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News Analysis: US

Ryan VP pick could yield clues on Romney’s foreign aid plans

By Pete Troilo13 August 2012

GOP presumptive presidential nominee Mitt Romney and his running mate, Wisconsin congressman Paul Ryan. Photo by: monkeyz_uncle / CC BY-NC-SA

Less than 90 days before Americans cast their ballots for president, President Barack Obama maintains only a slim lead over Republican challenger Mitt Romney in opinion polls. Amid the specter of a mandatory spending rollback on Jan. 2, many in the U.S. aid community have begun bracing themselves for even more belt-tightening should Romney take office later that month.

“Let me tell you: We’re spending more on foreign aid than we ought to be spending,” the former Massachusetts governor argued in a Republican presidential debate in October of last year.

Until this past weekend, however, Romney has given little indication of his foreign aid budget plans. On Saturday, the presumptive Republican presidential nominee named Paul Ryan as his running mate, calling the 42-year-old congressman from Wisconsin an “intellectual leader” of the Republican Party. From his perch as chairman of the House Budget Committee, the staunch fiscal conservative has drawn national attention as the architect of a controversial long-term budget blueprint to dramatically rein in federal spending and restructure social programs. By selecting Ryan, many believe Romney inevitably adopts his divisive budget proposal and principles. Obama has instead proposed a combination of modest spending reductions and a rollback of Bush administration tax cuts, which he argues would more responsibly tackle the ballooning U.S. budget deficit.

Political analysts say that an election once widely expected to be a referendum on Obama’s economic record has now become a choice between two competing visions over the role and size of government. A victory for the Romney-Ryan ticket in November would leave Republicans with a mandate – not to mention tremendous pressure from the party’s increasingly dominant right flank – to adopt the Ryan budget’s sweeping spending cuts, including slashes to U.S. foreign assistance. Over the next 10 years, the House Republican budget or Ryan budget would spend $40 trillion, well below the $47 trillion proposed in the Obama administration’s spending plan.

For fiscal 2013, the Ryan budget would slash international affairs spending by 10 percent below actual 2012 levels to $43 billion. The Obama administration, on the other hand, has requested $56 billion for international affairs in fiscal 2013. In recent years, above 90 percent of the U.S. international affairs budget has been allocated for the State Department and the U.S. Agency for International Development and their foreign aid programs.

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As the chart above shows, both the Ryan budget and the Obama administration’s spending plan would impose cuts to the U.S. international affairs budget in fiscal 2014. Under Obama’s plan, U.S. international affairs spending would then rise each year from fiscal 2015 to fiscal 2022. International affairs spending in the Ryan budget would continue to fall until fiscal 2016, hitting just $38 billion compared to $51 billion for the Obama plan that year.

After fiscal 2016, modest increases in international affairs spending would be underway each year for both the Obama and Ryan plans. Ten years from now, in 2022, U.S. international affairs spending would reach $58 billion under the Obama spending plan, 24 percent above the $47 billion target outlined by the Ryan budget.

While Obama’s proposed spending levels for foreign assistance have been met with mixed reactions among the U.S. aid community, most nonetheless credit the administration with keeping the U.S. aid budget largely intact in a tightfisted environment. The president’s fiscal 2013 request of $56 billion for international affairs would represent a 13 percent jump from his first budget back in fiscal 2010.

In stark contrast, leading voices in the U.S. development community have expressed dismay over the Ryan budget. Gregory Adams, director of aid effectiveness at Oxfam America, describes the Ryan plan as “small potatoes for Washington deficit math—yet devastating for poor people in the field.” Meanwhile, the U.S. Global Leadership Council warned that the Ryan budget would herald a “dangerous direction” in America’s global engagement. House Foreign Affairs Committee Ranking Member Howard Berman (D-Calif.) adds that the Ryan plan “fails to recognize” the importance of development and diplomacy in U.S. national security.

Republicans in Congress have come to the defense of the aid spending cuts championed by Ryan, making the case that America’s fiscal challenges imperil U.S. foreign assistance in the long run.

“Those who complain about potentially diminished levels of International Affairs funding need to ask themselves how much less an insolvent United States of America would be able to do,” argues Rep. Ileana Ros-Lehtinen (R-Fla.), chairwoman of the U.S. House Foreign Affairs Committee.

Beyond its topline figures for international affairs spending, the Ryan budget also outlined a number of recommendations on how U.S. aid agencies might make do with a significantly diminished budget. The Ryan budget calls for USAID to fully embrace the Millennium Challenge Corp.’s model of only disbursing aid to countries which demonstrate a commitment to good governance, economic openness, and social sector investment. The Ryan budget would even consolidate USAID under MCC – a far less likely scenario given USAID’s size and standing.

Ryan would also eliminate Feed the Future, President Obama’s global hunger and food security initiative. The vice presidential candidate argues that the program, which focuses on agricultural development, overlaps with longstanding U.S. food aid efforts.

Connie Veillette, former Director of the Rethinking U.S. Foreign Assistance Program at the Center for Global Development, disagrees with that assessment. “[Food aid] is not a long-term program to promote food security. The majority of its funds are for humanitarian responses to acute and chronic problems with regard to food availability and access. It is a “feed the now” rather than a “feed the future” approach,” says Veillette.

Washington’s support for World Bank-administered climate investment funds as well as the U.S. Complex Crises Fund, which finances stabilization and conflict prevention activities worldwide, would also be on the chopping block should a Romney administration fully embrace the Ryan budget. Sizeable spending cuts would also be in store for U.S. contributions to international organizations as well as USAID’s international disaster assistance programming.

Of course, Romney is still the man at the top of the ticket. While his advisers make clear that he supports the tenets of the Ryan budget, they also emphasize that he intends to put forward his own spending plans if elected. Thus far, unlike his running mate, Romney has mostly steered clear of offering specifics on the possible makeup of U.S. foreign aid in his administration.

The CEO-style structure of his campaign, as reported by Politico, also suggests that a host of advisers will have Romney’s ear. His advisers include some well-known foreign aid advocates – among them veterans of the Bush administration global development initiatives – who do not appear to share Ryan’s brand of fiscal conservatism.

Most notably, Romney has recently appointed former World Bank President Robert Zoellick as head of his national security transition team. Credited with modernizing the World Bank, Zoellick has urged developed countries, including the United States, to maintain foreign aid flows even amid the global financial crisis. Romney is also reportedly considering Zoellick as his Secretary of State. Romney’s foreign policy and national security team also counts former USAID Administrator Andrew Natsios and former MCC CEO John Danilovich.

While House Republicans remain resistant to a watered-down version of the Ryan budget, the conservative spending plan can claim some common ground with Obama’s aid agenda, particularly in regards to an expansion of performance-based aid. The Obama administration has tapped four countries (El Salvador, Ghana, the Philippines, and Tanzania) for its Partnership for Growth program. Taking a page from the MCC, the initiative aims to support broad-based economic growth in countries that demonstrate a strong commitment to democratic governance and sustainable development. In addition to recommending more performance-based aid, the Ryan budget also emphasized the need for U.S. aid programs to transition to country ownership. The administration’s USAID Forward reform agenda shares this commitment to locally-led project administration and implementation.

Furthermore, Romney has also committed to bolster economic ties with Africa, which would mark a continuation of the Obama administration’s increasingly business-oriented strategy for engagement with the continent. While compromise has been hard to find in Washington lately, agreement on these areas could form a basis for bipartisan discussions on the future of the U.S. aid program.

Lorenzo Piccio contributed to this report.

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About the author

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Pete Troilo

As director of global advisory and analysis, Pete manages all Devex research and analysis operations worldwide and monitors key trends in the global development business. Prior to joining Devex, Pete was a political and security risk consultant with a focus on Southeast Asia. He has also advised the U.S. government on foreign policy and led projects for the Asian Development Bank and International Finance Corp.


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