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International Affairs Budget Update
July 14, 2017
1. House State-Foreign Operations Bill Released: Deep Cut to
Topline
2. House Appropriations Committee Approves Bump Up for
McGovern-Dole Program
3. Nominations and Hearing Update: Green Moves Forward
4. Reform Update: Listening Report Released, Rumors Abound on
Shifts in Bureaucracy

1. House State-Foreign Operations Bill Released: Deep Cut to Topline

This week, the House Appropriations Committee announced $47.4 billion
in topline spending for its FY18 State-Foreign Operations (SFOPS)
bill, known as the 302(b) allocation. The $47.4 billion is split
between $35.3 billion in base and $12 billion in Overseas Contingency
Operations (OCO) funding. In particular, OCO funding takes a major cut
compared to last year.

There are two ways to compare this funding level to FY17. Both are
deep and would have a significant impact on programs, if enacted:

* Compared to the total FY17 enacted level of funding, which
includes the supplemental to combat ISIS that Congress passed in
December, the House proposal cuts funding by 17.4%, or $10
billion;
* If the ISIS supplemental is excluded, the proposal is 10.7%
below current levels, or $5.7 billion.

State-Foreign Operations Budget Snapshot

FY17 Enacted
FY18 Request
FY18 House

Base
$36.6 billion
$28.1 billion
$35.3 billion

OCO
$20.8 billion*
$12.0 billion
$12.0 billion

Total
$57.3 billion
$40.1 billion
$47.4 billion

*Includes $4.3 billion provided in the FY17 Security Assistance
Appropriations Act

While an improvement on the Administration's proposal, compared
to the funding allocations for the other 11 appropriations bills, the
cut to the State-Foreign Operations 302(b) allocation is
disproportionate, with the Financial Services spending bill taking the
next highest level cut of about 6%. USGLC President and CEO Liz
Schrayer released a statement raising concern that the funding level
falls short of current levels and urging the Senate to protect funding
for development and diplomacy programs.

http://action.usglc.org/site/R?i=Sls3HaZr6jC7o0EyTBngcg

It is important to remember that the SFOPS bill funds the lion's
share of the total International Affairs Budget, which was funded at
nearly $60 billion in FY17.

Selected Program Highlights

We will share more details when the House Appropriations Committee
releases its report to accompany the spending bill (likely next week),
but in the interim the bill text and Committee press release provide
some detail on specific program funding levels.

* Global Health: The House bill protects Global Health programs
compared to the Administration's request, but funding for
the overall account is down 5% ($404 million) compared to FY17.
The $8.3 billion provided in the bill is $1.8 billion more than
the Administration's request. More information on specific
accounts should be available when the report is released.

* Economic and Development Assistance: The House bill rejects the
Administration's proposal to consolidate the Development
Assistance, Economic Support Fund, Democracy Fund, and
Assistance to Europe, Eurasia and Central Asia (AEECA) accounts
into a new State Department-led Economic and Development Support
Fund.

* Humanitarian Assistance: The bill cuts humanitarian assistance
by 24% ($1.9 billion), which is a significant cut although less
than the 33% ($2.6 billion) cut proposed by the Administration
for the SFOPS humanitarian accounts. Notably, the House
Agriculture Appropriations bill also rejects the
Administration's proposal to eliminate the Title II, PL480
Food for Peace program, although it imposes a 13% ($200 million)
cut to the program.

* Peacekeeping: The House bill cuts funding for UN
Peacekeeping by 22% ($412 million) compared to FY17 levels. It
also cuts funding for non-UN Peacekeeping by 30% ($199 million).
These cuts, while very deep, are less drastic than what the
Administration requested. The Administration proposed cutting UN
Peacekeeping by 37% ($711 million) and non-UN peacekeeping by
54% ($358 million).

* Millennium Challenge Corporation: The House bill provides $800
million for the MCC, the same as the Administration's
request but a 12% ($105 million) cut compared to FY17.

* UN and Other International Organizations: The House bill cuts
funding to cover U.S. assessed contributions to the UN and other
international organizations by 14% ($188 million), roughly half
as deeply as the Administration proposed. As the House has done
in the past and similar to the Administration's proposal,
the bill eliminates the International Organization and Programs
(IO&P) account, through which voluntary contributions are
normally funded.

* International Financial Institutions: This is one of the few
areas that fares worse in the House bill than in the
Administration's request. Largely reflecting the
elimination of funding for the World Bank and climate related
programs, the Administration proposed a 16% ($290 million)
reduction. The House bill cuts these programs by 50% ($893
million).

* Security Assistance: The House bill cuts funding for security
assistance by 7% ($624 million). Notably, one-third of that cut
is due to the deep reduction in funding for non-UN peacekeeping
operations noted above. The Administration's budget
request protected security assistance and particularly Foreign
Military Financing for key allies, including Israel, Egypt, and
Jordan.

* Diplomatic Operations and Embassy Construction: The House
bill includes somewhat more modest cuts than those proposed by
the Administration for diplomatic operations and USAID operating
expenses. The bill would reduce the former by 12% ($1.2 billion)
and the latter by 7% ($91 million). It would cut funding for
embassy construction and maintenance far less deeply - by
about 23% ($697 million), compared to 62% ($1.9 billion) in the
request.

* Agencies Slated for Elimination: The House bill rejects the
Administration's proposed elimination of five agencies,
although supporting them at reduced funding levels.

Next Steps

The House Appropriations Committee is expected to mark up the FY18
State-Foreign Operations bill on Wednesday, July 19. House Republicans
are considering a range of options for moving spending bills before
the August recess, including a 12-bill omnibus package.

The Senate is much further behind than the House and is unlikely to
release its version of the SFOPS spending bills until after the August
recess, although with an additional two weeks of session in early
August the Appropriations Committee could decide to move forward if
the bill is ready.

USGLC is strongly urging the Senate Appropriations Committee to
maintain current level funding in its FY18 State-Foreign Operations
bill and reject deep and disproportionate cuts to the International
Affairs Budget.

2. House Appropriations Committee Approves Bump Up for McGovern-Dole
Program

This week the House Appropriations Committee approved the FY18
Agriculture Appropriations bill, which, as we reported last week,
restores much of the funding for international food aid programs,
which the Administration had proposed eliminating altogether. Notably,
the full committee approved a managers' amendment that included
increasing funding for the McGovern-Dole International Food for
Education and Child Nutrition program by $16.5 million - back to
FY17 levels - compared to the subcommittee level to $185
million. The Senate has yet to introduce its version of the FY18
Agriculture spending bill.

http://action.usglc.org/site/R?i=NuSoqv-ns_iolf-700rsdA

FY18 Agriculture Appropriations International Programs Snapshot

FY17 Enacted
FY18 Request
FY18 House

Food for Peace/P.L. 480 Title II
$1.6 billion
$0
$1.4 billion

McGovern-Dole
$202 million
$0
$202 million

Total
$1.8 billion
$0
$1.6 billion

3. Nominations and Hearing Update: Green Moves Forward

On Wednesday, the Senate Foreign Relations Committee (SFRC) voted to
approve Ambassador Mark Green's nomination to lead the U.S.
Agency for International Development (USAID). The full Senate could
vote to confirm him as early as next week, but with the Senate poised
to take up health care and other priorities in the coming weeks a vote
could be delayed. As conversations on reform at the State Department
and USAID continue in earnest, it is more critical than ever for USAID
to have a strong leader in place. This week, SFRC also held a
nomination hearing for Ray Washburne to lead the Overseas Private
Investment Corporation (OPIC). At the hearing, Washburne lauded OPIC
as "shining example for what the government can be" and
"a great foreign policy tool."

The House Foreign Affairs Committee also held two budget hearings, one
focused on the Middle East and North Africa and the other on the
Western Hemisphere. In both hearings, Members of Congress on both
sides of the aisle expressed concern about the Administration's
FY18 budget request. Middle East and North Africa Subcommittee
Chairman Ileana Ros-Lehtinen (R-FL) noted, "I believe we have
many good programs that should not be cut just for the sake of scaling
back."

4. Reform Update - Listening Report Released, Rumors Abound on
Shifts in Bureaucracy

In reform and reorganization news, the "Listening Report"
- commissioned by Secretary of State Rex Tillerson and based off
of interviews with State and USAID employees - has been released
to agency staff. Deputy Secretary of State John Sullivan is now tasked
with leading a working group to delve into five areas highlighted in
the report as needing reform: foreign assistance programs, overseas
operations, technology, staffing, and administration - which
will feed into the Department's submission to OMB. Notably,
among other findings, the report noted that USAID employees are deeply
concerned about the potential for the agency to lose its current
autonomy in the proposed reorganization process.

The Administration is rumored to be considering moving the State
Department's Bureau of Consular Affairs (CA) and Bureau of
Population, Refugees, and Migration (PRM) into the Department of
Homeland Security (DHS), possibly in an effort to streamline the
vetting of refugees. Secretary Tillerson is reportedly against such a
move. He is joined by Senate Foreign Relations Committee Ranking
Member Ben Cardin (D-MD), who recently said that "the State
Department should remain the face of America to the world and the
entry point for foreigners traveling here, for consular activities and
refugee resettlement."

http://action.usglc.org/site/R?i=i_h4dF7mzHQkaJOVqLI0eQ

Finally, the Co-Chairs of the Modernizing Foreign Assistance Network
(MFAN) released a discussion paper on a new architecture for U.S.
foreign assistance programs. The paper can be found here. This
discussion paper is one of nearly a half dozen reform proposals, which
range from calling for the creation of an independent cabinet-level
director of development programs across the government to
consolidating development programs at the State Department to a
consensus in the middle with a USAID Administrator as the premier
voice on development and a focus on programmatic efficiencies.

http://action.usglc.org/site/R?i=WDWgD9w6WdYstwbFJgQf7A


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