1.  State-Foreign Operations Bill Clears Final Committee Hurdle

The appropriations process picked back up last week as Members returned to Washington after the July 4th recess.  On Tuesday, the Senate State-Foreign Operations Appropriations Subcommittee approved its FY16 State-Foreign Operations spending bill and Thursday—after debate on several amendments (see below)—the full Committee approved the bill by a vote of 27-3 with Senators Patty Murray (D-WA), Jack Reed (D-RI), and Jon Tester (D-MT) voting no.

As previously reported, the Senate’s total allocation maintains International Affairs funding at nearly current levels.  The allocation of $49.0 billion includes $39.0 billion in base funding, $9.3 billion for Overseas Contingency Operations (OCO), and $759 million in emergency spending.  Taken together, the allocation is $1.2 billion (2%) above the House allocation and 1% below enacted spending.  While the Senate bill is higher overall than the House bill, it is more dependent on OCO and emergency funding.

State-Foreign Operations Appropriations Snapshot

*The table excludes $2.5 billion in emergency funding, which was provided specifically to combat the Ebola crisis in West Africa, but includes the Senate’s FY16 302(b) allocation of $759 million in emergency spending. 
** Reflects CBO re-estimate of Administration’s request.

During the Committee mark-up there was bipartisan agreement that sequestration and the current discretionary spending caps are negatively impacting Congress’s ability to adequately fund these important programs.  Both Senators Lindsey Graham (R-SC) and Patrick Leahy (D-VT), Chairman and Ranking Member of the Subcommittee respectively, noted the harm sequestration has caused on the International Affairs Budget in their opening statements.

Over the course of the one-hour mark-up, a number of amendments were offered, including:

• A Manager’s Amendment making technical and non-controversial changes to the underlying bill.  Passed by voice vote.
• An amendment offered by Subcommittee Ranking Member Patrick Leahy (D-VT) to restore $7.6 billion to base funding, some of it a shift from OCO, per the President’s budget request.  The amendment would have restored funding for a number of programs including MCC, Gavi, the Green Climate Fund, International Organizations and Programs, and others. Failed 14-16.
• An amendment offered by Senator Jeanne Shaheen (D-NH) to increase family planning funding at USAID, restore $35 million in funding to UNFPA, and permanently repeal the “Mexico City Policy” (Global Gag Rule). Passed 17-13, with all Democrats and three Republicans (Senators Susan Collins (R-ME), Lisa Murkowski (R-AK), and Mark Kirk (R-IL)) supporting it.
• An amendment offered by Senator Shelley Moore Capito (R-WV) to prohibit funds from being used to build an embassy security training facility at Fort Pickett, VA.  Withdrawn.
• An amendment offered by Senator Patrick Leahy that would permit the U.S. to provide training and other technical assistance to the International Criminal Court, without authorizing U.S. contributions to the Court.   Passed by voice vote.
• An amendment offered by Senator Patrick Leahy regarding changes to  Export-Import Bank and Overseas Private Investment Corporation (OPIC) regulations related to access to electricity.  Passed by voice vote.
• An amendment offered by Senators Jeff Merkley (D-OR) and Mark Kirk (R-IL) that would allow funding to the Green Climate Fund without congressional authorization.  Passed 16-14. 

Comparison of Senate and House Bills

As in the past, the Senate and House bills reflect similar priorities in some areas, but differ in other areas—compared to both the Administration’s request and each other. In terms of similarities, both bills prioritize funding for Global Health, humanitarian assistance, and diplomatic security, and make deep cuts to contributions to international financial institutions. The major differences center on funding for international organizations, UN Peacekeeping, development assistance, family planning, and International Monetary Fund (IMF) reform.

Detailed Analysis of Key Accounts: The table below compares how key accounts fared in the Senate and House bills.

Comparison of Senate and House FY16 State-Foreign Operations Bills

OCO Composition

The Senate proposes to maintain current funding levels for OCO – $9.3 billion, which is $2.3 billion higher than the request. Within the account, the Senate bill significantly increases funding for UN peacekeeping operations, International Disaster Assistance, Migration and Refugee Assistance, Foreign Military Financing, and several other accounts show on the table below.

By contrast, the House funds the OCO account much closer to the Administration’s request, with several significant exceptions. House appropriators increase funding for International Disaster Assistance, Migration and Refugee Assistance, International Narcotics Control and Law Enforcement, non-UN peacekeeping, and Foreign Military Financing, partially offsetting these increases with reductions in Nonproliferation and Anti-terror aid and several other programs.

State Operations and Diplomatic and Embassy Security

The House bill includes $8 billion for Diplomatic and Consular Affairs Programs (D&CP)—a $224 million increase from current levels but $567 million below the Administration’s request—which covers the cost of State Department operations around the world. The Senate bill includes $8.2 billion in D&CP funding – a $416 million increase from FY15 but $375 million below the request.

The House and Senate both fully fund the Administration’s request for State Department security-related operations and embassy costs.

International Security Assistance

The House provides a total of $8.6 billion for international security assistance, $165 million more than FY15 and the same as the Administration’s request. Compared to the request, the bill provides less for Nonproliferation, Anti-Terrorism, Demining, and Related (NADR) Programs and more for International Narcotics Control and Law Enforcement (INCLE) and Foreign Military Financing (FMF), including an additional $50 million to equip European and Eurasian partners facing Russian aggression.

The Senate includes $8.0 billion for these programs, $470 million less than in FY15 and $636 million below the request. Compared to FY15, the biggest reduction is a $276 million cut to INCLE. However, some of this reduction is offset by additional funding included in the Senate bill for the Assistance for Europe, Eurasia and Central Asia (AEECA) account (discussed further, below).

Global Health

The House maintains funding for Global Health at current levels, $273 million above the request. Compared to the request, the House cuts funding for family planning by $152 million, provides up to $1.35 billion for the Global Fund ($244 million above the request) and $882 million for Maternal and Child Health (MCH). The MCH increase ($112 million above the request) would, however, most likely be offset by the bill’s requirement that the Global Health account also fund any U.S. contribution to UNICEF. Gavi, the Vaccine Alliance, received $235 million within the MCH account, the same as the Administration’s request.

The Senate provides slightly more ($14 million) than the House for Global Health. While it closely resembles the House in most areas, there are some differences. Most notably, the bill, as amended by the Shaheen amendment (noted earlier), restores Family Planning funding to the requested level of $613 million.

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

Humanitarian Assistance

Reflecting the continuing, and in many cases expanding, humanitarian crises in Syria, Sudan, South Sudan, Iraq, Afghanistan, Burma and elsewhere, the House holds funding for humanitarian assistance flat at its FY15 level. Over the past four years, as a result of these growing crises, funding for these accounts has nearly doubled.  Unfortunately, even though these are long-term crises, much of this funding has been provided through OCO—including approximately $1.8 billion (35%) of the humanitarian assistance.

The Senate includes $117 less for humanitarian assistance in FY16 than the House, but still significantly more than the request. The Senate provides $3.0 billion (62%) of its humanitarian assistance funding through either OCO ($2.3 billion) or emergency appropriations ($759 million).

*Includes $298 million in IDA and $461 million emergency funding.

Peacekeeping

The House provides a slight ($64 million) increase from FY15 for non-UN peacekeeping operations. However, it maintains funding for UN peacekeeping operations at the FY15 level, which falls $818 million short of the Administration’s request—which was driven by the need to address surging requirements in South Sudan, the Central African Republic and elsewhere. It also rejects the $150 million requested for a new Peacekeeping Response Mechanism (PRM).

The Senate provides $473 million more for peacekeeping that the House. Although this is still $445 million below the request, it is $537 million more than provided in FY15. Like the House, the Senate rejects the request for the new PRM.

Multilateral Assistance

The House bill cuts funding for multilateral assistance by $1.3 billion (47%) from current levels. While the cuts are focused especially on various climate-related funds, contributions to a broad range of International Financial Institutions (IFIs) are also reduced or eliminated. The bill provides no funding for IMF reform and zeros out funding for voluntary contributions within the International Organizations and Programs (IO&P) account (through which UNICEF and many other International Organizations are normally funded).

The Senate includes $841 million (31%) less for multilateral assistance than was provided in FY15. Unlike the House bill, it includes the authority to restructure the U.S. financial position at the IMF, as well as necessary funding—both of which the Administration has sought from Congress for the past four budget cycles. The Senate also includes a slight increase above the request for the IO&P account. And unlike the House, it includes some funding for existing climate-related funds—although well below the requested level. In addition, the bill, as amended by the Merkley amendment, allows contributions to the new Green Climate Fund. In part, because the cost of IMF reform is substantially higher in the Senate bill than in the request (due to technical differences between OMB and CBO on “scoring” the cost of the proposal), the Senate bill cuts overall funding for the IFIs by even more than the House.

Development and Economic Assistance

The House holds funding for most of the major development accounts and agencies flat at FY15 levels, well below the levels requested by the Administration. The House bill includes a major reduction ($823 million from current levels and $2.2 billion from the request) in Economic Support Funds (ESF), through which the U.S. provides economic assistance to key allies in the Middle East and elsewhere, but does not indicate which countries would feel the impact of these reductions.

The House bill also cuts USAID’s Operating Expenses account, which covers USAID salaries and benefits and other Washington and overseas operating costs, by $93 million (8%) from FY15 levels and $302 million (21%) from the request.  The House bill cites concerns about the efficiency of USAID’s procurement process, but provides no indication of where the reductions should be taken.

The Senate provides modest increases above FY15 levels to the main development accounts. On the other hand, like the House bill it includes a cut to ESF. However, the reduction is somewhat smaller than in the House bill. More importantly, the Senate provides $854 million in the Assistance to Europe, Eurasia and Central Asia (AEECA) account. As the Senate report notes, this is funding for activities that the Administration included in its requests for the ESF and INCLE accounts. The Senate also includes more funding for USAID Operating Expenses than the House.

Policy Provisions

The Senate and House differ on a number of key policy provisions. The House includes a prohibition on the use of funds for an embassy or other diplomatic facility in Cuba. It also includes the “Mexico City Policy”, which requires all non-governmental organizations that receive federal funding to refrain from performing or promoting abortion services as a method of family planning, even with non-U.S. government funds in other countries. By contrast, the Senate bill does not include a prohibition on opening an embassy in Cuba and contains a repeal to the “Mexico City Policy.”   

2.  House Appropriators Pass Agriculture Bill

After cancelling a mark-up in June, the House Appropriations Committee last Wednesday approved its FY16 Agriculture Appropriations bill, which includes funding for two International Affairs accounts – Food for Peace (PL 480/international food assistance) and the McGovern-Dole International Food for Education and Child Nutrition account.  The bill provides $1.417 billion for Food for Peace (commonly referred to as food aid), of which $350 million is for non-emergency assistance – $49 million (3%) below current levels and $17 million (1%) above the Administration’s request.

FY16 Appropriations International Programs Snapshot

During the mark-up, the Committee did not consider amendments pertaining to these specific programs, but some Democratic members of the Committee, including Rep. Sam Farr (D-CA), expressed concern with the funding cuts to Food for Peace. The bill will now move to the full House for its consideration, although it is unlikely to come up for consideration on the floor in July.  The Senate Appropriations Committee has yet to mark-up its version of the bill.

3.  FY16: Short and Long Term Outlook

With eight legislative weeks left before the end of the fiscal year, the appropriations process is rapidly losing momentum.  After pulling the Interior and Environment bill from the House floor over a controversy surrounding the confederate flag, the House has passed only six bills on the floor – with six (including Interior) still on the docket. In a memo to House Republicans, Majority Leader Kevin McCarthy (R-CA) noted the Financial Services Appropriations bill as the only other spending bill that could hit the floor in July, meaning State-Foreign Operations, Agriculture, and several others remain in limbo.

In the Senate, the Appropriations Committee continues to consider funding bills, but without agreement between Republicans and Democrats on path forward that addresses sequestration, it is unlikely that any funding bill would be considered on the floor.  Democrats are opposing all motions to proceed and are pushing Republicans to negotiate a budget deal that would partially or fully lift sequester – allowing for increases to the overall allocations for the FY16 spending bills – similar to the budget compromise reached between Representative Paul Ryan (R-WI) and Senator Patty Murray (D-WA) in 2013.