May 2, 2017

Congress Passes One-Week CR, Leaked Budget Doc Shows Impact of 31% Cut

1.  Government Shutdown Avoided: Congress Passes One-Week Continuing Resolution

With hours to go before a shutdown, Congress approved a Continuing Resolution (CR) to keep the government open until May 5 and buy a few more days to negotiate a final FY17 spending bill. The stop-gap measure, which passed the House by a vote of 382-30 and passed the Senate by voice vote, maintains the same funding level for the FY17 International Affairs Budget – $58.8 billion – that was approved in December.

A one-week CR was needed as negotiations around a final FY17 spending bill were slowed this week due in part to disagreements around health insurance subsidies and border wall funding, though the Administration eventually retreated on both contentious issues in the interest of averting a government shutdown. Negotiators appear close to a deal but other complexities, including the repeal of Obamacare and tax reform discussions, could still throw a wrench in the process and prolong passage of a final FY17 bill.

As a reminder, the Administration recommended a 5.7% cut ($3.8 billion) to the FY17 International Affairs Budget. While the one-week CR did not include any cuts and lawmakers have largely rejected the idea of deep and disproportionate cuts to the International Affairs Budget, we should know next week whether development and diplomacy programs will be protected in FY17.

Next Steps

While FY17 negotiations are still underway and we have yet to see a full budget proposal from the Administration, Congress is starting its work on FY18. This week, House Budget Committee Chair Diane Black (R-TN) said she is looking to mark up a FY18 budget resolution the week of May 15 and move the proposal to the House floor by the end of the month. The Senate Budget Committee appears to be farther behind in the process.

The Administration is now targeting the week of May 22nd to release its full FY18 budget proposal. At that point, the House and Senate Appropriations Committees will begin holding hearings on the budget and writing the FY18 spending bills in earnest.

2.  More Details on FY18: Leaked Budget Document Sheds Light on Impact of 31% Cut to International Affairs Budget

This week Foreign Policy released an article containing a leaked internal State Department budget document that sheds light on the impact of the cuts proposed by the Administration for FY18 and confirms some of the most troubling rumors about the fate of certain development programs.

It is important to note that this document does not give nearly a full picture of the Administration’s proposal and we understand that changes have been made since this document – which is dated April 6th – was leaked. With that in mind, here are our takeaways:

  • Expect Mission Closures and a Refocus on “Countries of Greatest Strategic Importance”. The leaked document sheds light on the Administration’s plans to shutter or greatly reduce our footprint in 20 countries, with details of development, economic, and global health funding requests. We know that the full list of missions facing eventual closure is well over 30, so this document does not give the full picture but, some of the countries that will see major cuts or complete elimination include:
    • Africa – Central African Republic, Mauritania, Niger, Sierra Leone
    • Asia – Laos, Marshall Islands, Thailand, Timor-Leste, Azerbaijan, Sri Lanka, Turkmenistan
    • Europe – Belarus, Montenegro
    • Western Hemisphere – Brazil, Cuba, Ecuador, Jamaica, Nicaragua, Paraguay, Venezuela
  • Development Assistance Zeroed Out, Programs Shift to Economic Support Funds (ESF). As had been rumored, funding for USAID’s Development Assistance (DA) account is zeroed out and combined with the State Department’s Economic Support Fund. This tracks with rumors that the Administration is considering reducing the autonomy of USAID and will have significant impact on how programs are prioritized and carried out.
  • Global Health Sees Significant Cuts. Total global health funding would see a cut of 25%, according to the leaked document. The document indicates that Gavi, the Vaccine Alliance would be funded at $290 million, which fulfills the U.S. commitment to the organization. Few other global health programs are spared from cuts, including the International AIDS Vaccine Initiative, neglected tropical diseases, and multidrug-resistant tuberculosis – all of which take steep cuts in the leaked document.
  • Funding for Food Security Slashed. The Bureau for Food Security is targeted for a 68% funding cut. While the leaked document does not specifically mention the Feed the Future initiative, it is likely to be drastically reduced given the proposed cut to the Bureau – a concerning development at a time when we are facing four famines impacting more than 20 million people.
  • Innovation and Women Offices on the Chopping Block. The leaked document proposes an 86% cut to USAID’s Global Development Lab and eliminates funding for the Global Women’s Office at the State Department – both of which would surely be met with bipartisan opposition on Capitol Hill.
  • Plenty of Uncertainty Remains. The document did not address every area of the International Affairs Budget such as the MCC, Peace Corps, and some of the security accounts.