Pressure to Cut Spending Builds

November 18, 2010 By John Glenn

A number of proposals for cutting spending have circulated recently with potential consequences for the International Affairs Budget and foreign assistance in the wake of the midterm elections.   The reactions have been far-ranging, from outright dismissal to calls for making hard choices that highlight the challenges we’re facing in difficult economic times to make an ever stronger case for U.S. global engagement.  Four of the proposals are summarized below.

The Presidential Debt Commission co-chairs’ first draft of recommendations calls for reducing the deficit by $200 billion by FY2015.  The proposal calls for tax and entitlement reform and $200 billion in cuts to get the deficit under control.  Among the 58 “illustrative cuts” over the next four years, four items totaling $6.3 billion, or a little over 3% of the cuts, are related to the International Affairs Budget:

  • Slow growth of foreign aid –$4.6 billion in savings. Calls for a 10% reduction in the President’s recommended increases in international development and humanitarian assistance (one part of the International Affairs Budget) to $45 billion by 2015.
  • Reduce overhead costs of diplomatic operations – $1.3 billion in savings. Restricts the growth of the Diplomatic and Consular Programs and ends “locality pay” for domestically-based FSOs.
  • Reduce voluntary contributions to the UN – $.3 billion in savings. Recommends a 10% reduction in the $3.5 billion “voluntary funds” that the US gives to the UN on top of annual dues.
  • Eliminate OPIC – $.1 billion in savings. Eliminates new portfolios, but continues service on existing portfolios.

The Commission needs 14 of 18 votes in favor of any one item to include the initiative in the final report to Congress. 

The Bipartisan Policy Center’s report, Restoring America’s Future, co-chaired by Sen. Pete Domenici and Alice Rivlin, focused on reforming the tax system and reforming health care and social security and calls for freezing domestic and discretionary spending at FY2010 levels for four years.  It would set the International Affairs Budget at $56 billion, an approximately 4% cut from the FY11 budget.  The following recommendations directly affect the International Affairs Budget: 

  • Freeze spending at FY10 levels – Require the International Affairs Budget to “accommodate the rising costs associated with maintaining America’s diplomatic leadership abroad through diplomacy and support for allies and partners, as well as assistance in strengthening fragile states.” 
  • Call on policymakers to redefine “defense” and “non-defense” discretionary spending – as “security spending” and “non-security spending.”  Security spending would include defense, international affairs, and homeland security spending, recognizing the mission overlap among those programs.
  • Recommend programs to be terminated or reduced – summarizes but does not endorse the CBO’s proposal to replace funding for the International Trade Administration Agency’s trade promotion activities with fees and the CBO’s calls to terminate the Overseas Private Investment Corporation and the Regional Development Agencies.


The Republican Studies Committee (RSC) released their blue print to curtail federal spending– “FY2011 Budget: A Balanced Budget for America”–by reducing the federal budget, with the exception of defense, to FY08 levels.  The report highlights “16 principles” including “#13 — Reducing Spending on Foreign Aid,” identifying nearly $2 billion in cuts to the International Affairs Budget:

  • Eliminate USAID operating budget – $1.39 billion savings.
  • Eliminate agencies that promote U.S. exports and trade (e.g. OPIC, TDA, etc.)-  $111 million in savings. 
  • Cut International Fund for Ireland and ESF to Egypt – $17 and $250 million respectively in savings. Recommends cutting all foreign aid to Ireland, Northern Ireland, and Egypt, but recommends continuing military assistance to Egypt.


The Heritage Foundation also publishedHow to Cut $343 Billion from the Federal Budget,” which calls for $343 billion in cuts, with $3.956 billion from the International Affairs Budget, which would mean a 6.7% cut from the President’s FY11 request.  The report calls for the following cuts in international affairs programs:

  • Eliminate Development Assistance Program- $2.636 billion savings. 
  • Eliminate agencies that promote U.S. exports and trade- $56 million savings from the International Affairs Budget.  OPIC, USTDA, and several programs from Department of Trade would be eliminated. 
  • Cut Additional International Programs – $846 million savings. Cuts include the State Dept’s educational and cultural exchange programs, Democracy Fund, USIP, East-West Center, and Japan-US Friendship Commission.


More budget cutting proposals are expected in coming weeks, including one from the CATO Foundation, which launched its website for “downsizing government,” but hasn’t yet released its recommendations for the State Department.