2.    Gang of Six Unveils Budget Proposal

1.    House Foreign Affairs Committee Marking Up State Department-Foreign Assistance Authorization Bill Today

This morning the House Foreign Affairs Committee began consideration of a State Department-Foreign Assistance Reauthorization Bill (H.R. 2583), in what is expected to be a long and contentious markup with numerous amendments offered. The 161-page legislation, authored by Committee Chair Ileana Ros-Lehtinen (R-FL), authorizes FY12 appropriations for State Department and foreign assistance programs and makes several significant policy changes.

On funding issues, the bill generally maintains authorizations levels at current FY11 levels.  In some cases, however, this represents funding far below the FY12 request levels as well as FY10 funding.   As summarized below, examples in this category include Diplomatic and Consular programs, bilateral economic assistance, USAID Operating Expenses, and the Millennium Challenge Corporation (MCC).  The bill also prohibits any funding for USAID’s Office of Budget and Resource Management, an important new office created in 2010 as part of USAID’s reform efforts.  On policy issues, the legislation prohibits U.S. assistance to country governments that fail to pass the MCC’s corruption performance indicator, codifies into law the Mexico City Policy (Global Gag Rule), and places a number of specific restrictions on assistance to countries such as Egypt, Lebanon, Pakistan, and Yemen.

Chairwoman Ros-Lehtinen hopes to bring the bill to the full House shortly, but no floor time has been scheduled.  Senate Foreign Relations Committee Chairman Kerry (D-MA) is expected to introduce an alternative authorization bill next week.  While the House passed a State Department authorization bill in 2009, the last time a State Department authorization bill was enacted was in 2005.

Highlights of H.R. 2583

Funding Authorizations
The following programs, while authorized at current FY11 levels, are funded at levels significantly below the President’s FY12 request:

• Diplomatic and Consular Programs: $8.79 billion, $3.1 billion (-26%) below FY12 request
• USAID Operating Expenses: $1.52 billion, $222 million (-13%) below FY12 request
• Bilateral Economic Assistance: $21.21 billion, $2.5 billion (-11%) below FY12 request
• Millennium Challenge Corporation: $900 million, $225 million (-20%) below FY12 request

The only program authorized at levels above FY11 is the State Department’s Bureau for Democracy, Human Rights, and Labor, which would receive nearly triple ($14 million) the level requested for FY12.

Other Funding Items
USAID’s Office of Budget and Resource Management: The bill prohibits funding for this new office and states that “it shall be the policy of the United States to vest budget authorities and policy planning for all United States foreign assistance within one office at the Department of State.” (Sec. 411)  The Office of Budget and Resource Management is a key part of USAID’s Reform Effort, USAID Forward, launched in November 2010.  This provision would undermine efforts to rebuild operational capacity for development and diplomacy efforts.

Global Security Contingency Fund: Originally proposed in the President’s FY12 budget request, the Fund is designed to draw on pooled resources from both the Defense Department and the State Department to provide security and stabilization assistance.  It would essentially replace the existing Sec. 1206 authority under which both departments co-managed training for foreign security forces.  The bill authorizes the creation of this Fund at $300 million annually through FY15, to be drawn jointly from DOD and State funds (Sec. 924). The President requested $500 million for the Fund in his FY12 request.

Policy Items

• New Limitations on U.S. Assistance: prohibits U.S. assistance to the governments of countries that fail to pass the MCC corruption indicator.  Countries such as Afghanistan, Bangladesh, Egypt, Haiti, Iraq, and Pakistan, along with many others, would fail to meet this criteria.

• Global Gag Rule: prohibits assistance to foreign non-governmental organizations that promote or perform abortion, except in cases of rape, incest or to save the life of the mother.

• Global Fund to Fight AIDS, TB, and Malaria: requires a strengthened and more independent Inspector General.

• Peace Corps: requires within six months a Memorandum of Understanding (MOU) with State’s Diplomatic Security Bureau regarding safety of volunteers.  If an MOU is not signed within nine months, Peace Corps funding to deploy volunteers overseas is suspended, with a certification waiver.

2.    Gang of Six Unveils Budget Proposal

With the threat of an Aug. 2 debt limit default growing ever closer, the bipartisan Senate “Gang of Six” — consisting of Democratic Senators Conrad, Durbin, and Warner and Republican Senators Chambliss, Coburn and Crapo — unveiled yesterday a $3.7 trillion, 10-year deficit reduction package.  Their plan, the product of months of negotiations, is receiving plaudits from several Democratic and Republican leaders on Capitol Hill and discussions are underway about incorporating elements of their plan into the still-evolving McConnell-Reid proposal that would enable President Obama to raise the debt ceiling in three installments through 2012.

The Gang of Six package is based upon a combination of cuts to mandatory and discretionary spending and revenue increases.  It calls for an immediate $500 billion “downpayment” in discretionary savings through 2015, but no specifics on International Affairs Budget funding are currently available.

The Gang of Six package is similar in many respects to the recommendations of last year’s bipartisan Commission on Fiscal Responsibility and Reform, led by Erskine Bowles and Alan Simpson.   The Bowles-Simpson plan proposed $3 trillion in spending cuts over ten years and created “firewalls” between security and non-security spending.  The International Affairs Budget is considered part of security funding in their plan.