What the budget bill says about the future of US aid

A view at the east front of the U.S. Capitol from the Senate wing. Photo by: Phil Roeder / CC BY

WASHINGTON — On Friday, United States President Donald Trump signed — reluctantly — a massive spending bill that the U.S. development community has hailed as a rebuke of the administration’s proposals to slash foreign affairs funding.

Development advocates who had been working closely with members of Congress for the better part of a year to protect U.S. investments in global health, food security, humanitarian assistance, and other priorities broadcasted messages of gratitude to lawmakers, particularly those on the appropriations committee and subcommittees that hold sway over U.S. budgets.

“Congress is on the record once again saying that America can’t afford to withdraw from the world,” said Liz Schrayer, the president and chief executive officer of the U.S. Global Leadership Coalition. “Overall, it is a stunning rejection of what the Senate originally called a doctrine of retreat.”

Congress again rejects steep cuts to US foreign assistance in new budget

The U.S. Congress has released a budget that largely maintains U.S. foreign aid funding at fiscal year 2017 levels, and once again rejects the steep cuts proposed by the Trump administration. The bill provides $54 billion in funding for state and foreign operations — a cut of about 6 percent. The White House had proposed roughly 33 percent cuts in a budget request released last month.

Congress passed the $1.3 trillion spending bill on Thursday and President Donald Trump signed it into law Friday, hours ahead of the deadline to avert a government shutdown, and hours after the president tweeted that he would not sign the bill, a reversal of his position from the day before. The budget includes $54 billion for U.S. foreign affairs programs, an amount close to recent spending levels, and another dramatic departure from the multibillion dollar cuts proposed by the White House.

The ink has barely dried on the budget bill that will fund the government until the end of September, but development advocates are already fighting against the latest Trump administration budget proposal, which seeks to cut U.S. foreign affairs spending by 33 percent in fiscal year 2019. Many see this bill as a good sign, but acknowledge that next year’s budget will provide an equally difficult battleground.

It could prove even more difficult. Last month’s budget agreement imposes more restrictions on the amount of money available from a special account created to fund conflict operations, known as Overseas Contingency Operations, or OCO. While lawmakers were able to find enough money to make up for OCO reductions this year, next year they will have to come up with an additional $4 billion if they want to sustain current spending.

“We can’t lose sight that America is not keeping pace with growing crises and threats in the world,” Schrayer said, adding that in fiscal year 2019, the development community will be calling for $60 billion in funding.

As they pored over the 2,000-plus page bill, development experts hunted for winners and losers — and for signals as to how lawmakers will seek to steer U.S. development policy this year and into the future. With this bill, Congress showed a clear intention to exert strong oversight of any reforms or major changes to U.S. development programs, and they maintained funding to programs with strong bipartisan support. Other issues, including climate change and family planning, continue to divide Republicans and Democrats.

Oversight

Trump’s decision to replace Secretary of State Rex Tillerson with current Central Intelligence Agency Director Mike Pompeo two weeks ago raised a slew of questions about the future of the foreign affairs “redesign,” which Tillerson had previously led. State Department spokesperson Heather Nauert told reporters that information from the redesign activities will be bundled together and given to Pompeo to pursue — or not — at his discretion.

With this budget deal, lawmakers made sure they will also have a prominent seat at the redesign table.

The budget deal took significant steps to ensure Congress will have more visibility into how reorganization decisions are made — and oversight of any changes the administration chooses to pursue. Lawmakers stipulated that none of the funding they provided can be used for a reorganization, redesign, or any effort to “expand, eliminate, consolidate, or downsize” U.S. foreign affairs agencies without prior consultation with the appropriate congressional committee.

These additional requirements make clear that the former secretary of state botched congressional engagement, particularly around the reorganization process, said Jeremy Konyndyk, a senior policy adviser at the Center for Global Development. “He did a miserable job engaging Congress and engendered a lot of suspicion, including from Republicans.”

Regardless of the party, if an administration proposes changes to something Congress has weighed in on, Congress wants to be engaged, he said.

“The whole way that Secretary Tillerson approached the reform process was just begging Congress to layer on oversight,” Konyndyk said. “He eroded trust, ignored and disregarded Congress and so, it’s not a surprise to anyone who’s followed these committees.”

With the language in this bill, lawmakers gave themselves even more oversight authority than they did last year, when their consultation requirements focused on the question of whether the administration would seek to merge the U.S. Agency for International Development with the State Department. In this bill, administration officials will have to brief Congress on staffing changes, any planned reductions to USAID’s presence overseas, and investments in a new information technology platform.

Congress specifically instructed that the administration must fund USAID’s Regional Development Mission for Asia at the levels lawmakers provided in the bill, suggesting a keen interest in reviewing any administration plans to close USAID missions.

Some of the bill’s requirements are retroactive. For example, lawmakers directed that the secretary of state and USAID administrator must submit, within 30 days, “an analysis and justification for the reduction of Department of State and USAID personnel during calendar year 2017, to include an explanation of how such reductions support the missions of each agency.”

Lawmakers previously criticized Tillerson’s hiring freeze, which saw USAID cancel dozens of foreign service positions for which the agency had already recruited qualified applicants. Earlier this month, USAID regained control of its own hiring process, though the agency continues to employ a review board to oversee staffing additions.

The bill also laid out requirements for who should spend certain funds. For example, it requires that the funds made available for the Office of Global Women’s Issues be administered by the U.S. ambassador-at-large for global women’s issues, making clear that the administration wants that post to continue.

United Nations

While some United Nations accounts held steady in this budget bill, others, notably the peacekeeping budget, dropped this year, in part due to ongoing political discussions.

The U.S. is responsible for covering 22 percent of the bills at the U.N., and with the allocations in this budget, the U.S. can meet its financial obligations for the U.N. regular budget, said Peter Yeo, president of the Better World Campaign and senior vice president at the United Nations Foundation. 

While the funds allocated for peacekeeping were cut, there is about $300 million from the fiscal year 2017 budget that will carry over, which may somewhat alleviate the cuts. Still, the U.S. will fall about $230 million short of its obligations to U.N. peacekeeping funding — it will pay about 25 percent of peacekeeping bills, when it is supposed to pay 28 percent.

Organizations that provide humanitarian assistance are disappointed in the funding levels for U.N. peacekeeping, said Jill Marie Gerschutz-Bell, senior policy and legislative specialist at Catholic Relief Services.

“Peacekeepers play critical role in saving lives and allow CRS to provide humanitarian assistance. In some places humanitarian work is not possible without peacekeepers, particularly in complex emergencies around the globe,” she said.

While not ideal, the funds allocated for peacekeeping is a “major step forward” from the president’s budget request, Yeo said.

“The impact of paying 25 percent will be to add pressure to negotiations occurring in New York this year, which will culminate in December, to reduce the U.S. assessment rate,” Yeo said. “I think paying 25 percent is a statement to a lot of member states that we have to find a way to reduce the U.S. assessment rate.”

U.S. contributions to U.N. agencies including the United Nations Development Programme and the U.N. Children’s Fund, will remain largely equal to what they were in the previous fiscal year.

The bill includes $32.5 million in funding for the U.N. Population Fund, stipulating that UNFPA funds cannot be used for its program in China, and that the agency must keep U.S. funding separate from other accounts and not fund abortions. It is unlikely that the UNFPA will see those funds, however, as the administration has blocked U.S. contributions to the agency using the Kemp-Kasten Amendment, which prohibits foreign aid to any organization the administration determines is involved in coercive abortion or involuntary sterilization.

The decision to invoke Kemp-Kasten is an “inexplicable political judgement not based in fact” Yeo said, adding that UNF is working with Congress on the issue.

The funds allocated for UNFPA will instead go to USAID for family planning, maternal, and reproductive health activities, according to the bill.

The bill also includes a provision that would allow the U.S. to withhold 5 percent of the budget of a U.N. agency that took official action that undermined U.S. national security interests, or those of Israel. How this provision will play out in practice, remains to be seen, but Yeo said that it is concerning in part because there is not a clear definition of what it means to take an action that undermines U.S. national security, and that lack of clarity could lead to misunderstandings.

“When you look at what U.N. agencies do, they’re overwhelmingly actions aligned with U.S. foreign policy and national security interests,” Yeo said, adding, “the challenge is if you cut 5 percent of funding you can really undermine [the U.N.’s] ability to get its job done, which ultimately harms the U.S.”

Humanitarian Aid

Congress, in this bill, generally sent the message that humanitarian assistance is important and in the U.S. interest. Across the humanitarian assistance accounts, funding largely held even from what was enacted in fiscal year 2017, though some still say that given the magnitude of crises around the world, the U.S. should do more.

“What we see is there is total continuity and disregard for the level requested by the White House,” Konyndyk said. “What that reflects is that Congress gets why those accounts are important.”

Funding for refugees is about even with fiscal year 2017, and the bill explicitly outlines that the money allocated must be spent by the State Department, which Konyndyk said “sounds like a shot across the bow at Stephen Miller’s effort to kill the refugee bureau.”

Konyndyk, who use to lead USAID's Office of U.S. Foreign Disaster Assistance, said that while there are reasons to prefer the USAID model of humanitarian assistance, there are ways to fix that issue without destroying the refugee bureau, he said.

A significant amount of international disaster assistance funding was also moved from OCO funding to base funding, a sign many saw as promising, both because that funding will allow more flexibility and because it is a more stable pool of funding.

Much of the migration and refugee funding still comes from the OCO account, which does restrict where the funding can go — currently, that is Bangladesh, which is dealing with an influx of Rohingya fleeing Myanmar, and Latin America, which is seeing its largest displacement of people in history as political instability and hunger drive Venezuelans to leave the country.

“It is critical to continue to transition money back to the base … so that humanitarian funds can be spent where they’re needed,” said Gerschutz-Bell.

With growing needs, there is concern that funding will not fill those needs. And while last year Congress recognized the need for additional funding to address famine and approved additional spending, this is an election year, with fewer legislative days and it is unlikely that would happen again, certainly not before the election in November, Schrayer said.

The challenges of budget uncertainty

Senator Cardin blames Congress for US aid's 'budget disaster'

Senator Ben Cardin, ranking member of the Foreign Relations Committee, spoke to Devex Editor-in-Chief Raj Kumar about the need to return to a normal budget process, the Trump administration's efforts to circumvent congressional policy, and the future of U.S. aid reform.

Two big questions swirl as this budget bill sets the course for funding through the next six months: How will the mismatch between presidential requests and congressional allocations affect planning and programs, and will the administration spend the funds that are allocated.

The Office of Management and Budget has directed agencies and programs to make plans based on the president’s budget request, George Ingram, a senior fellow at the Brookings Institution said. Those plans now have to be reconfigured to take into account significantly more funding.

“It does put the worker bees in a pretty difficult situation because you have to be planning on the basis of a budget that is basically a fantasy, or maybe a nightmare,” Konyndyk said. “It gives you programmatic whiplash,” he said.

USAID often plans multiyear strategies, and often has high and low funding scenarios so missions and bureaus could have conversation with governments about the possibility of different levels of funding, Ingram said, but the differences in the budgets is undermining U.S. credibility. For humanitarian funding, which runs on faster cycles to respond to need, the condensed planning process poses more challenges, and the delayed budget bills after several continuing resolutions also results in a slower release of funds so that aid cannot always get where it’s needed.

“That is a major disconnect that interferes with the effective planning and implementation of assistance and interferes with and hurts our relationships,” he said.

There are also concerns, several people have told Devex, that the money appropriated by Congress will either not be spent, or not be distributed by the administration.

“I think we’re going to have to watch very carefully with Congress and USAID partners how money is spent when there is such a difference between administration proposals and congressionally appropriated dollars. There needs to be a lot more clarity about the administration’s plans to spend what Congress is providing,” said Tom Hart, the North American executive director of ONE Campaign.

Climate

While the budget includes some high-profile cuts to climate change-related spending, some analysts say the picture is not completely bleak for U.S. contributions and participation in international climate projects and negotiations.

Development experts dismayed as US exits Paris climate agreement

President Trump announced that the U.S. would withdraw from the landmark Paris Agreement on climate change, a process that can take up to four years. Development and environmental experts expressed their dismay, as they began to cast their sights on new countries to lead on climate change.

For a second straight year — and to no one's surprise — the bill prohibits funding to the Green Climate Fund, an institution created under the United Nations Framework Convention on Climate Change to support adaptation and mitigation projects in developing countries. That means the U.S. pledge of $3 billion to the GCF, made during the Obama administration, continues to go unmet.

The bill also prohibits any funding to support the enforcement of regulations barring the Overseas Private Investment Corp. or the Export-Import Bank from investing in coal projects. Those regulations, introduced during the previous administration, were seen as levers to drive more U.S. financing to renewable energy projects, instead of to fossil fuel production.

Climate finance advocates found some reason for optimism in the spending bill. Congress allocated roughly $140 million to the Global Environment Facility, only $7 million less than the previous two years. The GEF supports a wide range of conservation projects, many of which carry benefits for climate-vulnerable communities.

While Congress stripped funding from climate-specific initiatives like the GCF, it remains to be seen what this budget deal will ultimately mean for U.S. support to climate change activities. Without specifically endorsing projects or programs to mitigate carbon emissions or adapt to climate change impacts, lawmakers continued to support some of the major institutions that carry out that work.

The budget bill sets top-line allocations, but much of the actual spending done by institutions such as USAID, OPIC, and the World Bank, for example, is driven by demand from developing countries, or by staff who make decisions much farther downstream than the congressional appropriations process, said Joe Thwaites, associate at the World Resources Institute.

Thwaites remains hopeful U.N. climate agencies that got no mention in this budget bill might still see some funding from the U.S. government. The UNFCCC and the Intergovernmental Panel on Climate Change are the U.N.’s climate negotiation and climate science bodies, and Thwaites said the administration’s posture toward both of them seemed to be relaxing. While Congress did not appropriate any money to either body in this bill, the Trump administration could still contribute from its discretionary funds, Thwaites wrote in a blog post.

“We’re hearing from the administration that they have sort of changed their opinion, and they understand the value of these bodies,” Thwaites said, though he also pointed out that those messages surfaced before Tillerson, who has supported U.S. participation in climate negotiations, announced his resignation.

Congress and the Trump administration now find themselves in a difficult situation when it comes to climate change policy. On one hand, they seem to want to influence the course of international discussions. On the other hand, their decisions not to fund institutions like the Green Climate Fund gives them significantly less sway over the priorities they pursue, Thwaites said.

“It’s hard to see why the fund would pay attention to [their interests] if they’re not engaging and contributing,” he said.

About the authors

  • Saldiner adva

    Adva Saldinger

    Adva Saldinger is an Associate Editor at Devex, where she covers the intersection of business and international development, as well as U.S. foreign aid policy. From partnerships to trade and social entrepreneurship to impact investing, Adva explores the role the private sector and private capital play in development. A journalist with more than 10 years of experience, she has worked at several newspapers in the U.S. and lived in both Ghana and South Africa.
  • 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.