May 24, 2011

International Affairs Budget Update, 5-12-11

1. Analysis of House Appropriations Allocations for FY12
2. Comparison of International Affairs Budget Allocation with Other Accounts
3. Senate Action on FY12 Budget Still Delayed; Committee Markup Possible Next Week

1. Analysis of House Appropriations Allocations for FY12 Appropriations

The House Appropriations Committee yesterday afternoon released the all-important appropriations allocations–“302(b)s”–for FY12.  Due to the way the Committee describes these allocations, there has been some confusion about the exact funding levels for the International Affairs Budget.

The confusion over the funding level for State-Foreign Operations account stems from the way the Committee accounts for war-related expenditures, known as the OCO account (Overseas Contingency Operations).

Understanding Impact of Allocations

The good news is that the $47.2 billion House allocation marks an improvement from the deep and disproportionate 18% cut contained in the FY12 budget resolution passed last month by the House.

Here is the concern: the core programs (non-war related funding) are certainly being reduced with serious long-term funding implications.  When comparing the funding levels for core accounts over the last two years, the House appropriations allocation represents nearly a 20% reduction.  While an exact calculation is not possible at this time to determine the one year impact on core programs, it is likely to translate to a 12%-16% cut.  (An exact calculation is not possible at this time because a core vs. OCO breakdown does not exist, pending final FY11 program allocations by the State Department and USAID). One final point of comparison is that the FY12 House allocation, even including OCO funding, represents a dramatic cut of 19% from the President’s FY12 request level.

The bottom line: The overall allocation is better than compared with the House budget resolution.  However, the allocation continues a two-year trend of significant cuts to non-war related programs and operations.

International Affairs Budget Snapshot

Core Request
House Budget Resolution
$56.6 b $50.1 b $53.0 b
($61.7 with OCO)
$41.0 b $49.1 b
($47.2 b State-For Ops)

*Moves $1.1 billion for the Pakistan Counterinsurgency Capability Fund (PCCF) to Defense Appropriations.  The PCCF is part of the FY12 OCO Request and the FY12 Budget Resolution.

2. Comparison with Other Accounts

The House Appropriations Committee worked from an overall cap for discretionary spending, known as 302(a), of $1.019 trillion.  In total, the allocations for FY12 result in a net cut of $30 billion relative to FY11 levels and $121 billion below the President’s FY12 request.

In the FY11 spending agreement, the International Affairs Budget shouldered a disproportionate 17% of the overall cuts. In the FY12 allocation, the International Affairs Budget constitutes about 3% of the net cuts, a number much closer to the proportionality of the size of the International Affairs Budget.  As a comparison, the Labor-HHS account received about 38% of the cuts and Transportation received about 16% of the cuts.

The total State-Foreign Operations allocation is more in line with how other security accounts fared: Homeland Security received a 2.6% cut, Military Construction-Veterans received a 0.8% cut, and DOD received a 3.3% increase.  However, when looking at non-war related expenditures, the disproportionate nature of cuts to the FY12 International Affairs Budget is very clear.  The estimated 12-16% cut for core programs in FY12 is, in fact, one of the most significantly impacted accounts and completely out of step with the rest of the security spending accounts (as noted above).  In fact, without the OCO funds, the International Affairs Budget is among the most severely cut, along with Labor-HHS, Transportation and Agriculture-FDA, all of which are cut between 11-14%.

3. Senate Action on FY12 Budget Still Delayed; Committee Markup Possible Next Week

Senate Budget Committee Chairman Kent Conrad (D-ND) is aiming to hold a markup on his FY12 budget proposal next Wednesday, May 18.  Senator Conrad has been holding off on a markup, in part to allow more time for the bipartisan “Gang of Six” to reach an agreement on a comprehensive budget proposal.  With the likelihood of an agreement waning, Conrad has also faced obstacles in ensuring sufficient support from Democrats on the Budget Committee if he proceeds with his own budget resolution.  Most notably, Senator Bernie Sanders (I-VT) has threatened to block its approval in Committee unless the resolution contains a more even balance between spending cuts and revenue increases.  Adjustments to the resolution to address Sanders’ objections have been made, which would allow next week’s markup to proceed.

While the details of Senator Conrad’s budget resolution have not been released, Senate aides have said the Chairman’s proposal would achieve $4 trillion in deficit reduction over the next decade by raising $2 trillion in revenue and $2 trillion in spending cuts.  In contrast to the House budget resolution passed last month, the International Affairs Budget is expected to be included as part of national security spending in Chairman Conrad’s budget; however, details of the funding level for the International Affairs Budget are unknown at this time.