8 Takeaways from the Administration’s Budget Proposal

April 23, 2013 By Liz Schrayer

The Administration’s $52 billion International Affairs Budget request is nearly identical to amounts enacted for FY13 (post-sequestration) but represents a 4% cut from FY12 with $48.2 billion in base funding and $3.8 billion for Overseas Contingency Operations (OCO) programs.  The spending blueprint includes several areas of significant re-prioritization and rebalancing in a constrained fiscal environment. Our 8 top takeaways:

1.Balances Strategic Interests & Fiscal Constraints. The President’s request makes some tough choices, prioritizing the protection of our diplomats and embassies, areas of strategic importance like the Middle East, reforms to make civilian operations more effective, and greater leveraging of the partnerships with the private sector.  At the same time, it significantly reduces resources for the Frontline States and scales back USAID’s presence in eleven countries.

Obama Budget

2.Still a Cut Over Past Four Years. Current base funding for the International Affairs Budget has been cut 19% since 2010, despite the growing number of crises America faces around the world. And when adjusted for inflation, the FY14 request still falls 15% below FY10 levels in real terms.

3. Reduces Assistance to Frontline States. Programs in Afghanistan, Pakistan, and Iraq are cut by $6.1 billion (40%) from FY12 levels, and OCO funding is limited exclusively to activities in those countries. This is a significant break from the last two years as OCO funding in non-Frontline States is put back in base International Affairs Budget accounts, allowing for better long-term strategic planning.

4. Protects our Diplomats. Following the tragic events in Benghazi last year, the State Department, with the support of Congress, has significantly increased resources to strengthen security and protect U.S. officials around the world. For FY14, the Administration seeks $2.4 billion in base appropriations for Embassy Security, Construction, and Maintenance—55% higher than current levels.

5. Sets Priorities.

  • Continues pivot to Asia with East Asia and Pacific region receiving an increase of $53 million (7%) from FY12;
  • Increases investment in Feed the Future by 7% from FY12 levels;
  • Renews FY13 commitment to the Global Fund, and increases PEPFAR funding by nearly 4%;
  • Establishes Middle East and North Africa Incentive Fund of $580 million to provide additional tools to address short-term, unanticipated needs; and
  • Promotes development through trade and investment at OPIC and USTDA.

6. Imposes Selectivity.

  • Scales back USAID’s presence in eleven countries;
  • Reduces the number of focus nations under Feed the Future and Global Health;
  • Continues downward trend in assistance to Eurasia and Central Asia;
  • Turns over greater responsibility to partner governments for counter-narcotics efforts in Colombia and HIV/AIDS programs in South Africa.

7. Reforming USAID. The budget request includes a 29% increase for the ambitious USAID Forward reform program, with goals to strengthen the ability to deliver more impactful results, create stronger partnerships with the private sector and local development partners, and identify and scale up innovative, game-changing solutions to challenging development problems.

8. A Shift in Food Aid Policy. The Administration seeks to replace the Food for Peace Program with new delivery mechanisms aimed at enhancing flexibility, achieving efficiencies, and reaching more beneficiaries by transferring funds to three USAID accounts from which the U.S. could deliver more food aid as cash vouchers and locally purchased commodities. The agency claims these changes will deliver food aid 11 to 14 weeks faster, reaching 4 million more people each year with same funding.

Read our full FY14 budget analysis.