New year, similar budget request aims to slash aid budget

Copies of U.S. President Donald Trump's FY2021 budget proposal sit on display for the news media on Capitol Hill in Washington, D.C. Photo by: REUTERS / Leah Millis

WASHINGTON — The Trump administration released its fiscal year 2021 budget request Monday, which once again called for significant cuts to foreign aid, cuts that development experts said are likely to be dismissed by Congress as they have been in the past several years.

The proposal calls for $44.1 billion in foreign aid spending in FY2021, a reduction of more than 20% from the $55.7 billion approved for FY2020. Included in the budget request are several proposals to consolidate different spending accounts and significant cuts to both global health and humanitarian assistance.

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But the proposal is likely to be met with resistance from Congress. The top Democrat and Republican on the House Foreign Affairs Committee criticized the cuts, with Democratic Rep. Eliot Engel saying the proposal was headed to the recycling bin while Republican Rep. Mike McCaul said: "Successful diplomacy is cost effective — fully funding our foreign assistance programs will ultimately save taxpayer dollars, military resources, and protect the homeland.”

Via Twitter.

One of the main themes of the budget request was that when it comes to foreign aid, other countries need to do their part and step up.

“I believe the pattern is simply repeating itself with the president’s request effectively being a nonstarter in the eyes of Congress,” said Noam Unger, vice president for development policy, advocacy and learning at InterAction.  

While most programs see significant proposed cuts, the budget requests $290 million for Gavi, the Vaccine Alliance, which matches what the organization had hoped it would receive ahead of its replenishment later this year.

“We’re really pleased to see the commitment to Gavi,” said Tom Hart, the North American executive director at ONE Campaign. “[But] we are in truth looking at a budget that is more or less really really harmful with this one notable exception.”

By the numbers: Proposed U.S. budget for 2021. Icons from FlatIcon.com.

Global health

Gavi may have received its request, but the proposed budget cuts global health spending at the U.S. Agency for International Development and the State Department by about $3 billion.

“While we appreciate the ongoing support for global health, we prefer for that to not only come in the form of lip service, but in investments and true leadership across the board.”

— Loyce Pace, president and executive director, Global Health Council

“The Budget increases resources for USAID to help improve global public health and prevent the spread of diseases, such as the outbreak of Ebola in the Democratic Republic of Congo (DRC) and the ongoing emergence of the novel coronavirus 2019-nCoV.,” USAID Administrator Mark Green said in a statement.

When asked how that comment aligns with the proposed cuts, a USAID spokesperson pointed to a $15 million increase in global health security spending and $25 million for the Emergency Reserve Fund, which can be deployed to respond to pandemic outbreaks.

While the budget proposes slashing global health spending, it still uses rhetoric about ending AIDS, supporting global health security and several other issues, said Loyce Pace, the president and executive director at the Global Health Council.

“While we appreciate the ongoing support for global health, we prefer for that to not only come in the form of lip service, but in investments and true leadership across the board,” she said.

In addition to cuts to the global health accounts at State and USAID, there were also proposed reductions for global health programs run by other agencies including the Department of Health and Human Services. The budget also proposes cutting funding to the World Health Organization by about 52%, which a State Department official said was in part because international organizations need greater accountability and efficiency and need to put appropriate reforms in place.

“Aside from the very real financial impact, what message is that sending to WHO and other countries making commitments?” Pace asked. “That message is worrisome because it makes me question the level of faith the administration is showing in WHO, but I hope that Congress would respond by reiterating its faith in the agency.”

She added that at the U.N. in general and at WHO specifically, there have been a lot of changes — there is a commitment to reform and agencies are working to streamline their efforts.

“The global health issues are outpacing our ability to keep up. That’s not just an efficiency problem but a resources problem,” she said.

A large portion of the $3 billion gap between what Congress appropriated in FY20 for global health spending and this proposal comes from a total of more than $2 billion in cuts to the President’s Emergency Plan for AIDS Relief and the U.S. contribution to the Global Fund to Fight AIDS, Tuberculosis and Malaria.

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The administration has proposed similar reductions to PEPFAR in the past, but the U.S. global AIDS coordinator, Ambassador Debbie Birx, told Devex last week that if the administration really didn’t support  PEPFAR, it would have cut the budget entirely, rather than proposing a cut which it knew Congress would likely overturn.

Humanitarian assistance

The administration proposes merging several humanitarian assistance accounts into one new International Humanitarian Assistance account, and cutting about $3 billion from what was appropriated in fiscal year 2020.

In the budget document, the administration writes that the estimated average of annual funding for 2020 and 2021 for humanitarian assistance, when combined with unspent money that will be carried over, will be $8.8 billion, the second highest level ever.                

While the administration had proposed consolidating the accounts and cutting humanitarian assistance in the past — a move Congress has rejected repeatedly — the justification this time is different, said Jeremy Konyndyk, a senior policy fellow at the Center for Global Development.

“The bottom line here is they’re requesting a third less money than they had this year and they’re trying to dress that up with budgetary smokescreens,” he said. “They do this every year and Congress ignores it every year, but that doesn’t make it any less irresponsible. What is amazing is how much they are trying to distract from what they are doing.”

The administration is also essentially saying that it plans to “artificially suppress spending” so that it has money to carry over, despite every humanitarian aid appeal being underfunded, Konyndyk said.

Funding humanitarian aid through a single account will allow the U.S. government to respond to a “crisis and a person, not a designation” and allow it to ensure that the right resources are in the right place at the right time, Doug Pitkin, the director of the State Department’s Bureau of Budget and Planning said at a press conference Monday.

He said current funding doesn’t have a lot of flexibility and that even with the lower $6 billion appropriation request for fiscal year 2021, the U.S. is still the largest donor in the humanitarian assistance space. The decrease in funding will help ensure that the U.S. contribution is closer to 25%, which is what the administration believes is appropriate in terms of burden sharing, he said.

This isn’t the first time the administration has said others need to step up and do more but Konyndyk said there are several counterarguments. Countries are unlikely to spend money if the U.S. is pulling back, he said, and while the U.S. may give the most in absolute terms, other countries give more relative to their size.

Development funding

In addition to proposing the merging of the humanitarian accounts, the administration also proposed merging USAID Development Assistance account, State’s Economic Support Fund, and several others into a new Economic Support and Development Fund.

Merging those accounts would be a “really bad move if you’re interested in sustainable development outcomes,” said Conor Savoy, the executive director at the Modernizing Foreign Assistance Network. ESF and development assistance dollars have typically been spent differently with different aims in mind, he said.

“The combination of the accounts comingles and misunderstands the accounts, which were established for two different purposes,” he said, adding that Congress will likely reject that proposal again.

The administration makes it clear with this budget proposal that it supports private sector engagement, allocating nearly $730 million to the U.S. International Development Finance Corporation, as well as $75 million for the Prosper Africa and $77 million for Power Africa.

Potential budget bump for DFC raises concerns about aid funding

The White House is expected to include a significantly higher appropriations request for DFC in its 2021 budget, raising concerns that the new agency’s equity authority is being funded in a way that could threaten allocations for other aid programs.

Devex reported on the proposal to increase DFC’s budget dramatically, in large part to increase funding for its ability to make equity investments, and how it could create tensions in a development community that had supported the new institution. Congress is unlikely to use its limited additional allocations this year to increase spending for DFC by the requested amount, especially at the expense of other programs, Hart said. He said instead Congress and the administration should fix the budget scoring issues with the new agency’s equity authority.

A look ahead

The consensus among aid professionals is that Congress will once again ignore this budget proposal as they grapple with appropriating money for FY2021.

Many also believe that a budget bill will not be passed by the start of the fiscal year, and that instead, Congress will pass a continuing resolution leaving the matter to be dealt with after the November election.

There may be more wiggle room in budget allocations this year than last, and Hart said he expects a small increase to aid spending.  

While this budget seems a repeat of years past, the development community will be working hard to advocate against the cuts and for a robust foreign affairs budget for FY2021. However, language in the budget request hints at another potential budget fight before FY2021 spending can be resolved – raising the continued possibility of rescission.

“The Administration cannot simply sit by while the Congress continues to spend. In addition to providing a clear road map to a more fiscally responsible future in the Budget, the Administration is using all available tools and levers to restrain spending … as well as the revitalization of tools such as rescissions” the budget states.

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.