The path toward the first U.S. budget in five years is growing more fraught, with sequestration looming again on the horizon.
While the passage of the U.S. budget conference Tuesday night is being celebrated as the first Republican budget passed by both houses in eight years, the House and Senate appropriations bills — which are legally binding, unlike the nonbinding budget conference — tell another story.
The nonbinding budget conference provides a nonbinding framework for spending, while the appropriations bills — like the 302(b) allocations released by the House last week — sets spending for the 302(b) accounts. This includes the all-important State and Foreign Operations “150” account, which funds 97 percent of foreign aid spending.
For the whole international affairs budget, the approved nonbinding budget conference shows a 7 percent cut (about $1.5 billion) compared with fiscal year 2015. This includes a 4 percent cut in base funding and a 24 percent cut to the Overseas Contingency Operations budget.
But the binding House allocations — together with the Senate allocations likely to be released next week — will set top-line numbers for subcommittees and give clues about the finer allocations for foreign aid spending in 2016.
One big surprise is how drastically the foreign aid allocations depart from the House budget resolution passed last month. The House originally agreed to cap spending in the off-budget OCO account at $5 billion, but the 302(b) allocations bumped this to $7 billion.
That is a good sign for aid advocates, according to some budget experts.
“Because the domestic appropriations allocations are so tight, providing the maximum OCO level for [State and Foreign Operations] allows a little flexibility for domestic programs,” Kate Eltrich, a partner at Sixkiller Consulting, told Devex.
Still, programs traditionally funded through OCO will need to scale back, Eltrich noted, since the allocations fall short of the 2015 level of $9.2 billion, and the lost OCO funds won’t be transferred to base spending.
The Senate 302(b) allocations will likely be released in the next couple of weeks, Eltrich said.
But given the Senate’s recent divide over using off-budget funds from the OCO account to increase defense spending, senators will have a hard time reconciling their differences while still managing to maintain budget caps. Also, it’s important to note that the nonbinding budget conference is based on funds freed up by a hypothetical repeal of the President Barack Obama’s health care law, and the president has pledged to veto any bill that attempts to end the Affordable Care Act.
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Molly is a global development reporter for Devex. Based in London, she covers U.K. foreign aid and trends in international development. She draws on her experience covering aid legislation and the USAID implementer community in Washington, D.C., as well as her time as a Fulbright Fellow and development practitioner in the Middle East to develop stories with insider analysis.
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