• Inside Development
Breaking News

Obama Unveils 2012 Budget Request; Foreign Aid Largely Spared from Cuts

By Rolf Rosenkranz14 February 2011

U.S. President Barack Obama contemplates during a budget meeting at the White House. Photo by: Pete Souza / White House

The White House on Monday (Feb. 14) announced plans to increase global health and food aid and continue “significant levels of funding” for development assistance to Iraq, Afghanistan and Pakistan in the coming year. These policies are part of the Obama administration’s fiscal 2012 budget proposal and will likely face significant opposition in the U.S. Congress as budget-conscious lawmakers push for across-the-board spending cuts.

President Barack Obama is requesting $47 billion for the Department of State and U.S. Agency for International Development, according to documents released by the Office of Management and Budget - a 1 percent increase from 2010, and a smaller annual increase than in past years. Of that amount, $32.9 billion would be spent on core foreign assistance and food aid, and $14.2 billion on core State Department operations.

An additional $8.7 billion is being requested for overseas contingency operations in countries such as Iraq, Afghanistan and Pakistan, where counterinsurgency efforts and initiatives such as the training of police are increasingly managed by State instead of the Department of Defense. The overall governmentwide OCO budget would decrease by $41 billion compared to 2010 estimates.

Here are some investments included in the 2012 budget proposal:

  • $9.8 billion for the Global Health Initiative.
  • $1.4 billion for Feed the Future to promote sustainable production and avoid food emergencies in priority countries.
  • $56 million for the U.S. Trade and Development Agency to promote U.S. exports for priority development projects.
  • $3.3 billion for multilateral institutions, invested through the Treasury Department.
  • $4.2 billion for helping internally displaced persons, refugees and victims of armed conflict and natural disasters.
  • $50 million for the Global Security Contingency Fund, which integrates Defense and State resources to address security crises involving both agencies.
  • $87 million for a multiyear initiative to strengthen U.S. diplomatic and development expertise in countries of the greatest strategic importance.

Among the “hard choices” the administration said it made when drafting its 2012 budget request is to slow down hiring USAID and DOS staff. The Obama administration had planned to increase the number of foreign service officers 25 percent by 2013 - largely to build in-country capacity and procurement expertise - but now says it would not reach that goal until at least 2015.

Spending would be reduced by, among other things:

  • Reducing bilateral programs and the Assistance for Europe, Eurasia & Central Asia account by $115 million to focus funding on regions with the greatest assistance needs such as Africa. All told, bilateral aid to six countries would be eliminated, and development assistance to more than 20 other countries would be cut by at least half.
  • Eliminating bilateral security assistance for several countries, as resources are being focused on countries with strategic significance, such as Israel and Pakistan.
  • Cuting funding for the African Development Foundation and the Inter-American Foundation by nearly 20 percent and instructing the organizations to seek partnerships to leverage and maximize remaining funding.
  • Supporting USAID operational and programmatic improvements, including reforms to procurement systems and investments in science and technology, innovation, and monitoring and evaluation.
  • Saving approximately $15 million in 2012 using information technology to achieve efficiencies, such as eliminating duplication of data center services and infrastructure to control energy use and facility costs and phasing out legacy messaging systems.

“Although not subject to a freeze in funding, the Department is committed to finding efficiencies, cutting waste, and focusing on key priorities,” one document states. “Accordingly, foreign assistance to several countries has been eliminated. Additionally, efficiency gains have dramatically reduced the costs of treating AIDS through the Global Health Initiative, and future savings will be realized through changes to USAID’s operating model to encourage local ownership and facilitate the phasing-down of such funding.”

The elimination of programs and lower-than-expected increase in PEPFAR funding have already raised eyebrows over the past few months, and Obama’s 2012 budget proposal remains a tough sell to the public and increasingly budget-conscious lawmakers in the U.S. Congress, which holds the government’s purse strings: Conservative Republicans are almost certainly going to continue pushing severe cuts to foreign assistance, while aid advocates may fret over selected cuts and funding decisions such as those on PEPFAR.

Overall, however, it is likely that the aid community will throw its support behind the White House’s proposal.

“What we see clearly is that the president recognizes the need to make the best use of our development dollars,” former Republican Rep. Jim Kolbe told Devex, pointing the Obama administration’s plans to improve the aid delivery mechanism, reform procurement and boost in-house capacity at USAID and beyond. Kolbe, a co-chair of the Modernizing Foreign Assistance Network, spoke with Devex Monday after reviewing a White House budget fact sheet, but without having studied the administration’s budget justification.

Kolbe acknowledged that the White House plan included some “tough choices,” but he stressed that contracting reform, staff training and beefed-up monitoring and evaluation were “absolutely necessary” to improve aid effectiveness.

The Obama proposal was “on the right track,” said the former former chairman of the House Appropriations subcommittee on state and foreign operations. Development aid is “not a nice thing to have, it’s a must-have,” he added.

Does the budget proposal hint at a stratefic shift in the Obama’s approach to foreign affairs? Kolbe said he wasn’t sure, but allowed that while the United States had focused much attention to “strategic partnerships” in the past few years, there might be a greater focus on good governance, building democratic institutions and ensuring a long-term economic sustainability of countries such as Egypt.

In the coming weeks, Secretary of State Hillary Clinton and USAID Administrator Rajiv Shah will make the case to Congress that a robust “investment” in foreign affairs is vital for U.S. economic and security interests - a mantra the Obama administration has been pushing for at least a year, but one that Kolbe said has neither gained enough traction with the U.S. public nor with lawmakers.

“It’s a hard sell,” he said. “We’ve not made that case so well over the years. We have a better case right now if,” - and he emphasized that term, “we can show some real progress” reforming the aid delivery process.

“I understand we need to make cuts” in all areas of government, Kolbe said. But he called the cuts proposed by the Republican Party “pretty drastic” and “short-sighted.” Diplomacy and “soft power” were “more needed than ever” to ensure national security, he stressed.

The U.S. Global Leadership Coalition, meanwhile, praised the White House budget proposal and urged Congress to “fully support it.”

Sam Worthington, president of InterAction, an NGO association, called the proposal “responsible and sensible” and stressed that it would “help save lives, create economic prosperity here and abroad, and reduce future deficits by preventing bigger security outlays in the future.”

Commenting on steps taken by the Obama administration to beef up aid effectiveness, Worthington said, “Now that improvements are actually being made, the Hill has another reason to support President Obama’s budget request.”

Both groups voiced grave concern about plans by House Republicans to cut foreign affairs funding for the remainder of the current fiscal year, which ends Sept. 30, this week.

“If the cuts proposed by the House of Representatives for FY 2011 became law, they would harm our country by weakening our security and undercutting future economic prosperity, thereby endangering our nation’s future fiscal health,” Worthington said in a statement. “These cuts would also gut key life-saving humanitarian and development accounts. For example, they include a 67 percent reduction in international disaster assistance and a 15 percent drop in child and maternal health spending. The result of this will be more lives lost to HIV/AIDS and starvation, fewer children in schools and the U.S. unable to respond to those in need when a crisis strikes.”

Read the White House fiscal 2012 foreign affairs budget proposal, including requested appropriations for USAID, the Millennium Challenge Corp. and other organizations and initiatives such as global health, peacekeeping and foreign military financing.

Read more industry statements on the U.S. foreign affairs budget:

What’s your take on the budget proposal? Please let us know by leaving a comment below! And check back for more news and analysis of the 2012 budget - as well as ongoing efforts to cut foreign affairs as part of a spending bill that would cover the remainder of fiscal 2011.

About the author

Rolf rosenkranz 400x400
Rolf Rosenkranz

Rolf Rosenkranz oversees a talented team of in-house journalists, correspondents and guest contributors located around the globe. Since joining Devex in early 2008, Rolf has been instrumental in growing its fledgling news operation into the leading online source for global development news and analysis. Previously, Rolf was managing editor at Inside Health Policy, a subscription-based news service in Washington. He has reported from Africa for the Johannesburg-based Star and its publisher, Independent News & Media, as well as the Westdeutsche Allgemeine Zeitung, a German daily.


Join the Discussion