The US Debt Panel’s Failure and Its Impact on the Foreign Aid Budget

Joint Select Committee on Deficit Reduction cochairs Rep. Jeb Hensarling (R-Texas) and Sen. Patty Murray (D-Wash.). Photo by: republicanconference and studio08denver

The fight to save the U.S. foreign aid budget from further Congressional cuts continues following the failure of a special bipartisan and bicameral committee to agree on ways to save $1.2 trillion from the U.S. federal budget over the next 10 years.

The Joint Select Committee on Deficit Reduction announced Nov. 21 that it could not “make any bipartisan agreement available to the public” before its Nov. 23 deadline. In a joint statement, co-chairs Sen. Patty Murray (D-Wash.) and Rep. Jeb Hensarling (R-Texas) said committee members were unable to bridge “significant differences” in order to come up with a plan. Reports indicate tax reforms were among the main sticking points in the committee’s deliberations.

This failure of the so-called supercommittee to come up with an agreement triggers some $1.2 trillion worth of across-the-board budget cuts that are set to take effect starting January 2013. Half of the cuts would come from the U.S. budget function number 50 covering discretionary spending for national defense, while the rest would be from the remaining federal budget categories, including number 150 — the international affairs account.

How automatic spending cuts would affect the U.S. international affairs budget exactly, however, remains to be seen, as the Budget Control Act does not stipulate reductions per budget account outside of national defense spending.

The are also some doubts over whether the automatic spending cuts would actually take effect since next year’s presidential and congressional elections are likely to change the country’s political landscape before 2013.

The implementation of the automatic cuts is outlined in the Budget Control Act of 2011, the same legislation that created the supercommittee. The act was signed into law by U.S. President Barack Obama in August after the White House and the U.S. Congress reached a compromise to raise the country’s debt ceiling.

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About the author

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    Ivy Mungcal

    As senior staff writer, Ivy Mungcal contributes to several Devex publications. Her focus is on breaking news, and in particular on global aid reform and trends in the United States, Europe, the Caribbean and the Americas. Before joining Devex in 2009, Ivy produced specialized content for U.S. and U.K.-based business websites.