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International Affairs Budget Update
July 21, 2017
1. Senate Funding Guidance Released-International Affairs
Budget Protected
2. House State-Foreign Operations Bill Moves Forward
3. House Budget Resolution Introduced-Steep Cut to the
International Affairs Budget
4. Reform Update-Deputy Secretary Sullivan Testifies, Former
Diplomats Speak Out

The past several days have seen significant action on the
International Affairs Budget, giving a much clearer picture of how
development and diplomacy programs are faring in FY18. The Senate
Appropriations Committee released its spending allocations, the House
Budget Committee marked up the long-awaited FY18 Budget Resolution,
and the House Appropriations Committee approved its State-Foreign
Operations bill. There is still a long way to go before final spending
bills are sent to the President's desk, but this week saw
significant progress when it comes to protecting America's
development and diplomacy programs.

The analysis below dives into each of these developments and also
notes recent activity around efforts to reform and reorganize the
State Department and USAID.

1. Senate Funding Guidance Released-International Affairs
Budget Protected

This week, the Senate Appropriations Committee announced $51.2 billion
in topline spending for its FY18 State-Foreign Operations (SFOPS)
bill. The $51.2 billion is split between $30.4 billion in base and
$20.8 billion in Overseas Contingency Operations (OCO) funding. When
compared to FY17, this represents a:

* 1.7% ($859 million) cut, excluding the ISIS supplemental passed
in December and famine relief in the FY17 Omnibus, or
* 10.8% ($6.15 billion) cut if you include the ISIS supplemental
and famine funding.

It is important to note that, as has been done in the past,
Appropriators cut base funding, but largely made up that funding
deficit through increases in the OCO account. This shift has led to a
number of long-term programs being funded through an account that was
meant to be temporary in nature and USGLC continues to call on
Congress and the Administration to address this issue.

The topline funding level proposed by the Senate is exponentially
better than the Administration's proposal and significantly more
than the House proposal for the International Affairs Budget. USGLC
President and CEO Liz Schrayer released a statement praising the
Senate's strong SFOPS allocation and urging Congress to follow the
Senate's leadership when negotiating final funding levels for
the International Affairs Budget. Note: the chart below shows funding
levels for the entire International Affairs Budget.

http://action.usglc.org/site/R?i=8c6EEKiKUAeBlN48uvTqsw

International Affairs Budget Snapshot

FY17 Enacted
FY18 Request**
FY18 House
FY18 Senate

Base
$38.4 billion
$28.5 billion
$36.9 billion
$32.2 billion

OCO
$20.8 billion*
$12.0 billion
$12.0 billion
$20.8 billion

Total
$59.1 billion
$40.5 billion
$48.9 billion
$53.0 billion

*Includes $4.3 billion provided in the FY17 Security Assistance
Appropriations Act
**Based on CBO's re-estimate of the Administration's
request

This week the Senate Appropriations Committee also approved its FY18
Agriculture Appropriations bill. The bill provides $1.6 billion for
the Food for Peace (PL 480/international food assistance) program,
$200 million more than the House and equal to the FY17 enacted level.
The bill funds the McGovern-Dole International Food for Education and
Child Nutrition program at $206.6 million, $4.6 million (2%) more than
the House and the FY17 enacted level, and includes $15 million to
purchase some food aid locally or regionally. As a reminder, the
Administration zeroed out the Food for Peace and McGovern-Dole
programs in its budget request.

FY18 Agriculture Appropriations International Programs Snapshot

FY17 Enacted
FY18 Request
FY18 House
FY18 Senate

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

McGovern-Dole
$202 million
$0
$202 million
$207 million

Local and Regional Procurement
$0*
$0
$0
$0**

Total
$1.8 billion
$0
$1.6 billion
$1.8 billion

*$5 million of McGovern-Dole funding included for local and regional
procurement
**$15 million of McGovern-Dole funding included for local and regional
procurement

2. House State-Foreign Operations Bill Moves Forward

This week, the House Appropriations Committee approved its FY18
State-Foreign Operations (SFOPS) bill, setting it up for a
potential-but unlikely-vote on the House floor in
September. See the above chart comparing the topline allocations for
the International Affairs Budget.

During the markup of the bill in full Committee, members offered 16
amendments on a variety of issues, including restoring funding for UN
agencies, peacekeeping, the Peace Corps, disaster assistance, and
family planning programs. Other amendments centered on global
environmental concerns, policy relating to Cuba, and the Mexico City
Policy or Global Gag Rule. A few amendments of note:

* An amendment offered by Rep. Charlie Dent (R-PA) to change the
quorum rules for the Export-Import Bank. Passed by voice vote.
* An amendment offered by Rep. Ken Calvert (R-CA) expressing
disapproval of UNESCO's designation of Hebron as a
Palestinian heritage site. Passed by voice vote.
* An amendment offered by Rep. David Price (D-NC) to ensure the
Bureaus of Population, Refugees, and Migration (PRM) and
Consular Affairs (CA) remain part of the State Department.
Withdrawn.

Selected Program Highlights

Below are some additional details on program funding gleaned from the
House SFOPS report.
http://action.usglc.org/site/R?i=jlckKxS0oUATinapdgk7Vw

Global Health

As we reported last week, the House bill protects Global Health
programs compared to the Administration's proposal, but still
cuts overall funding by approximately 5%. A few accounts to note:
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Files\Content.Outlook\632I0GBA\International Affairs Budget Update
03-30-17_v11.docx

* The Maternal and Child Health account includes $290 million for
Gavi, the Vaccine Alliance, a 5% ($15 million) increase compared
to FY17 levels - an amount the Administration believes
puts it on track to meet a four-year, $1 billion pledge.
* Funding for Polio eradication is held flat from FY17 levels at
$51.5 million. The bill also holds flat funding for Malaria
programs by redirecting $250 million of remaining FY15 Ebola
balances.
* The Global Health Security account is cut by 93% ($133 million),
which is partially offset by using $73 million in Ebola
balances.
* The bill provides $142 million in global health funding without
a specified purpose, although some of this funding will likely
be designated for Neglected Tropical Diseases (NTDs).

Global Health Funding*

FY16 Final
FY17 Enacted
FY18 Request
FY18 House

Bilateral PEPFAR
$4.32 billion
$4.32 billion
$3.85 billion
$4.32 billion

Global Fund
$1.35 billion
$1.35 billion
$1.125 billion
$1.35 billion

USAID HIV/AIDS
$330 million
$330 million
$0
$330 million

Malaria
$674 million
$755 million
$424 million
$505 million

Tuberculosis
$236 million
$241 million
$178 million
$241 million

Maternal/Child Health
$750 million
$815 million
$750 million
$815 million

Vulnerable Children
$22 million
$23 million
$0
$23 million

Nutrition
$125 million
$125 million
$79 million
$125 million

Family Planning
$608 million
$608 million
$0
$461 million

NTDs
$100 million
$100 million
$75 million
N/A

Global Health Security
$73 million
$143 million
$0
$10 million

Total
$8.5 billion
$8.72 billion
$6.48 billion
$8.32 billion

*State Department and USAID Global Health accounts only, except for
family planning.

Development and Economic Assistance

The House bill cuts economic and development assistance across the
board, although less than the Administration had requested. The
Committee also rejects the Administration's proposal to
consolidate several accounts into a new Economic Support and
Development Fund, noting that any decision to consolidate accounts
should be made after the State Department and USAID complete their
reorganization plan and authorizing committees have a chance to weigh
in. The report similarly rejects the Administration's proposal
"to eliminate or significantly reduce development programs in
the least developed countries" and states the Committee's
intent that these programs continue.

Development and Economic Assistance Funding

FY16 Final
FY17 Enacted
FY18 Request
FY18 House

Development Assistance (DA)
$2.78 billion
$3.0 billion
$0
$2.78 billion

Economic Support Fund (ESF)
$4.3 billion
$4.68 billion
$4.94 billion
$3.4 billion

Assistance to Europe, Eurasia and Central Asia (AEECA)
$930 million
$902 million
$0
$692 million

Democracy Fund
$151 million
$211 million
$0
$211 million

Millennium Challenge Corporation (MCC)
$901 million
$905 million
$800 million
$800 million

Peace Corps
$410 million
$410 million
$398 million
$398 million

Humanitarian Assistance

The House bill proposes steep cuts to humanitarian assistance compared
to total FY17 spending, although less than those proposed by the
Administration. Notably, the Committee leaves open the possibility
that additional funding could be added for famine relief as the
appropriations process moves forward.

Humanitarian Assistance Funding

FY16 Final
FY17 Enacted
FY18 Request
FY18 House

Disaster Aid (IDA)
$2.79 billion
$3.81 billion
$2.51 billion
$2.82 billion

Refugees (MRA)
$3.06 billion
$3.06 billion
$2.75 billion
$3.11 billion

Emergency Refugees
$50 million
$50 million
$0
$0

Total
$7.6 billion
$9.4 billion
$5.3 billion
$5.93 billion

Peacekeeping

The House bill cuts funding for UN and non-UN peacekeeping operations
compared to FY17 levels. Consistent with the Administration's
request, the House bill limits assessed contributions for UN
Peacekeeping to the 25% statutory cap. It also supports the
Administration's efforts to reduce the U.S. assessment rate and
curb the number and duration of peacekeeping missions.

Peacekeeping Funding

FY16 Final
FY17 Enacted
FY18 Request
FY18 House

UN Operations
$2.46 billion
$1.91 billion
$1.2 billion
$1.5 billion

Non-UN Ops
$601 million
$659 million
$301 million
$460 million

Total
$3.06 billion
$2.52 billion
$1.5 billion
$1.96 billion

International Security Assistance

The House bill cuts security assistance from current levels. In
particular, it provides $6.1 billion for Foreign Military Financing
(FMF), a 4% ($226 million) cut from FY17 levels but $965 million more
than the Administration requested. It also rejects the
Administration's proposal to change FMF assistance from grants
to loans, noting the Committee could consider such authority on a
country-by-country basis in the future.

Reform and Reorganization

The House bill builds on the requirement in the FY17 Omnibus that
requires the Secretary of State to submit a report to the
Appropriations Committees before taking action to reorganize the State
Department or USAID per the Administration's March 2017
executive order. Unlike the Omnibus, the House bill requires the
report to be submitted to "appropriate congressional
committees", which includes authorizing as well as
appropriations committees. The bill also directs the report to include
detailed justifications and cost-savings projections for any
reorganization plans.

http://action.usglc.org/site/R?i=8WabtPMYBJYX6voB5RJUhA

Next Steps

House Republican leadership has announced it is packaging four
spending bills as a "national security minibus" for a vote
before the August recess. The minibus will include the FY18 Defense,
Energy and Water, Legislative Branch, and Military Construction-VA
bills. With this announcement and the upcoming August recess, the
State-Foreign Operations (SFOPS) bill will not see further action
until at least September.

And while the Senate released its guidance on topline spending levels
for the 12 appropriations bills as reported above, we are not likely
to see the full State-Foreign Operations bill until the fall.

3. House Budget Resolution Introduced-Steep Cut to the
International Affairs Budget

After months of delay, House Budget Committee Chairwoman Diane Black
(R-TN) released the FY18 Budget Resolution this week, which was
approved by the Committee on a largely party-line vote of 22-14. The
resolution sets out $511 billion for non-defense discretionary
spending, which is about $5 billion below the Budget Control Act (BCA)
cap for FY18. It provides $48.3 billion for the International Affairs
Budget, including $36.3 billion in base and $12 billion in OCO
funding.

This $48.3 billion topline for the International Affairs Budget
represents an 18% ($10.8 billion) cut compared to total FY17 enacted
funding and is roughly $600 million less than the House Appropriations
Committee's allocation. Traditionally the budget resolution
provides important guidelines for topline spending, but given that the
House Appropriations Committee has already approved its own
allocations, the resolution holds less weight in this regard.
The Republican Study Committee (RSC) also released its budget this
week. In the past, the RSC's budget has been considered as an
amendment when the budget resolution moves to the House floor. The
RSC's budget mirrors the Administration's budget request
and calls for a reduction in foreign assistance. Notably, the budget
would:

http://action.usglc.org/site/R?i=QCOfvxauRjRJ1bY3bxWuFA

* Eliminate the International Organizations and Programs
(IO&P) and Emergency Refugee and Migration Assistance (ERMA)
accounts,
* Withhold funding for the Organization for Economic Cooperation
and Development (OECD), and
* Shutter the East-West Center, U.S. Institute of Peace, U.S.
Trade and Development Agency (USTDA), Inter-American Foundation,
Asia Foundation, and the African Development Foundation.

4. Reform Update - Deputy Secretary Sullivan Testifies, Former
Diplomats Speak Out

In reform and reorganization news, on Monday Deputy Secretary of State
John Sullivan testified before the Senate Foreign Relations Committee
on the FY18 State Department Authorization bill and the
Department's reorganization plans. Senators on both sides of the
aisle pressed Sullivan for details on the reforms under consideration,
specifics on the process, and the role of Congress. Throughout the
hearing, Sullivan reiterated that there are "no predetermined
outcomes" when it comes to the review process. In response to
concerns expressed by multiple Senators about the potential merger of
USAID into State and the shift of both the Consular Affairs (CA) and
Population, Refugees, and Migration (PRM) Bureaus into the Department
of Homeland Security, Sullivan stated that this is not an intention of
the Department. The Foreign Relations Committee is expected to mark up
its FY18 State Department Authorization next week, but is unlikely to
consider any significant reform proposals until the
Administration's review is complete.

On Sunday, 58 former diplomats and national security advisors from
Republican and Democratic administrations sent a letter to Secretary
Tillerson urging him to sustain and strengthen PRM's role and
mission at the State Department. The letter argues that, "the
elimination of PRM's assistance functions would have profound
and negative implications for the Secretary of State's capacity
to influence policy issues of key concern to the United States."

http://action.usglc.org/site/R?i=XYA_cQFtuq5AuLYmglv0-w

Next week, another reform proposal will be put forward. On Monday,
Senators Todd Young (R-IN) and Jeanne Shaheen (D-NH), co-chairs of the
CSIS Congressional Task Force on Reform and Reorganization of U.S.
Development Assistance, will participate in an event to release the
Task Force's report identifying actionable recommendations to
improve the efficiency, effectiveness, and accountability of U.S.
foreign assistance programs.

http://action.usglc.org/site/R?i=R0HZtbnoqbdYvXeQ_rK3Cw


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