White House 'rescission' plan throws aid community into uncharted waters

The White House. Photo by: Joyce N. Boghosian / White House

WASHINGTON — Development advocates are bracing for an attempt by United States President Donald Trump’s administration to rescind billions of dollars that Congress has already appropriated for foreign assistance programs.

Rumors about the “rescission package” have swirled around Washington, D.C., for more than a week, as U.S. development advocates have sought to piece together details of what the plan could include — and what options are available for them to fight against it. Devex spoke to multiple sources briefed on the rescission plan, who shared information from private conversations and off-the-record meetings, on condition of anonymity.

White House opens new front in war on US aid budget

The latest effort by the White House Office of Management and Budget to cut U.S. foreign assistance indicates that the Trump administration is tired of seeing its spending plans overturned by Congress.

The Trump administration’s latest effort to cut U.S. foreign aid has thrown global development supporters into the uncharted waters of a budget fight with no historical precedent. The plan, directed from the White House Office of Management and Budget, is expected to arrive early next week — likely on Aug. 28, according to multiple sources.

The rescission package would place a 45-day “freeze” on money in certain accounts that has not yet been obligated by the U.S. Department of State and the U.S. Agency for International Development. The move would be unprecedented because of its timing — just over a month before the end of fiscal year 2018 — and it would put lawmakers and foreign aid supporters in an ambiguous and alarming position. By the time the 45-day freeze lifted, the fiscal year would be over, and as a result the unspent money would go back to U.S. Treasury.

With little time to overturn the White House’s effort — and a hazy list of options for Congress to do so  — development advocates see a real possibility that billions of dollars already designated for U.S. foreign assistance could disappear. Some of them remain confident that lawmakers will either find a way to defeat the White House’s plan, or to convince the Trump administration that the political costs of going through with it would outweigh any political gains.

While this particular rescission package is only expected to target funding for the State Department and USAID, lawmakers worry that it could set a dangerous precedent for the White House to be able to ignore Congress’ budget authority. Some lawmakers have questioned whether the move would even be legal.

The rescission package would aim to retract funds appropriated on a two-year basis in fiscal year 2017, as well as funds appropriated on a one-year basis in fiscal year 2018, according to people familiar with the plan. Both of those funding pools expire when the current fiscal year ends on Sept. 30.

Questions remain about exactly how much funding — and which accounts — the rescission package would affect.

The accounts that the White House wants to reclaim represent moving targets. As of last week, the OMB plan was believed to apply to $3.6 billion in assistance, but since then, USAID and the State Department have been obligating money quickly in the targeted accounts, and the total is now down to $2 billion, according to several sources updated on the accounts this week. Further changes in those numbers are expected before the rescission package arrives.

The largest pot of money targeted is the Economic Support Fund, an account managed by the State Department that provides assistance to countries where the U.S. has a strategic interest, sources said. USAID’s Development Assistance account was previously believed to be vulnerable to rescission, but staff briefed on the account told Devex it has now been completely obligated.

State Department funds that provide bilateral assistance to Europe, Eurasia, and Central Asia are also reportedly being targeted, as are State Department funds that support security sectors such as law enforcement, peacekeeping, and foreign military financing.

Contributions to multilateral organizations are also rumored to take a big hit under the White House plan, with all unobligated funding in the International Organizations and Programs accounts slated for rescission, sources said. That would likely include contributions to international peacekeeping organizations and United Nations agencies such as UNICEF.

Some development experts, who also spoke to Devex on condition of anonymity in order to speak freely, speculated that the White House may have chosen not to target global health and humanitarian accounts since they typically enjoy broad, bipartisan support, and seeking to cut them would likely give rise to more impassioned opposition.

The OMB’s plan has forced some of the administration’s development and diplomacy leaders into a difficult situation, and some of them are reportedly lobbying against their own administration’s rescission effort, according to people briefed on the situation.

Both Secretary of State Mike Pompeo and United Nations Ambassador Nikki Haley are rumored to have voiced their opposition to President Trump’s plan, while Vice President Mike Pence listened to lawmakers express their disapproval at a Republican policy lunch on Tuesday, according to people with knowledge of the meeting.

One Republican lobbyist shrugged off the suggestion that Pompeo has been an effective advocate for maintaining funding.

“If Pompeo was being really strong, we wouldn’t even be having this discussion,” the lobbyist said, adding, “I wouldn’t want to give him too much credit.”

USAID Administrator Mark Green faced repeated questions about the rescission package at a Center for International and Strategic Studies event on Monday. The USAID chief did not articulate any position on the issue, and suggested that he had little information about it.

“On the budget front, I really don't have much more that I can provide. Part of it is — I'm not attempting to duck — I just literally don't have more. I'd refer you to OMB quite frankly,” Green said.

Typically Congress can reject a rescission package, as the Senate did earlier this year. In this case, with the OMB’s directive expected to arrive so close to the end of the fiscal year, there are questions about the tools available to lawmakers to oppose it. While development advocates and congressional staffers are scrambling to identify options, one source involved in the effort said that “none of them are particularly attractive.”

The most straightforward course of action would be for either the House of Representatives or the Senate to call for a full floor vote to reject the rescission package, which at least some members believe they have the authority to do. With the House in recess, calling such a vote would fall to the Senate, a potential solution that would have to overcome both political and timing challenges. The Senate floor schedule is already packed, and leaders are unlikely to disrupt it.

A second option that some aid advocates have explored is extending the authority of the funds targeted for rescission into fiscal year 2019, so that they would not expire on Sept. 30. This would give the State Department and USAID additional time to obligate them.

While there is some debate around this option, supporters believe that extending the funds’ authority into 2019 would create another problem. If the funding authority is extended into 2019, the Congressional Budget Office may have to “score” the funding as though it were newly appropriated, and that would raise the 2019 budget above the spending caps agreed to in a two-year budget deal earlier this year.

A third option would be for lawmakers to sue the OMB through the U.S. Government Accountability Office, though aid advocates worry about the lengthiness of this option and they remain uncertain about the funds’ fate with a lawsuit pending.

Amid the uncertainty, U.S. aid budget experts are clear about two things: This additional layer of conflict will drive a further wedge between the Trump administration and the development community; and, as funding agencies rush to push money out the door against a backdrop of vanishing funds and a broken budget process, the effectiveness of development programs stands to suffer.

About the author

  • 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.