to spend the appropriated funds.

On Central America funding, some of the changes are subtle, including language that “not less than” the amounts stated “should” be made available. Assistance should be prioritized for programs and activities that address the key factors that lead to migration, according to the bill. There is also language about fiscal year 2019 funding, outlining how it should be spent, placing some limitations on funding, and outlining what should be done if the funds need to be reprogrammed.

It also says that the limitations on funding should not apply to food security programs, programs that combat gender-based violence, or humanitarian assistance. While humanitarian assistance is typically exempt from funding freezes motivated by politics, that was not the case in Central America this year.

The budget also includes specifics about aid to the West Bank and Gaza, including language that provides a fix to legislation that pinned U.S. assistance to legal action related to acts of terror committed against American citizens in Palestinian territories, which resulted in blocking U.S. assistance. Those provisions are really important, O’Keefe said, and should allow the U.S. to fund programs in those areas.

Rescissions, spending, and oversight

While the original House bill had more language asserting Congress’ appropriation authority, the final bill does include some added deadlines on when money should be appropriated, additional language on how money should be spent, and requirements for congressional notifications related to a variety of administration initiatives.

The House bill contained strong language about how the executive branch should not infringe upon Congress’ power of the purse, but much of that language was cut — likely in order to get the bill done, Savoy said.

“[The] current levers of oversight and appropriations really [aren’t] meant to deal with an administration that is hellbent on not spending certain types of money.”

— Development policy analyst who asked for anonymity

Congress used the appropriations bill in several instances to further its oversight of administration programs and policy changes.

The bill requires congressional notification before action can be taken as a result of the foreign assistance review — an opaque process, the results of which have not yet been shared publicly. Under the bill, any “programmatic, funding or organizational changes resulting from implementation of any foreign assistance review or realignment shall be subject to prior consultation with, and the regular notification procedures of, the Committees on Appropriations.”

There is also a requirement that USAID submit a report to Congress about USAID’s reorganization efforts within 30 days of the bill being signed, and then quarterly thereafter.

“We’ll see how this language works out,” O’Keefe said. “Congress and the administration are playing cat and mouse on the whole across the budget on the issue of flexibility of spending.”

Several of the experts Devex spoke to said that despite the enhanced language, they expect there may be another rescission attempt.

The development policy analyst told Devex that he doesn’t think the “current levers of oversight and appropriations really are meant to deal with an administration that is hellbent on not spending certain types of money.”

And a senior advocacy professional at an NGO said that the “administration is getting better and better at manipulating the system,” and is also increasingly politicizing aid. While the net cumulative effect is not the one-third reduction in the foreign aid budget the administration requested, it “does slow and degrade” the funding that is appropriated, she said.

About the author

  • Saldiner adva

    Adva Saldinger

    Adva Saldinger is an Associate Editor at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.