Short-Term Deal Reached to End Shutdown, Conferenced FY19 Spending Bills Released: Congress Again Rejects Dangerous Cuts to International Affairs Budget Topline

A SPECIAL NOTE ON THE GOVERNMENT SHUTDOWN

After several failed votes in the Senate yesterday to end the partial government shutdown, now in its 35th day, Congress and the White House today reached a short-term deal to reopen the government for three weeks while negotiations over border wall funding continue. The Senate quickly approved the short-term Continuing Resolution (CR), which would restore funding at current levels through February 15 and allow federal employees – including the workforce of our civilian international affairs agencies – to go back to work. The House is expected to follow suit later today. It remains to be seen whether this temporary reprieve will result in a long-term solution to fund the government through the end of the fiscal year. The USGLC is monitoring the situation closely and will send updates as appropriate.

As a reminder, Congress passed five of its twelve FY19 spending bills before the end of the fiscal year last September – ensuring part of the federal government would be funded in FY19. However, none of the bills that fund the International Affairs Budget – the State-Foreign Operations (SFOPS), Agriculture, or Commerce-Justice-Science Appropriations bills – were approved. In December, Congress passed a short-term Continuing Resolution (CR) to extend current funding levels for the International Affairs Budget and other affected agencies and programs and allow for further negotiations on finalizing FY19 spending.

When Congress and the Administration failed to reach an agreement on the remaining seven spending bills due to a dispute over funding for a border wall, a partial government shutdown was triggered – resulting in a funding lapse for America’s diplomatic and development programs. In an op-ed earlier today, USGLC President and CEO Liz Schrayer noted, “Looking at the threats around the world, from extremism to Ebola to an expansionist China, it is clear that we cannot ignore the damage from taking our civilian corps off of the playing field, even for a moment.”

In recent days, both the House and Senate released the text of six appropriations bills that reflect bipartisan agreements reached late last year to finalize FY19 spending. While these bills are unlikely to become law until a long-term deal is struck on the border wall issue, they could become part of a broader agreement to finalize FY19 spending once and for all.

When it comes to the FY19 International Affairs Budget, the agreement struck by Congressional negotiators not only rejects the deep and disproportionate cuts proposed by the Administration, but also slightly increases funding by $193 million (0.3%) compared to current levels. Specifically, the International Affairs Budget receives a total of $56.1 billion, split between $48.1 billion in base and $8 billion in Overseas Contingency Operations (OCO) funding.

International Affairs Budget Snapshot

FY18 Enacted FY19 Request* FY19 Conferenced Package
Base $43.9 billion $42.2 billion $48.1 billion
OCO $12.0 billion $0 $8.0 billion
Total $55.9 billion $42.2 billion $56.1 billion

*Based on CBO’s re-estimate of the Administration’s request

This topline reflects a bipartisan commitment in Congress to strengthen America’s development and diplomacy programs despite back-to-back budget requests from the Administration that, if enacted, would have taken funding back to levels not seen since 9/11 (inflation adjusted).

HIGHLIGHTS OF INCREASES AND DECREASES

Increases Compared to FY18 Enacted

  • USAID Capital Investment Fund: up $28 million (+14%)
  • Contributions to International Peacekeeping: up $169 million (+12%)
  • Countering Russian Influence Fund: up $25 million (+10%)
  • International Narcotics Control and Law Enforcement: up $129 million (+9%)
  • Educational and Cultural Exchanges: up $55 million (+8%)
  • National Endowment for Democracy: up $10 million (+6%)
  • Diplomatic and Consular Programs: up $454 million (+5%)
  • Democracy Fund: up $12 million (+5%)

Decreases Compared to FY18 Enacted

  • Embassy Security and Construction: down $339 million (-15%)
  • State Department Capital Investment Fund: down $11 million (-10%)
  • UN Peacekeeping: down $49 million (-9%)
  • Economic Support Fund: down $251 million (-6%)

NOTABLE PROGRAMS

Below is an analysis of notable security, economic, and humanitarian programs and how they fared in the conferenced package. Importantly, Congress funds all five agencies proposed for elimination in the Administration’s FY19 budget request at current levels. Those agencies include the U.S. Trade and Development Agency (USTDA), the Asia Foundation, the African Development Foundation, East-West Center, and the Inter-American Foundation.

NOTABLE SECURITY PROGRAMS

International Security Assistance: Increases for INCLE and FMF

The conferenced package includes a total of $9.2 billion for international security assistance, $128 million (1%) more than current levels. International Narcotics Control and Law Enforcement (INCLE) programs receive a sizeable $129 million (9%) increase, while the Foreign Military Financing (FMF) account sees a $60 million (1%) boost. At the same time, Nonproliferation, Anti-Terrorism, Demining, and Related (NADR) programs are cut by $12 million (1%) and funding for the International Military Education and Training (IMET) account is held flat. The measure also rejects, for a second year, the Administration’s proposal to provide some FMF assistance through loans.

State Operations: Steady Funding for Diplomatic and Embassy Security

The conferenced package provides $9.2 billion for Diplomatic and Consular Programs (D&CP), $454 million (5%) more than current funding, and maintains the current level of $6.1 billion for Diplomatic and Embassy Security funding. Embassy Security Construction and Maintenance (ESCM) saw a $339 million (15%) cut.

NOTABLE ECONOMIC PROGRAMS

Trade Agencies: Funding Maintained at Current Levels

The conferenced package funds all export promotion agencies at FY18 levels. The Export-Import Bank and Overseas Private Investment Corporation (OPIC) receive $110 million and $79 million for administrative expenses respectively, while the USTDA – which the Administration had proposed to eliminate – is funded at $80 million.

Last fall, Congress passed bipartisan legislation to consolidate OPIC, USAID’s Development Credit Authority (DCA), and several other investment-related programs into a modernized U.S. International Development Finance Corporation (USIDFC). However, noting the time needed to stand up the new agency, Congress does not include in the conferenced package funding that the Administration requested for the USIDFC in FY19, and instead continues to fund OPIC and the DCA at current levels.

Development and Economic Assistance: Mixed Results

The conferenced package cuts the Economic Support Fund (ESF) by $251 million (6%), but otherwise holds funding for development and economic assistance programs flat at current levels or includes slight increases. Similar to FY18, it rejects the Administration’s proposal to combine four of these accounts – ESF, Development Assistance (DA), Assistance to Europe, Eurasia, and Central Asia (AEECA), and Democracy Fund – into a new State Department-led Economic Support and Development Fund (ESDF).

It also provides level funding for DA and the Millennium Challenge Corporation (MCC), while providing slight increases for USAID Operating Expenses ($25 million), the USAID Capital Investment Fund ($28 million), Democracy Fund ($12 million), AEECA ($10 million), and the Peace Corps ($1 million).

Development and Economic Assistance FY18 Enacted FY19 Request FY19 Conferenced Package
ESDF $0 $5.1 billion $0
DA $3.0 billion $0 $3.0 billion
MCC $905 million $800 million $905 million
Peace Corps $410 million $396 million $411 million
USAID OE $1.35 billion $1.12 billion $1.37 billion
ESF $4.0 billion $0 $3.7 billion
AEECA $750 million $0 $760 million
Democracy Fund $216 million $0 $227 million

The conferenced package sets out $38.6 million for the U.S. Institute of Peace (USIP) – a nearly $1 million increase from FY18 levels. The additional funding is designated to facilitate the Syria Study Group, which Congress authorized last year to make recommendations on a Syrian diplomatic and military strategy. This funding level is a clear rejection of the Administration’s FY19 proposal to cut funding for USIP in half.

NOTABLE HUMANITARIAN PROGRAMS

Humanitarian Assistance: Modest Increase

The conferenced package not only rejects the Administration’s proposed deep cuts to humanitarian assistance, but also sets out $7.8 billion for these programs – a $173 million (2.3%) increase from current levels. This boost in funding, while small, comes at a time of looming famine in Yemen, the ongoing crisis in Syria, and unprecedented global migration with 68.5 million forcibly displaced people around the world, among many other challenges.

Humanitarian Assistance FY18 Enacted FY19 Request FY19 Conferenced Package
Disaster Aid (IDA) $4.29 billion $3.56 billion $4.39 billion
Refugees (MRA) $3.36 billion $2.8 billion $3.43 billion
Emergency Refugees $1 million $0 $1 million
Total $7.6 billion $6.4 billion $7.8 billion

Global Health: Slight Increases

Reflecting continued strong bipartisan support for global health, Congress includes $8.84 billion for these programs, $148 million (2%) more than in FY18. It provides a slight increase of $50 million for HIV/AIDS programs and maintains flat funding for the U.S. Global Fund contribution. The conferenced package also increases funding for Tuberculosis ($41 million), Nutrition ($20 million), Maternal and Child Health ($7 million), Neglected Tropical Diseases ($3 million), and Vulnerable Children ($1 million) compared to FY18.

The conferenced package provides a total of $100 million for Global Health Security, a $27 million increase from current levels. In addition, it directs $40 million in prior-year Ebola funds be repurposed for Global Health Security including $2 million to be added to the Emergency Reserve Fund, which was established in the FY17 Omnibus Appropriations bill to respond to emerging threats.

The text also holds funding for family planning flat, rejecting the Administration’s proposal to slash funding for these programs by half. It also maintains current level funding for addressing polio at $59 million and for Gavi, the Vaccine Alliance, at $290 million.

Global Health* FY18 Enacted FY19 Request FY19 Conferenced Package
Bilateral PEPFAR $4.32 billion $3.85 billion $4.37 billion
Global Fund $1.35 billion $925 million $1.35 billion
USAID HIV/AIDS $330 million $0 $330 million
Malaria $755 million $674 million $755 million
Tuberculosis $261 million $178 million $302 million
Maternal/Child Health $830 million $620 million $835 million
Vulnerable Children $23 million $0 $24 million
Nutrition $125 million $79 million $145 million
Family Planning $608 million $302 million $608 million
NTDs $100 million $75 million $103 million
Global Health Security $73 million $0 $100 million
Total $8.69 billion $6.71 billion $8.84 billion

*State Department and USAID Global Health accounts only, except for family planning.

Food Aid: Proposed Eliminations Rejected

Congress maintains FY18 funding levels for the Food for Peace program, rejecting the Administration’s proposal to eliminate it for a second year in a row. In the case of the McGovern-Dole International Food for Education and Child Nutrition program, Congress provides a modest $3 million (1.3%) increase. Of the program’s total, $15 million is designated available to purchase some food aid locally or regionally, $5 million more than last year.

FY19 Agriculture Appropriations International Programs Snapshot

FY18 Enacted FY19 Request FY19 Conferenced Package
Food for Peace/PL 480 Title II $1.72 billion $0 $1.72 billion
McGovern-Dole $207.6 million $0 $210.3 million
Local and Regional Procurement $0* $0 $0**
Total $1.93 billion $0 $1.93 billion

*10 million of McGovern-Dole funding is included for local and regional procurement.
**$15 million of McGovern-Dole funding is included for local and regional procurement.

NOTABLE MULTILATERAL PROGRAMS

Multilateral Assistance: Held Flat Across the Board

The conferenced package maintains current level funding for multilateral assistance. Notably, it rejects the Administration’s request to eliminate the International Organization and Programs (IO&P) account, which funds voluntary contributions to various UN-affiliated and other international organizations, and instead includes $339 million for this account – the same as current funding. The conferenced package also rejects the Administration’s proposal to cut Treasury International Programs by $112 million and provides $1.5 billion for these programs, again equivalent to current levels.

The conferenced package holds funding flat for International Financial Institutions (IFIs) as well. In line with the FY18 Omnibus Appropriations bill and the Administration’s FY19 request, the conferenced package eliminates funding for the Treasury Department’s contribution to the Green Climate Fund – although, as in the past, it does not explicitly prohibit contributions to the Fund.

International Peacekeeping: Mixed Results

While the negotiated package includes a $169 million (12%) increase in funding for Contributions to International Peacekeeping (CIPA), which covers assessed contributions for UN peacekeeping missions, unlike in FY18 the account will not be able to draw on significant carryover balances from previous years. In addition, the package cuts funding for Peacekeeping Operations (PKO) by $49 million (9%). The PKO account funds non-UN peacekeeping forces and operations. As in past years, the negotiated package maintains the 25% legislative cap on UN peacekeeping contributions rather than the negotiated rate of 28%. As a result, the U.S. will not be able to meet its peacekeeping obligations and will again accumulate arrears. America’s total arrears now stand at $750 million.

Peacekeeping FY18 Enacted FY19 Request FY19 Conferenced Package
UN Operations (CIPA) $1.38 billion $1.2 billion $1.55 billion
Non-UN Ops (PKO) $538 million $291 million $489 million
Total $1.92 billion $1.49 billion $2.04 billion

NOTABLE POLICY PROVISIONS

Reform and Congressional Oversight

Building on the strong language in the House and Senate’s respective State-Foreign Operations Appropriations (SFOPS) bills, the SFOPS portion of the conferenced package and accompanying explanatory statement include several important requirements related to oversight, accountability, and reform. Key provisions include:

  • Outlines specific end-strength levels for State Department and USAID career and non-career personnel, noting that a similar requirement was included in final FY18 Omnibus Appropriations bill “with which the Department of State and USAID have not complied.”
  • Requires the State Department and USAID to report to Congress within 60 days of the completion of the Foreign Assistance Review (FAR) detailing its anticipated impact on “programs and operations in future fiscal year budget requests.” It also requires Congressional consultation and notification prior to any “programmatic, funding, and organizational changes resulting from implementation of” the FAR.
  • Requires the USAID Administrator to regularly consult with Congress and development stakeholders on “efforts to transition nations from assistance recipients to enduring diplomatic, economic, and security partners.”
  • Requires OPIC to develop an inter-agency agreement with the USAID Office of Inspector General (OIG) to “to continue oversight, including audits, inspections, and investigations” of the new U.S. International Development Finance Corporation (USIDFC), until the new USIDFC Inspector General is operational.

Additional Items of Note

  • Requires the Administration to develop an “international diplomatic and assistance strategy to stop the flow of opioids into the United States” and supports State Department efforts to address the illegal trafficking of opioids into our country.
  • Does not codify the Administration’s expanded Mexico City Policy, which would apply this policy to all global health funding.

Next Steps

With a deal in place to fund the government for the next three weeks, the Administration and Congressional leadership are now tasked with reaching a long-term agreement to fund the government through the end of the fiscal year. The delays caused by the partial government shutdown could also impact the timing of the Administration’s upcoming FY20 budget request, which is historically released in early February, and potentially delay the start of a new Congressional appropriations cycle.

However, Members of Congress on both sides of the aisle have acknowledged that a new bipartisan budget deal to lift the caps on defense and non-defense discretionary spending must be reached in order to fund the government in FY20. Reaching a new budget deal that avoids the severe cuts associated with a return to sequestration will be a top priority for the 116th Congress. It will be critical for any budget deal to increase the cap on non-defense discretionary spending in order to properly fund America’s development and diplomacy programs.

Account-by-Account Details

Download the account-by-account details here.