Last week, the Obama administration unveiled its much-anticipated fiscal 2013 international affairs budget request. As reported by Devex, the $56.4 billion top line request was received with some mixed emotions, but generally the global development community in Washington and other parts of the world viewed it as practical and balanced. If signed into law, the 2013 international affairs budget request would represent a modest 2 percent increase over current spending levels.
Approximately $51.6 billion (91 percent) of the total would be set aside specifically for the State Department and the U.S. Agency for International Development and their foreign aid programs. About $8.2 billion (16 percent) of the State and USAID budget would fund overseas contingency operations in support of civilian-led programs in Iraq, Afghanistan and Pakistan. Unlike the rest of the international affairs budget, appropriations for overseas contingency operations do not count against spending caps established under last August’s last-minute debt deal.
Of course, many question marks remain and a lot can happen before a final international affairs budget reaches the president’s desk for signature. For readers unfamiliar with the intricacies of the U.S. budget process, the president’s request is the first step in what will undoubtedly be months of back-and-forth between the White House and Congress. While the first day of October marks the start of fiscal 2013, congressional Republicans may very well postpone signing off on the administration’s fourth budget until after the presidential elections in November.
Historical context is always important when assessing Washington budget processes and outcomes. (See the chart above for differences between requested and actual budgets during the Obama administration). Indeed, if the fate of President Barack Obama’s prior international affairs budgets is any indication, then the $56.4 billion top-line figure for fiscal 2013 is far from assured. For example, in advance of fiscal 2010 not even the president’s decisive majorities in both the House and Senate could shield the international affairs budget from a 7-percent cut. For fiscal 2011, in the wake of Republicans capturing the majority in the House, Congress slashed the president’s request by 14 percent. The 2012 international affairs budget request was actually one-tenth below the fiscal 2011 request. In the end, Congress enacted an international affairs budget 4 percent above the president’s request, but analysts say this increase was fueled primarily by additional appropriations for OCO as the Obama administration began to wind down military operations in Iraq and the Afghanistan-Pakistan region.
For fiscal 2013, the administration has proposed $7.9 billion for global health programs which will be divided among those administered by the State Department ($5.4 billion) and USAID ($2.5 billion). Global health programming is the largest single foreign assistance account in the international affairs budget. For fiscal 2010, weeks before President Obama’s announcement of his Global Health Initiative, Congress passed a global health budget 2 percent above the requested amount. Since then, with the House under a Republican majority, Congress has slashed the president’s request for global health by 8 percent and 6 percent for fiscal 2011 and 2012, respectively. One key takeaway here is that the administration is now unlikely to fulfill its six-year pledge (2009-2014) of $63 billion for GHI, which aims to synergize Washington’s global health programs.
The USAID sub-account, which supports a wide range of global health programs, has borne the brunt of these cuts: 17 percent in 2011 and 15 percent in 2012. The president’s requests for the much larger State Department sub-account, the source of most funding for the President’s Emergency Plan for AIDS Relief, as well as U.S. contributions to the Global Fund to Fight AIDS, Tuberculosis and Malaria, were reduced by 3 percent for 2011 and 2 percent for 2012. Should Congress continue to spare the State sub-account from deeper cuts, President Obama will come close to fulfilling his investment promise to the Global Fund of $4 billion from 2011 to 2013, which would solidify the U.S. position as the organization’s leading donor.
For fiscal 2013, the administration has requested $2.5 billion for the USAID-administered development assistance account, which funds bilateral food security, climate change, education, economic development, and democracy promotion programs, as well as USAID Forward – the agency’s procurement reform initiative. Congress has slashed the president’s development assistance request by an average of 12 percent each year since fiscal 2010 with cuts peaking at 15 percent for fiscal 2011.
A large portion of the development assistance account supports President Obama’s global hunger initiative known as Feed the Future and the Global Climate Change Initiative. For fiscal 2013, the administration has requested $1 billion for Feed the Future and $470 million for GCCI bilateral programming. On average in both fiscal 2010 and 2011, Congress cut requested funding for bilateral Feed the Future programs by 24 percent and bilateral GCCI programs by 16 percent. While the actual 2012 budgets for these two core development programs have not yet been disclosed, the administration appears to be on track to fulfill its $3 billion pledge for GCCI from fiscal 2010 to fiscal 2012.
On the other hand, as a result of devastating cuts by Congress, the administration has likely fallen short of its $3.5 billion commitment for Feed the Future from fiscal 2010 to fiscal 2012. It is only projected to meet this commitment in fiscal 2013.
The administration’s international affairs budget request for fiscal 2013 includes $4.2 billion for humanitarian assistance channeled through a pair of USAID- and U.S. Department of Agriculture-administered food aid accounts ($1.6 billion), another pair of State Department-administered migration and refugee assistance accounts ($1.7 billion), and a USAID-administered international disaster assistance account ($960 million). While Congress reduced the administration’s humanitarian assistance budget by 2 percent in fiscal 2011, it signed off on more than what was requested in both fiscal 2010 (4 percent) and fiscal 2012 (3 percent).
Among the three prongs of U.S. humanitarian aid, only migration and refugee assistance programs have been granted more funding than requested each year from fiscal 2010 to fiscal 2012. Funding for food aid has fared the poorest, with Congress slashing the president’s request by 11 percent and 13 percent, respectively, for fiscal 2011 and fiscal 2012, following a 1 percent increase in fiscal 2010. Nonetheless, these congressional cuts have not been as severe as those imposed on Feed the Future, raising doubts over Washington’s ability to reorient the U.S. food security strategy toward long-term agricultural development that theoretically would foster sustainability in developing countries.
Millennium Challenge Corp.
For fiscal 2013, the administration has requested $898 million for the MCC. Since fiscal 2010, on average, Congress has slashed requested funding for the MCC by 24 percent each year, peaking at a 30 percent cut in fiscal 2011. Some believe that Congress has been hesitant to fully embrace the MCC because “it has not spent its money fast enough,” in part because the agency only disburses the billions already at its disposal when countries meet benchmarks in areas including good governance and social sector investment.
As Connie Veillette, director of the Center for Global Development’s Rethinking U.S. Foreign Assistance Program, said: “Congress loathes the sight of big pots of money that remain unobligated for too long.”
Deep cuts to the president’s fiscal 2013 request for the MCC have the potential to jeopardize second compacts currently in the pipeline for El Salvador, Benin, and Ghana.
International financial institutions
For fiscal 2013, the administration has requested $2.6 billion for U.S. contributions to international financial institutions. Since fiscal 2010, Congress has slashed the president’s request for IFIs on average by 23 percent each year.
U.S. contributions to multilateral climate financing facilities have been hardest hit. Since fiscal 2010, Congress has cut in half the president’s request for U.S. contributions to the World Bank-administered Climate Investment Funds and the Global Environment Facility, cosponsored by the World Bank and the United Nations. How Congress responds to the administration’s $364 million request for these climate financing facilities in fiscal 2013, as well as at least another $470 million in proposed bilateral climate programming, will be a test for GCCI as it moves beyond President Obama’s $3 billion pledge through 2012.
The president’s proposed contributions to concessional lending facilities of the world’s multilateral development banks, which represent the bulk of the IFI account, have also been subject to cuts by Congress, albeit at lower levels. Since fiscal 2010, Congress has slashed proposed contributions to the World Bank’s International Development Association by 4 percent, the African Development Fund by 22 percent and the Asian Development Fund by 41 percent. For fiscal 2013, the president has requested $1.4 billion for the IDA, $195 million for the AfDF, and $115 million for the ADF.
On a brighter note, both Congress and the president have been largely supportive of contributions to general capital increases for MDBs in a bid to maintain U.S. positioning at these institutions. For the first time in over two decades, MDBs are simultaneously requesting increases to their capital bases which were recently depleted due to heavy lending during the financial crisis. Congress has enacted nearly 100 percent of the president’s requests for the World Bank’s International Bank for Reconstruction and Development, the African Development Bank and the Asian Development Bank. Interestingly, Congress did cut a fiscal 2012 request for the Inter-American Development Bank by 26 percent. It is likely no coincidence that Washington’s share of voting power at the IADB (30 percent) appears less vulnerable to challenge than at the IBRD (17 percent), ADB (16 percent), and AfDB (7 percent). For fiscal 2013, the president has requested $187 million for IBRD, $107 million for ADB, $102 million for IADB, and $32 million for AfDB.
Lorenzo is a contributing analyst for Devex. Previously Devex's senior analyst for development finance in Manila, he is currently an MA candidate in international economics and international development at the Johns Hopkins School of Advanced International Studies in Washington. Lorenzo holds a bachelor's degree in government and social studies from Wesleyan University.
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