1. Administration’s Rescissions Proposal Released: $334 Million in Prior-Year International Affairs Funding Targeted

This week the Administration released a proposal to rescind $15.4 billion in prior-year unobligated funds, starting a process last used almost 20 years ago to cancel Congressional appropriations pursuant to the Budget and Impoundment Control Act of 1974. The release came after the President expressed a strong desire to cut back on federal spending, decrying the size of the recently-passed FY18 Omnibus. Notably, the proposal would not rescind funds approved in the FY18 Omnibus after bipartisan Members of Congress publicly opposed this effort.

Prior to the proposal’s release, it was reported that the International Affairs Budget could be disproportionately targeted. Instead, the proposal includes $334 million in rescissions to the International Affairs Budget, roughly 2% of the overall package, including:

• $252 million from the FY15 Ebola response, which the Administration argued is unnecessary – of note, just one day after the proposal was released, reports surfaced of an Ebola outbreak in the Democratic Republic of the Congo;
• $52 million for the Millennium Challenge Corporation (MCC) as the agency’s compact with Indonesia is close to its conclusion;
• $30 million from the Complex Crises Fund, noting that programs could instead be funded through the Economic Support Fund.

Procedurally, Congress has 45 legislative days to consider the package, during which time the funds included therein are frozen. If Congress does not enact these rescissions by the end of the 45 days, the funding will be available to be spent once again.

House Republican Leadership appears eager to quickly consider the proposal. House Majority Leader Kevin McCarthy (R-CA) has introduced a bill with the rescissions that can be considered on the House floor without going through the committee process. However, other members of the House Republican Conference – including several Appropriators – have expressed their opposition.

Senate Majority Leader Mitch McConnell (R-KY) said this week that he is open to considering the package if it passes the House, while Senate Appropriations Committee Chairman Richard Shelby (R-AL) shared concerns with several of the proposed rescissions. With Democrats widely opposed to the proposal, it is unclear whether the White House has the votes to pass the package through both chambers.

Next Steps

A vote on the rescissions proposal in the House could come as early as next week and while the outcome is still unclear, there is a high likelihood that the Administration is already working on another proposal to send to Capitol Hill. Just a few weeks ago, OMB Director Mick Mulvaney said with regards to rescissions, “we could send some now, some a month from now, some later on in the fall.” The International Affairs Budget is likely to be included in these future proposals and could potentially be disproportionately targeted.

2. With No Budget Resolution in Sight, Senate “Deems” Topline Discretionary Spending Level for FY19

This week Senate Budget Committee Chairman Mike Enzi (R-WY) all but acknowledged that he will not be marking up a FY19 budget resolution by “deeming” the topline discretionary spending level – known as the 302(a) allocation – approved in February’s budget deal. This move formally allows the appropriations process to move ahead. House Budget Chairman Steve Womack (R-AR) said he will do the same by the May 15 deadline but is still planning to draft a budget resolution.

As a reminder, the budget deal lifted the caps on discretionary spending for FY19 but included just $8 billion for non-defense discretionary Overseas Contingency Operations (OCO) funding. However, the FY18 Omnibus included $12 billion in this account which funds major portions of the International Affairs Budget. Therefore, Congress would need to find $4 billion in base or other funding for the International Affairs Budget in FY19 just to maintain FY18 levels.

3. International Food Aid Funding Sees a Cut in House Agriculture Appropriations Bill

This week the House Appropriations Agriculture Subcommittee approved its FY19 spending bill, which rejects the Administration’s proposal to eliminate two critical international food aid programs. The bill includes $1.5 billion for Food for Peace, a $220 million (15%) cut compared to FY18 levels due to a one-time $116 million increase for the program in FY18. The bill also provides $207.6 million for the McGovern-Dole International Food for Education and Child Nutrition Program, equal to the FY18 enacted level.

FY18 Agriculture Appropriations International Programs Snapshot

*Does not reflect the Administration’s transfer of $300 million into the Food for Peace program from the International Disaster Assistance account in FY17.

Next Steps

The appropriations process is now in full swing. The Senate Agriculture Appropriations Subcommittee is expected to mark up its bill at the end of the month, while the House and Senate State-Foreign Operations Appropriations Subcommittees will likely release their bills in June. Notably, newly minted Secretary of State Mike Pompeo will appear before the Senate Foreign Relations Committee on May 24 to discuss the Administration’s FY19 International Affairs Budget request. He is also expected to testify before the House Foreign Affairs Committee that week.

4. Bipartisan Foreign Assistance Bills On the Move in Congress

Over the past several months, bipartisan support has been building around several pieces of foreign assistance legislation that seek to strengthen and enhance development and diplomacy tools. In particular, legislation to reform America’s development finance tools has garnered widespread support and has seen movement in both the House and the Senate in recent days. The Better Utilization of Investments Leading to Development (BUILD) Act (H.R. 5105/S. 2463), introduced in February by Reps. Ted Yoho (R-FL) and Adam Smith (D-WA) and Senators Bob Corker (R-TN) and Chris Coons (D-DE), would streamline the tools of multiple agencies into a single, full-service international development finance institution.

This week the House Foreign Affairs Committee approved its version of the BUILD Act and the Senate Foreign Relations Committee held an in-depth hearing on modernizing America’s development finance toolkit. At the Senate Foreign Relations Committee hearing, Chairman Bob Corker (R-TN) lauded the work of stakeholders to help create momentum for the BUILD Act’s goals and noted, “With a modern development finance corporation, we could increase the effectiveness and reach of U.S. aid and strengthen market economies abroad.”

Several other bills have also seen action in Congress in the past several months, including:

• AGOA and MCA Modernization Act (H.R. 3445/S. 832). Introduced by Reps. Ed Royce (R-CA) and Eliot Engel (D-NY) and Senators Ben Cardin (D-MD) and Johnny Isakson (R-GA), the bill makes several changes to the AGOA and MCA laws, including allowing concurrent compacts for eligible countries. It passed the House and Senate with overwhelming bipartisan support and was signed into law in April.

• Food for Peace Modernization Act (H.R. 5276/S. 2551). Introduced by Reps. Ed Royce (R-CA) and Earl Blumenauer (D-OR) and Senators Bob Corker (R-TN) and Chris Coons (D-DE), the legislation seeks to reform and modernize the Food for Peace Act including eliminating the requirement to monetize food aid.

• Global Food Security Act Reauthorization (H.R. 5129/S. 2269). Introduced by Reps. Chris Smith (R-NJ) and Betty McCollum (D-MN) and Senators Bob Casey (D-PA) and Johnny Isakson (R-GA), the legislation would reauthorize the Global Food Security Act that became law in 2016. The House Foreign Affairs Committee approved the bill in April.

• Global Fragility and Violence Reduction Act (H.R. 5273). Introduced by Reps. Eliot Engel (D-NY), Ted Poe (R-TX), Michael McCaul (R-TX), and others, the bill would establish a strategy and inter-agency initiative to reduce and address the causes of violence in fragile states.