After several weeks of delay, the FY11 budget and appropriations process is now in full swing on Capitol Hill. This week the House approved a one-year “budget deeming” resolution setting a binding overall cap on discretionary spending (see story below for more information), and half of the House Appropriations subcommittees have held mark ups of their bills. The Senate is likely to begin its Appropriations process soon after the July 4^th recess, including its own version of a “budget deeming” measure and markups of individual Appropriations bills.

The two Subcommittees who oversee the International Affairs Budget approved their bills this week — Agriculture and State-Foreign Operations.  The result of these two Subcommittees leaves the FY11 International Affairs Budget totaling $54.9 billion[i], a $3.3 billion (6%) cut from the President’s request.

2.         House Approves One-Year “Budget Deemer”

Late Thursday the House of Representatives passed a “budget enforcement resolution” introduced by House Budget Committee Chairman John Spratt (D-SC).  The resolution, attached to the FY 10 supplemental, sets an overall limit – the 302(a) allocation – of $1.121 trillion for FY 11 discretionary spending, $7 billion below President Obama’s request and $3 billion below the resolution passed by the Senate Budget Committee in April.  Based upon the $4 billion reduction in the State-Foreign Operations bill, the International Affairs Budget will shoulder almost 60% of the House’s total cut to the President’s discretionary budget request.

3.     House-Approved Supplemental Heads Back to Senate

The House-approved FY 10 supplemental will have to be taken up again by the Senate, which passed a smaller version of the bill, when it returns to session on July 12.  Secretary of Defense Robert Gates had strongly urged Congress to pass the supplemental before recess because the lack of funding will begin to interfere with military operations.

4.     House’s State-Foreign Operations Subcommittee Markup

The most significant development of the week was Wednesday’s Subcommittee markup in the House of the State-Foreign Operations Appropriations bill.  That bill, which funds about 96% of the International Affairs Budget, provides $52.6 billion — $4 billion (7%) below the President’s request.  An amendment by Rep. Denny Rehberg (R-MT) to reduce the funding levels further, back to FY10 level, was rejected along party lines by a vote of 5-8 vote.

USGLC released a press statement expressing concern about the impact of the $4 billion cut on national and economic security.  In particular, we expressed dismay that approximately 57% of the total cuts the House has called for in the President’s FY11 discretionary budget request will come from the International Affairs Budget, even though it totals only 1.4% of the federal budget.

Highlights of the House’s State-Foreign Operations Bill

Afghanistan: Concerned by reports of potential large-scale corruption and diversion of U.S. aid resources in Afghanistan, Subcommittee Chair Lowey (D-NY) announced in advance of the markup that she would defer approval of funds for Afghanistan until her Subcommittee held oversight hearings, evaluated what steps the Afghan government is taking to address corruption, and explored what accountability measures should be taken to minimize diversion.  At stake is about $3.9 billion in economic assistance proposed for FY11.

Pakistan and Iraq: For the other two “frontline” states, the Subcommittee made significant reductions in the President’s request.  Pakistan’s aid is set at $2.5 billion, $540 million less than the request with more than half of the cut falling on the Pakistan Counterinsurgency Capability Fund.  Iraq’s assistance is roughly cut in half – to $351 million.  Some of this reduction, however, will be offset by the House Subcommittee’s plan to include funding in the FY10 supplemental for transferring responsibility from DOD to the State Department for training Iraqi police.

Other Strategic Partners: Unlike cuts proposed for the three frontline states, the House Subcommittee provides full funding to several other key Middle East partners, including  Israel ($3 billion), Egypt ($1.55 billion), and Jordan ($682 million).

Global Health: Overall funding for global health programs totals $8.25 billion, $263 million below the FY11 request but 5.3% above current funding.  Subcommittee allocation decisions for various elements within global health, however, offer a mixed picture:

• HIV/AIDS receives $5.875 billion, $25 million more than the request; within this total, the Global Fund would get $1.125 billion, $125 million more than proposed.
• Tuberculosis is set at $240 million, $10 million larger than the request.
• Family Planning/Reproductive Health gets a small increase in the Subcommittee bill – from $590 million to $600 million – and the UN Population Fund contribution grows from $50 million requested to $60 million appropriated.
• Malaria is set at $615 million, $65 million under the request.
• Maternal and Child Health receives $750 million, $150 million below the President’s budget.
• Neglected Tropical Diseases is $80 million, well below the $155 million request.

Food Security and Agriculture: Feed the Future, a high priority food security initiative, for which the Obama Administration requested $1.76 billion, was cut to $1.15 billion, reducing both bilateral and multilateral parts of the initiative.

Highlights of Other Select Increases:

Despite the significant constraints on the State-Foreign Operations budget, the Subcommittee managed to meet or increase the President’s request in several areas:

• Basic Education — $925 million, $82 million above the proposed level.
• Peace Corps — $460 million, at the President’s request.
• Refugee Assistance — $38 million higher than the request.
• African Development and Inter-American Foundations – at the request of $30 million and $23 million, respectively
• Asia Foundation — $19 million, $3 million higher than the request.
• International Organizations and Programs — $398 million, $48 million more than proposal.
• Contributions to International Organizations — $1.595 billion, as requested.
• Embassy Security — $1.8 billion, $114 million higher than the request.
• Education and Cultural Exchanges — $635 million, $2 million more than submitted.
• National Endowment for Democracy — $110 million, up by $5 million from the request.

Highlights of Other Select Decreases:

More common, however, the Subcommittee cut multiple accounts throughout the bill.  Among the most significant:

• USAID Operating Expenses — $1.4 billion, $62 million less than proposed.
• Development Assistance — $2.77 billion, $211 million below the request, likely with most reductions coming from food security.
• International Disaster Assistance — $845 million, $16 million less than requested.
• Economic Support Fund — $7.02 billion, down $792 million from the submission.
• Millennium Challenge Corporation — $1.1 billion, $175 million less than the request.
• International Narcotics Control and Law Enforcement — $1.43 billion, $706 million below the request, although forward funding in FY10 some aid to Mexico will minimize a portion of this reduction.
• International Financial Institutions — $2.31 billion, nearly $650 million less than proposal.  Cuts to the Climate Change and Technology Funds, the Asian Development Bank, and the Food Security Fund are especially large.
• Diplomatic and Consular Programs — $8.86 billion, $678 million below the request.
• Contributions to International Peacekeeping — $2.13 billion, $56 million less than proposed.

FY11 International Affairs Budget Snapshot

(as of 07/02/10)

* International Affairs totals for each year include additional amounts (ranging between $77 million and $89 million) appropriated in the Treasury spending bill for the International Trade Commission and the Foreign Claims Settlement Commission and $300 million for the Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria, included in the Labor-HHS bill.  The Administration does not include the Global Fund appropriations in the International Affairs budget but the Congressional Budget Office does.  This table follows the CBO scoring calculation.

** FY2010 and FY2009 enacted have been adjusted to reflect “forward funding” what Congress appropriated in an emergency FY2009 supplemental in order to cover about $1.8 billion of the FY2010 request.  FY2009 has been reduced and FY2010 has been increased by the same amount in order to reflect Congressional intent.