Last week the House Budget Committee approved its FY13 House Budget Resolution in a 19-18 vote, with two Republicans and all Democrats on the panel opposing the measure.  During the nearly twelve-hour markup, debate focused on tax reform and Medicare overhaul proposals in the Ryan budget, but did not discuss the proposed 11% cut to the total International Affairs Budget.  Committee Democrats strongly criticized the bill, with Ranking Member Chris Van Hollen (D-MD) saying, “To govern is to choose, and the choices made in the Republican budget are simply wrong for America.”

Over the weekend, the Budget Committee posted the report language for the Budget Resolution, confirming – as we reported last week – that International Affairs receives $40.9 billion in base funding and $8.2 billion for Overseas Contingency Operations (OCO).  This total FY13 level of $49.1 billion would represent a troubling 11% cut from current levels and nearly 13% from the President’s request.   The report language includes several policy recommendations for the International Affairs Budget, including:

• Consolidating USAID’s Development Assistance with the Millennium Challenge Corporation (MCC), making MCC the lead agency;
• Eliminating the Complex Crisis Fund;
• Eliminating funding for “peripheral foreign affairs institutions,” such as the African Development Foundation, the East-West Center, and the Asia Foundation;
• Reducing funding for the Broadcasting Board of Governors (BBG);
• Reducing Educational and Cultural Exchange programs;
• Eliminating contributions to the Clean Technology Fund and the Strategic Climate Fund;
• Reducing voluntary contributions to International Organizations, claiming they duplicate payments under the Contribution to International Organizations (CIO) account;
• Eliminating Feed the Future, claiming it duplicates Food for Peace Title II/P.L. 480 and the McGovern-Dole Food for Education program; and
• Reducing funding for USAID’s International Disaster Assistance account.

Although these policy recommendations are only that – recommendations to House authorizers and appropriators – they are troubling.  For example, the House Resolution proposes to eliminate the President’s global food security initiative, Feed the Future, because it is duplicative of other food aid programs.  Feed the Future, however, is actually intended to promote a country’s capacity to meet its own food needs, reduce dependence on food aid, and become more self-reliant.

Budget Would Replace Sequestration

One item of note is that the House GOP Budget Resolution also serves as a substitute to the current sequestration process in order to protect Defense from incurring deep cuts over the next decade.  As a reminder, unless Congress acts to repeal the sequestration procedures put in place by the Budget Control Act, automatic annual cuts of about $109 billion will be triggered on January 2, 2013, with Defense absorbing 50% of these cuts.  The other 50% will come from non-defense discretionary and mandatory programs. If passed into law, the House Budget Resolution would replace sequestration through savings.  In addition to the proposed $19 billion reduction in FY13 discretionary spending cap,  the Resolution directs six committees to further reduce spending under their jurisdictions, mainly for entitlement and mandatory programs, by a collective $18 billion for next year and $261 billion over ten years.  The House Foreign Affairs Committee is not one of the six committees tasked with coming up with additional budget savings.

It is highly unlikely, however, that the House Committee proposal will move forward, with the Senate not planning to vote on a Budget Resolution this year.

Next Steps

Floor action on the House Budget Resolution will begin mid-week, where it will face further partisan debate.  Several alternative budgets will be offered, including a budget by House Democrats, which is expected to fully fund the President’s request for the International Affairs Budget.  The Republican Study Committee (RSC) will also propose a budget alternative that caps FY13 discretionary spending at $931 billion, $116 billion lower than the cap agreed to in the Budget Control Act last summer and $97 billion below Chairman Ryan’s budget level.  The big question is how many Republicans will vote for Chairman Ryan’s bill, given the interest by many in the caucus to support the deeper cuts proposed in the RSC bill.

2.    President Obama Nominates New World Bank President

On Friday, President Obama nominated Jim Yong Kim to be the new President of the World Bank, succeeding current President Bob Zoellick.  Dr. Kim, born in South Korea and an American citizen, is the first nominee for the head of the Bank that does not come from the world of finance or politics.  He brings a strong background in global health and is highly respected throughout the development community, having received a MacArthur “genius” grant for his work on tuberculosis in 2003 and named one of Time Magazine’s list of 100 most influential people in the world in 2006.

Kim is a co-founder of Partners in Health, which led innovations in the delivery of global health treatments in the most remote parts of the world, and a contributor to the Global Health Delivery Project with the Harvard Business and Medical Schools, dedicated to improving the implementation of global health initiatives.  Dr. Kim also led the World Health Organization’s program to expand HIV/AIDS treatment from 2004 to 2006.  He has served as President of Dartmouth College since 2009.  In announcing Kim’s nomination, the President said, “Jim has truly global experience. He’s worked from Asia to Africa to the Americas, from capitals to small villages,” and, “It’s time for a development professional to lead the world’s largest development agency.”   

3.    Focus on Export Legislation Continues

Export-Import Bank Reauthorization Stalled

Last Tuesday the Senate failed to overcome a procedural hurdle to reauthorize the Export-Import Bank (Ex-Im Bank), which is part of the International Affairs Budget, and raise its credit cap to $140 billion.  The amendment, which was sponsored by Senators Maria Cantwell (D-WA), Lindsey Graham (R-SC) and nearly 20 other bipartisan Senators, failed to pass over process concerns and a controversy between Delta Air Lines and Boeing.

A companion House bill, H.R. 2072, was reported out of the Financial Services Committee in September 2011 with bipartisan support.  The House has indicated it may take up the reauthorization the week of April 16^th when the chamber returns from the April recess.

The Export-Import Bank, established in 1934, has financed over $474 billion of U.S. exports and in 2011 its financing supported 288,000 American jobs, according to the Bank.  It was last fully authorized in 2006 when Congress established a Small Business Division within the Bank to provide greater emphasis on support for smaller enterprises.  In December, lawmakers provided a temporary extension for Bank operations through May 31, 2012.

Supporters of the Bank reauthorization say that failure to reauthorize it could harm U.S. companies and their workers overseas, potentially resulting in the loss of thousands of American jobs.  Last year alone, the Bank facilitated about $40 billion in exports from U.S. companies of all sizes and because the fees Ex-Im earns exceeds its annual losses, last year it actually earned about $700 million for the Federal Treasury.

Senators Introduce Bipartisan Bill to Increase Exports to Africa

Last week Senators John Boozman (R-AR), Chris Coons (D-DE) and Dick Durbin (D-IL) introduced a bill aimed at increasing exports to Africa by 200 percent over the next ten years. If enacted, the bill would have implications for several economic development programs funded by the International Affairs Budget.

Upon the bill’s introduction, Senator Boozman said, “This bill lets us establish a plan that will allow us to compete with nations like China that are already extremely active in the African markets. The bottom line is that increased trade in Africa will mean more jobs here at home.”  Senator Coons, Chairman of the Senate Foreign Relations Subcommittee on African Affairs, highlighted the effectiveness of advancing long-term development goals while supporting U.S. economic growth, saying: “By helping build sustainable models of economic growth in Africa, we will also lessen dependency on foreign aid and provide American goods to the growing number of African consumers.”  A similar bill has been introduced in the House by Representatives Chris Smith (R-NJ) and Bobby Rush (D-IL).

Among other provisions, the bill would:

• Establish permanent Ex-Im Bank and Commerce Department trade staff on the African continent to support U.S. businesses;
• Support efforts by the Overseas Private Investment Corporation (OPIC) to open African markets to U.S. businesses;
• Provide training to commercial service officers and State Department/USAID economic officers on the Ex-Im Bank, OPIC, and U.S. Trade Development Agency; and
• Coordinate efforts of Ex-Im Bank, OPIC, State Department, Department of Commerce, and Small Business Administration to promote U.S. exports to Africa more effectively.