What would deep cuts to US foreign aid look like?

By Michael Igoe, Adva Saldinger 15 March 2017

A water and wastewater infrastructure built in Egypt with the support of the U.S. Agency for International Development. Photo by: Mohamed Abdelwahab / USAID Egypt / CC BY-NC

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For U.S. aid advocates, last month’s news that the Donald Trump administration will seek massive cuts to U.S. foreign affairs funding came as an unwelcome, though not unexpected, blow. The intervening days have seen a flurry of speculation and warnings about what cuts of the magnitude President Trump is proposing — up to 37 percent — would mean for U.S. global development programs and the populations they serve.

The most optimistic voices hope the cuts might force long-sought reforms to U.S. foreign assistance programs, achieving greater efficiency and focus. On the other end of the spectrum, development experts warn they will inflict critical damage to lifesaving programs that are already underfunded — while making little dent in the cost-savings they are supposed achieve to help offset a $54 billion increase in defense spending.

Secretary of State Rex Tillerson is reportedly among those who have pushed back against the most drastic proposals, calling for tempered — though still dramatic — cuts to foreign affairs next year, with additional cuts phased in later.

“Even the reports of Secretary Tillerson’s counteroffer sound pretty draconian — like we’re going to phase that in instead of doing it all at once and the first year cuts would be something like 20 percent,” said Rep. David Price, a Democrat from North Carolina, at a House subcommittee hearing last week.

“I have no idea, of course, whether that is going to come to pass, but I think we need to understand the implications,” Price said.

The president’s budget proposal is traditionally seen more as a suggestion than a blueprint. Lawmakers in both chambers create budgets of their own, which are then negotiated down to an annual spending plan they can vote on. But this is the first time in recent memory that a principal proponent of cuts to foreign assistance spending will be the man in the White House. He will have the power of his public profile — and Twitter feed — to justify those proposals to the American public, should he choose to do so.

In President Barack Obama’s budget requests, aid advocates were generally confident they would find a larger number than Congress would ultimately approve. Now they face the opposite situation, with their strongest remaining government allies on Capitol Hill — senators such as Republican Senator Lindsey Graham from South Carolina, who called Trump’s 37 percent figure, “dead on arrival.”

It now appears inevitable that foreign assistance programs will be weighed against one another to determine which survive and which won’t. In the meantime, aid experts are pondering exactly how a significant blow to the foreign affairs account might resonate throughout ongoing and planned programs.

Contentious conversations

If an event Monday at the Center for Global Development was any indication, deep cuts to foreign aid spending will likely also bring about tense discussions about whether some cuts are warranted and how they should be done.

The forum brought together conservative and liberal think tank experts to discuss foreign aid, exposing a wide gulf in opinions. There were more than a few murmurs of disbelief or dissent from the crowd. One attendee mouthed a profanity in response to a comment she disagreed with, another sighed “Jesus Christ” once it was over.

One question loomed large: will dramatic cuts finally lead to foreign aid reform?

Although contentious, the conversation found agreement that foreign aid policy is guided by outdated legislation in great need of updating. The U.S. Foreign Assistance Act was passed in 1961 and has been added to over the years, but has not been overhauled.

“We have an archaic structure that lends itself to the sort of fiddling and also frankly to the argument that’s made by a lot of opponents of aid that it is not effective,” said Danielle Pletka, the senior vice president, foreign and defense policy studies at the American Enterprise Institute. “Now is the opportunity to do the right thing.”

But other advocates question whether dramatic cuts would achieve those reforms, how long change could take to materialize and if the cuts will be done in a reasoned, systematic manner.

“This is not a budget cut arrived at out of a serious process. We can come up with efficiencies, a smart way to do it, but there is zero sign anything has gone into a coherent plan,” John Norris, the executive director of the sustainable security and peacebuilding initiative at the Center for American Progress, argued.

Pletka responded by saying that “all of us are horribly ill served” by being offensive or discounting the administration. It “just doesn’t get us anywhere,” she said.

Discussants suggested a few particulars about what cuts could mean. James Roberts, a research fellow for economic freedom and growth at The Heritage Foundation, said integrating the U.S. Agency for International Development into the State Department would improve efficiency and save money. Moreover, the State Department should undergo an organizational overhaul, he said, adding that the Heritage Foundation has suggested eliminating special envoys and putting regional bureaus back in charge.

Secretary of State Rex Tillerson. Photo by: U.S. Department of State

With a smaller budget, Roberts suggested foreign aid should be focused on trouble spots such as Afghanistan “where properly constructed projects can work” and should not be spent in other parts of the world where the assistance is too small to make a difference.

If USAID were to be folded into the State Department, Norris and Scott Morris — a senior fellow and the director of the U.S. Development Policy Initiative at the Center for Global Development — worried that neither State nor the Department of Defense have the expertise in international development needed to best design and execute aid programs.

Morris argued that one way to maximize U.S. government funding in an era of cuts is to invest more in multilateral organizations such as the World Bank that can leverage that capital. But the Trump administration has already signalled that it is keen to cut funding for international organizations, including a reported 50 percent slash to the U.N. funding.

Other suggestions arose, including the need for more congressional oversight and the idea of a Charity Navigator of sorts for U.S. government programs that would measure and then lead to more support for programs that spend less money on overhead costs. Pletka also said that if looking broadly at foreign aid cuts, budgetary support to countries including Israel, Egypt and Pakistan should be on the table. Israel in particular, she said, does not need U.S. aid.

The cuts may also force the U.S. to pare down the number of countries it works in to focus on where success is possible and there are committed governments partners, Norris said. The cuts are also likely not to be distributed evenly. The difficult conversations won’t just happen at think tanks but among constituencies within the aid community looking to advocate for their priorities — be it PEPFAR or humanitarian response.

“It’s going to be a very heated fight,” Norris said.

via Devex Youtube

A budget role for watchdogs?

In addition to requiring cuts to USAID programs, Trump’s budget could also restrict the ability of watchdog offices to provide oversight to those programs.

Last week, the House subcommittee that negotiates State Department and U.S. Agency for International Development appropriations kicked off its budget season with testimony from the inspectors general who oversee State Department and USAID programs. Lawmakers repeatedly pressed the two watchdogs to share their views on how funding cuts would affect their abilities to conduct oversight — and what they would mean for the assistance programs the inspectors general regularly review and assess.

“When you’re talking about those kinds of cuts, and you’re also talking about a hiring freeze … there’s going to be some real serious tradeoffs that need to be made about those programs that we look at,” said USAID Inspector General Ann Calvaresi Barr.

“Suffice it to say that our return on investment … will certainly go down,” she added.

The USAID inspector general suggested that her office could play a role in examining how a development agency facing budget cuts might go about determining which programs to keep and which ones to cut.

“For us to be able to step back and take that strategic look — how did USAID, how did the other agencies determine where those cuts would be made? What drove those decisions? Were those the right decisions? We just have not done that kind of holistic look, but I think with these kinds of questions that are being raised, that could be an appropriate role for an IG to take during this time of change,” she said.

‘You have to cut where the money is’

Others make more dire predictions of what cuts at the magnitude Trump is reportedly considering would mean for U.S. foreign assistance programs and the often vulnerable populations they serve around the world.

Jeremy Konyndyk, the former director of the U.S. Office of Foreign Disaster Assistance and a senior fellow at the Center for Global Development, told Devex a 37 percent budget cut would have “catastrophic consequences for U.S. humanitarian response.”

Emergency operations worldwide are already underfunded. In planning for and responding to international disasters, budget shortfalls — not surpluses — were the norm during his tenure under President Obama, Konyndyk said. In 2016 the international disaster assistance account’s enacted budget was roughly $2.8 billion.

“Every year we would go through a budget planning process and the needs that we would identify would significantly outstrip the resources available to us,” he said.

With the threat of famine currently mounting in four countries — South Sudan, Nigeria, Yemen and Somalia — on top of enormous ongoing humanitarian challenges in Syria, Iraq and elsewhere, the demand for U.S. assistance is growing, not shrinking. Even with what Konyndyk called a “healthy and robust” disaster assistance budget last year, his office still had to approach the Office of Management and Budget to request additional funding.

Asked how he would have responded to a demand to cut his office’s budget 37 percent, Konyndyk said it would not be possible by “trimming” at the edges. Cuts of that magnitude would require scaling back some of the biggest disaster assistance operations, including those that operate in tandem with military efforts such as the anti-ISIS campaign in Syria and Iraq, as well as stabilization efforts in Afghanistan.

“What I would always say to my budget teams is, you have to cut where the money is … Where most of the money is, is in those big responses,” Konyndyk said.

The former disaster chief added that large-scale budget cuts to the international disaster assistance account would also likely degrade his former office’s ability to invest in research and in preparedness. However, pulling money from those areas would be counterproductive, Konyndyk said, because investments in research and innovation ensure U.S. disaster response efforts take advantage of technologies and innovations that can make them more cost-effective.

He added that the 5 to 10 percent of the foreign disaster office’s budget that goes to preparedness every year mostly contributes to building up national counterpart organizations, so that these are better prepared to respond when and if a disaster strikes — lessening the burden for donor countries such as the U.S. to send their own personnel and resources.

In both cases, in terms of the overall cost savings the Trump administration hopes to find in order to spend more on the military, “it’s a negligible amount of money,” Konyndyk added.

Stay tuned to Devex for more news and analysis of what the Trump administration means for global development. Read more coverage here and subscribe to The Development Newswire.

About the authors

Igoe michael 1
Michael Igoe@AlterIgoe

Michael Igoe is a senior correspondent for Devex. Based in Washington, D.C., he covers U.S. foreign aid and emerging trends in international development and humanitarian policy. Michael draws on his experience as both a journalist and international development practitioner in Central Asia to develop stories from an insider's perspective.


Adva%2520saldinger%2520photo
Adva Saldinger@deveximpact

As a Devex Impact associate editor, Adva leads coverage of the intersection of business and international development. From partnerships to trade and social entrepreneurship to impact investing, she enjoys exploring the role the private sector and private capital play in development. Previously, she has worked as a reporter at newspapers in both the U.S. and South Africa. Most recently, she has been ghostwriting a memoir for a former child slave and NGO founder in Ghana.


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