What is the likely impact of the current budget negotiations on US government funding for International Affairs? In the latest installment of the U.S. Global Leadership Coalition’s must-read Budget Watch, Tod Preston, the group’s Government Relations Director, outlines four scenarios of how developments might unfold. Sequestration would be the worst outcome for International Affairs and discretionary spending.
Scenario #1: Current FY13 Continuing Resolution is Extended
Under this scenario, the FY13 appropriations for International Affairs would total $54.7 billion — $43.5 billion in the “base” and another $11.2 billion for the Overseas Contingency Operations (OCO) account, a category that is not subject to the spending caps. This amount for International Affairs would be slightly less than the temporary CR and FY12 levels (1% and 0.4%, respectively)…..
The wild card for this scenario is that an extension of a full-year CR is expected to include a number of alterations (referred to as “anomalies”) to the current formula and will, therefore, change somewhat from these projections.
Scenario #2: Congress enacts FY13 Omnibus
…..If Congress enacted an omnibus appropriation, the overall package would be cut by $4 billion – divided evenly between security and non-security programs – due to reductions made to the FY13 discretionary spending cap in the recent “mini deal.” Once again under this scenario, the International Affairs Budget would be considered part of the “security” cap. Assuming that the omnibus generally tracked what Appropriators agreed to in December, this scenario would result in a 0.3% reduction for International Affairs from FY13 levels used by appropriators last year….
Scenario #3: Sequestration
In scenario #3, the International Affairs Budget would in reality be part of the non-defense category because the definition of “security” spending is amended and limited to Defense programs only. If sequestration becomes a reality, it appears to be the worst outcome for International Affairs, as well as for all discretionary spending. Without a comprehensive deficit reduction plan in place on March 1, OMB will enforce an across-the-board of roughly 7% (or perhaps less) for all non-defense appropriation accounts. Under the sequestration process, Defense spending absorbs half of the necessary cuts, with all other spending programs, including International Affairs taking the other half. ……If sequestration is applied as illustrated above, International Affairs would fall nearly $3 billion (6.4%) below FY12 levels and $3.1 billion (7%) below the current CR. It would be by far the low water mark of any previously recommended amounts for base International Affairs levels in FY13 and a full $10.7 billion (20.7%) less than the $51.5 billion base FY10 International Affairs Budget.
Scenario #4: Grand Bargain Reached
A final scenario is that Congress and the President resolve their big differences over revenue increases, cuts to entitlements and discretionary spending, and how to raise the debt ceiling. Coupled with this could be the cancellation of sequestration, significantly revised spending caps over the next decade, and a new framework for FY13 appropriations. While this scenario is highly unlikely, there is no way to tell what this might mean for the International Affairs Budget. With a grand bargain, however, it is hard to imagine a scenario without additional discretionary spending cuts across all accounts.
How are agencies coping with the uncertainty? the USGLC asks:
Program managers at all U.S. foreign affairs agencies are taking precautions to allow for adjustments when final decisions are reached. In some cases, where International Affairs accounts have multi-year spending authority – Embassy Security, National Endowment for Democracy, USAID Development Assistance, Global Health, and Economic Support Fund, to name a few – the challenges are less. Limited amounts of funds are being obligated at this point, but when lawmakers settle on final appropriations, program managers will have until September 30, 2014 or beyond to make allocations and obligate funds.
The greatest concern rests with International Affairs accounts in three other areas: operating expense accounts for the State Department and USAID, humanitarian assistance and those with single year authority to obligate (such as Foreign Military Financing and Non-Proliferation, Anti-Terrorism, and De-mining). Humanitarian programs probably face the most uncertainty, not only from over their final funding levels but also the demands that will arise in the coming months, such as the ongoing crisis in Syria and the growing concern in Mali.
How will sequestration work?
If OMB orders sequestration, it will apply the cuts to each “Program, Project, and Activity,” (PPA) an arcane budgetary term with different definitions for each appropriations bill. While foreign affairs agency budget managers are still considering how the sequestration cuts will be applied, it appears there will likely be ….. Read the rest.
The U.S. Global Leadership Coalition (USGLC) is a broad-based influential network of 400 businesses and NGOs; national security and foreign policy experts; and business, faith-based, academic and community leaders in all 50 states who support a smart power approach of elevating diplomacy and development alongside defense in order to build a better, safer world.