State-Foreign Operations Spending Bills
Advance in Senate and House

Yesterday the Senate Appropriations Committee approved its FY15 State-Foreign Operations Appropriations bill in a 25-5 vote, following the Subcommittee markup on Tuesday afternoon. Senators Richard Shelby (R-AL), Thad Cochran (R-MS), Mitch McConnell (R-KY), Lamar Alexander (R-TN), and John Hoeven (R-ND) voted against the bill, citing concerns about Overseas Contingency Operations (OCO) funding in the measure.

The Senate’s action coincided with subcommittee approval on Tuesday evening of the House’s State-Foreign Operations Appropriations bill. While both the House and Senate bills are identical on the total spending level, they differ significantly on the split between base and OCO funding.  In addition, the two bills differ on the prioritization of some accounts.

Both bills total approximately $48.3 billion, but the Senate bill includes $39.7 billion in base funding and $8.6 billion in OCO funds, while the House bill includes $42.4 billion in base funding and $5.9 billion in OCO funds – approximately $3 billion difference in base funding.

Significantly, the Senate cuts base funding $2.82 billion (6.6%) below current levels while the House reduces the base by only $100 million (-0.2%). To mitigate this cut, the Senate increases OCO levels by $2.1 billion above FY14 amounts. In total — base and OCO — both bills are about $700 million (1.4%) less than current spending.

While the USGLC supports the overall funding of both bills, we are very concerned about the Senate’s cut to base funding and issued a statement from USGLC Co-Presidents Bill Lane of Caterpillar and Carolyn Miles of Save the Children saying that while “the Overseas Contingency Operations (OCO) funds can mitigate the impact of funding shortfalls in the short term, the long term implications of reducing the baseline are dangerous given cuts totaling 14 percent over the past four years.”

State-Foreign Operations Appropriations

During Senate consideration of the bill, Subcommittee Chairman Patrick Leahy (D-VT) stated “This was a difficult bill to draft because of the rapidly worsening humanitarian crises in Syria, Iraq, and Africa, and the dramatic surge in migration of unaccompanied minors from Central America.”  Similarly, Subcommittee Ranking Member Lindsey Graham (R-SC) said, “The world is blowing up, all you got to do is watch television, and the base funding of this bill is going down.  Refugee problems in Jordan, Lebanon, and now Iraq.  Now is the time for Congress and the Senate to consider emergency supplemental to deal with these issues.”

Amendment to Restore Base Funding Fails

To address Republican concerns about the OCO funding level, which they believe Democrats inflated in order to increase funding for discretionary programs beyond levels agreed to in the Murray-Ryan FY14-15 budget agreement, Senator Graham offered an amendment in the full Committee markup that would impose a government-wide rescission of $2.7 billion in order to move base funding from OCO back into the baseline. That rescission would translate to a 0.266% cut across all discretionary accounts.  Democrats opposed the amendment, citing the cuts it would make to many programs, including Veterans Affairs, the National Institutes of Health, and the Defense Department.  The amendment failed on a nearly party-line 13-17 vote, with Senator Susan Collins (R-ME) the only Republican to vote against it.

In the House Subcommittee markup on Tuesday, Chairwoman Kay Granger (R-TX) noted that the bill “is a product that reflects many of the priorities facing the subcommittee in today’s challenging and unpredictable world.”  Ranking Member Nita Lowey (D-NY) thanked Chairman Hal Rogers (R-KY) “for the bill allocation’s recognition of the importance of foreign assistance and diplomacy” while expressing concern about a few areas, including cuts to USAID operating expenses.

The House bill will be taken up by the full Appropriations Committee next Tuesday morning. Further action on the bills (e.g. floor consideration) is unlikely in the House or Senate before the fiscal year begins on October 1.

We will provide additional updates following the House action next week.

Overview of Senate and House FY15 State-Foreign Operations Bills

As in past years, the House and Senate bills align on the prioritization of some accounts while differing considerably on others.  In terms of similarities, both the House and Senate bills prioritize funding for disaster and refugee aid, Global Health, and embassy security. In addition, both measures add funding above requested levels for Ukraine and other former Soviet and East European nations that face regional threats.  The major differences in the bills center on contributions to International Organizations, UN Peacekeeping, and the Multilateral Development Banks.  The House imposes significant cuts in these areas while the Senate maintains funding levels in keeping with the Administration’s request.  Detailed analysis of the bills is below.

Comparison of Senate and House FY15 State-Foreign Operations Bills

OCO Composition

With the drawdown of American military forces, OCO funding for International Affairs has been declining.  From a high of $11.2 billion in FY12, OCO appropriations dropped to $6.5 billion in FY14 and further to $5.9 billion in the President’s request for FY15.  While the Administration, until the FY15 request, proposed to fund only urgent diplomatic operations and foreign aid for Afghanistan, Pakistan, and Iraq within the OCO category, Congress has broadened the scope of OCO and increased funding levels to accommodate other global contingencies, especially for humanitarian needs.  For the first time, the Administration also went beyond the Frontline States in its FY15 OCO request, including $1.3 billion for Syria and $150 million for a new, flexible Peacekeeping Mechanism.

The Senate proposes to increase OCO to $8.6 billion, $2.7 billion higher than the request.  This add-on essentially covers the cuts recommended to base State-Foreign Operations.  The reduction to base amounts was made in order to accommodate additional resources for several domestic spending measures that would otherwise not fall within the limits of discretionary spending caps for FY15.  OCO is considered “emergency” spending and is not subject to budgetary cap limitations.

With the additional $2.7 billion, the Senate Committee broadens the scope of what will be supported with OCO resources.  The Senate measure significantly increases OCO funding for UN and international organizations (activities in Iraq and Afghanistan), UN peacekeeping operations (Somalia, Central African Republic, and Mali), International Disaster Assistance (for crises in the Frontline States, Syria, Lebanon, Jordan, Lebanon, Yemen, and Africa), the Complex Crisis Fund (allowing for transfers to peacekeeping accounts), Migration and Refugee Aid (for relief in the Middle East, South Asia, and Africa), and several other accounts shown in the table below.

The House, on the other hand, funds OCO accounts much closer to the Administration’s request, although with several notable exceptions.  House appropriators increase International Disaster and Refugee accounts by $433 million and non-UN peacekeeping operations by $146 million.  Offsetting these increases are cuts to the Administration’s proposed budget for the Economic Support Fund, International Narcotics, Foreign Military Financing, and the Complex Crisis Fund.

Global Health

House and Senate bills increase funding for Global Health compared to the request although neither provides current level amounts. In total, the House bill adds about $260 million to the Administration’s request, including a $300 million increase for bilateral PEPFAR programs, a 5% increase for Maternal/Child Health and 10% more for Nutrition.

Senate totals are about $90 million higher than the request, with small plus-ups for several elements shown in the table below.  Family planning funding levels continue to be a matter of dispute between the House and Senate.  The House provides $461 million from all accounts in the bill while the Senate includes $644 million.

Note: State Department and USAID Global Health Accounts only, except for family planning.  Additional funds for some Global Health programs are included in other accounts.  FY14 reflect directives in the appropriation and are subject to possible change.

Development Assistance

The House provides $2.53 billion, a level slightly higher than current funding but $92 million less than the request.  With several House directives set at or above FY14 amounts, as shown in the table below, the Administration may not have enough resources for planned increases for initiatives like Feed the Future and Power Africa.

The Senate amount is less than the House — $2.42 billion or 8% below the request.  Food Security and Agriculture is set at $1 billion, $100 million under current funding and $176 million less than the request.  At this amount, USAID would not be able to increase funding for Feed the Future, as recommended.

* Development Assistance and all other accounts in the bill.  FY14 reflect directives in the appropriation and are subject to possible change.

Humanitarian Assistance

Given the increasing humanitarian requirements – in Syria, South Sudan, Central African Republic, Iraq – both the House and Senate bills increase spending well beyond the Administration’s request for these emergency situations.  House and Senate measures provide about $4.9 billion, nearly 50% more than requested for FY15.  House levels match those provided for FY14 while the Senate increases International Disaster aid by nearly $100 million while trimming the amount for refugees slightly.

Frontline State Funding

The Senate bill provides a total of $4.1 billion in State Department operations and foreign assistance to Afghanistan, Pakistan, and Iraq.  This is about $1 billion (-20%) below the Administration’s request.  House totals are not available at this time.

Palestinian Assistance

While not suspending assistance for West Bank/Gaza, the House bill tightens current restrictions that would lead to a cut-off of aid if the Palestinian government forms an agreement with Hamas.  The Senate measure requires additional consultations with Congress regarding circumstances with the Palestinian government prior to the obligation of assistance.