Trump administration resurrects 'rescission' proposal in latest attack on US aid spending

White House Office of Management and Budget Director Mick Mulvaney. Photo by: REUTERS/Kevin Lamarque

WASHINGTON — The Trump administration appears poised — for the second summer in a row — to attempt to retract billions of dollars in foreign assistance funding already appropriated by the U.S. Congress.

In a letter obtained by Devex, the White House Office of Management and Budget directed the U.S. Agency for International Development and the State Department on Monday to freeze more than a dozen accounts and report back on the amount of funding they contain that has not yet been committed to a specific project. The funding in question totals between $2 billion and $4 billion that is set to expire when the current fiscal year ends on Sept. 30, according to people familiar with the accounts.

“Under the guise of reviewing the balance sheet, it actually halts ongoing work at the worst possible moment. Which is precisely the intent.”

— Jeremy Konyndyk, senior policy fellow, Center for Global Development

“This review drops a bomb into the end-of-year issuance of new grant/contract awards. Under the guise of reviewing the balance sheet, it actually halts ongoing work at the worst possible moment. Which is precisely the intent,” Jeremy Konyndyk, a senior policy fellow at the Center for Global Development, who led USAID’s disaster response during the Obama administration, wrote on Twitter.

Last year the White House considered using the same budgetary authority — a relatively obscure process known as “rescission” — to target U.S. global development funding. USAID’s country missions managed to quickly spend much of their remaining unobligated funds, and OMB ultimately abandoned that plan.

People with knowledge of the situation, who spoke on the condition of anonymity, told Devex they believe the White House will move forward with the rescission proposal this year.

Some USAID missions could also find more of their funding exposed to a rescission proposal this time around, due to a series of setbacks that have blocked spending during the current fiscal year.

In Dec. 2018, a disagreement between Republicans and Democrats over border security resulted in a 35-day partial government shutdown, which saw many U.S. aid workers furloughed and operations suspended.

In March, President Donald Trump announced that the U.S. would cease all foreign assistance to the “Northern Triangle” countries of Central America — El Salvador, Guatemala, and Honduras — in response to concerns about migration from these countries to the U.S. That move, which one congressional aide referred to as “a rescission by another name,” affected roughly $450 million in assistance funding.

In recent months, the White House has also blocked large amounts of U.S. aid spending through its strict implementation of the Trafficking Victims Protection Act. The TVPA restricts funding to governments that fail to meet minimum standards in preventing trafficking in persons. While previous administrations have issued waivers to allow assistance to continue in many cases, the Trump administration has taken a much harder line — and left many of USAID’s field officers wondering whether their programs will be allowed to continue or not.

Devex has learned of at least one USAID country mission affected by the TVPA sanctions that was still waiting for spending to be approved, only to discover now that these unspent funds could be frozen and targeted for rescission.

The Trump administration’s use of rescission authority is particularly disruptive because of its timing — during a congressional recess, and close to the end of the fiscal year. A rescission proposal initiates a 45-day freeze on the funding in question, during which Congress can review the rescission request, and accept it, reject it, or take no action at all. Since Congress is not back in session until early September, lawmakers will have limited time to act before the end of the fiscal year.

If the White House issues a rescission proposal less than 45 days before the end of the fiscal year, it is unclear what option lawmakers have to restore funding that is set to expire while the freeze is still in effect.

In Dec. 2018, the Government Accountability Office — in response to a request from Democratic leaders of the House and Senate Appropriations Committees — examined the legality of the White House using the rescission process to withhold funds past their date of expiry and found this to be “an abuse of this limited authority.”

Lawmakers push back on rescission

Provisions buried in a May 2019 House of Representatives budget bill aimed to prevent the White House from rescinding foreign aid money that Congress has already appropriated. The bill took aim at the rescission process and the Trump administration's human trafficking policies.

In May, the U.S. House of Representatives — citing concerns about “overreach in the programming of foreign assistance by OMB and the National Security Council” — tried to preempt similar attempts by the White House by changing the law. Lawmakers included language in their fiscal year 2020 budget bill that would extend the lifespan of any funding targeted for rescission within 60 days of their expiration.

As budget negotiations for 2020 continue, that language has yet to become law. Many expect the House and Senate will settle for a continuing resolution, which would hold budget levels steady for an agreed amount of time, but might not offer the same opportunity to push back against a Trump administration rescission proposal.

USAID and the State Department are the only U.S. government agencies whose funds have been frozen so far.

In a barrage of statements, U.S. development advocates were quick to condemn the administration’s apparent plan.

“Diverting lifesaving funds that have already been appropriated by Congress is dangerous and unprecedented. It will put countless programs at risk of sudden closure, endanger some of the world’s most vulnerable people, and reduce the effectiveness of taxpayer dollars,” said David Ray, CARE’s vice president of policy and advocacy.

“For the second summer in a row — just when Congress is on its five-week recess — OMB is singling out America’s civilian national security tools for a potential cancellation of funds that will take America off the global playing field,” said U.S. Global Leadership Coalition President and CEO Liz Schrayer.

“This is no surprise given this administration’s slash and burn approach to foreign assistance and governing more broadly. It is a dangerous break with a long tradition of American leadership in the world and violates the Constitution’s separation of powers,” said Scott Paul, Oxfam America’s humanitarian policy lead.

About the author

  • Igoe michael 1

    Michael Igoe

    Michael Igoe is a Senior Reporter with Devex, based in Washington, D.C. He covers U.S. foreign aid, global health, climate change, and development finance. Prior to joining Devex, Michael researched water management and climate change adaptation in post-Soviet Central Asia, where he also wrote for EurasiaNet. Michael earned his bachelor's degree from Bowdoin College, where he majored in Russian, and his master’s degree from the University of Montana, where he studied international conservation and development.