Before leaving for Easter Recess at the end of this week, floor action is expected in both chambers on the FY13 Continuing Resolution and the FY14 Budget Resolutions.  While we will be carefully monitoring the impact of all four bills, we are most concerned with the upcoming Senate budget debate where the open rule allows for many potential cutting amendments.  Here is an update on each of the bills:

FY13 Continuing Resolution

Today the Senate is resuming work on the FY13 Continuing Resolution (CR), with the goal of passing the bill later tonight or tomorrow.  Senate leaders have been working through the weekend to reach agreement on a path toward passing the spending package, which has been bogged down by nearly 100 pending amendments.

As we reported last week, the House passed its version of the CR providing the same total spending level for International Affairs ($52.1 billion) as the Senate. In incorporating anomalies, both the Senate and House bolstered funding for embassy security.  However, the Senate bill includes nearly $2 billion higher funding than the House for USAID International Disaster Assistance, Refugee Assistance, Global Health and International Peacekeeping Activities, off-set by cuts elsewhere making these additions budget-neutral.  We will provide a more detailed analysis of these anomalies and their implications later this week.

Among the dozens of amendments offered to the CR are separate efforts by Senators Marco Rubio (R-FL), John McCain (R-AZ), Jim Inhofe (R-OK), Rand Paul (R-KY), and Pat Leahy (D-VT) to place new restrictions on aid to Egypt.  Senate leaders are hopeful they can pass the bill by tomorrow and then send the measure back to the House where it is expected to be swiftly cleared, barring it is not filled with new policy riders.  The bill will then head to the President’s desk for signature ahead of the March 27^th deadline.

FY14 Budget Resolutions

In addition to finalizing the FY13 funding, the Senate and House will consider their respective FY14 Budget Resolutions on the floor, which were both approved by party line votes in committee last week.  In an unusual move, the Administration is not expected to send their budget proposal to Congress until the week of April 8.

The House Rules Committee is meeting today to determine what alternative budget proposals and amendments will be considered on the floor as it debates its FY14 Budget Resolution this week. As was reported last week, the Ryan Budget cuts the International Affairs Budget by 7% from post-sequestration levels while Representative Chris Van Hollen (D-MD), the Ranking Member of the House Budget Committee, is expected to introduce an alternative proposal that will fully fund the International Affairs Budget.  Debate on the House Budget Resolution will begin tomorrow and the Republican Study Committee as well as the Congressional Black Caucus and Progressive Caucus will also introduce alternative budget proposals.

The Senate’s FY14 Budget Resolution provides $45.6 billion in base funding for the International Affairs Budget – 9.6% above FY13 sequestered levels and 18% higher than the level proposed in the House.  The Senate is expected to begin debate on the FY14 Budget as early as Wednesday with a “vote-a-rama” of amendments lasting perhaps into the weekend.  It is likely that the International Affairs Budget will be the target of several damaging cutting amendments.

2.    More Details on House Budget Committee’s  FY14 Recommendations

As part of the FY14 budget resolution approved last week by the House Budget Committee, the Committee released a series of non-binding policy recommendations for International Affairs programs.  Many of these proposals are similar or identical to recommendations from the last year.  In characterizing the International Affairs Budget as “critical in advancing U.S. strategic priorities and interests,” the House panel’s proposals include:

• Task the MCC as Lead Agency on Foreign Development Assistance.  The House Budget Committee report states that the Millennium Challenge Corporation (MCC) is more effective and efficient than USAID’s development aid programs in delivering foreign aid.  In the report, they call for the MCC emphasis on outputs to be the foundation for all U.S. development programs, saying the MCC model “results in the most benefits for the taxpayer dollar.”  The House panel made a similar recommendation for FY13, although last year the Committee recommended “consolidating” USAID development assistance with MCC.  Estimated savings: unclear, if any.
• Reduce Contributions to International Organizations and Programs.  As it did last year, the committee report says these voluntary contributions as duplicative of U.S. obligatory payments to entities funded under the Contributions to International Organizations account.  Estimated savings: unclear.  FY13 estimated appropriation:  $331 million.
• Eliminate Funding for Peripheral Foreign Affairs Institutions.  Also suggested last year, the House resolution assumes the termination of funding for the Inter-American Foundation, the African Development Foundation, the Asia Foundation, the East-West Center, and the Center for Middle Eastern-Western Dialogue.  Estimated savings: $83 million.
• Eliminate contributions to the Clean Technology Fund and Strategic Climate Fund.  As recommended last year, the Budget Committee argues that contributions to these multilateral funds are not “core” U.S. foreign policy functions.  Estimated savings: $223 million.
• Reduce Education Exchange Programs:  Also recommended for cutting in FY13, the House Committee asserts that while laudable programs, they are “non-essential” activities of the international affairs budget.  Estimated savings:  unclear.  FY13 estimated appropriation:  $578 million.
• Eliminate Complex Crisis Fund.  As suggested for FY13, the House Committee recommends that the State Department Bureau of Conflict and Stabilization Operations lead on conflict prevention activities and terminating the Complex Crisis Fund.  Estimated savings: $38 million.
• Diplomatic Security.  Although the House panel does not suggest reducing funds for State Department’s Diplomatic and Consular Programs or for Embassy Security, it does raise concerns over how the Department prioritizes resource allocations and manages diplomatic security resources, calling for the State Department to “reprioritize its resources and reduce wasteful spending.”  Estimated savings: $0.

Missing from the Committee’s FY14 policy recommendations that were proposed for FY13 are 1) the reduction in spending for the Broadcasting Board of Governors; 2) the elimination of Feed the Future; and 3) cuts to USAID’s International Disaster Assistance programs.

3.    Differences in House and Senate FY14 Budget Proposals

With details now available for both House and Senate FY14 Budget Resolutions, it is clear that a major factor in the $6.9 billion difference between the Senate and House International Affairs funding proposals – a 7% cut in the House and a 9.6% increase in the Senate – is the different Non-Defense Discretionary (NDD) spending totals used by each Committee.

The Senate panel sticks to the caps from the 2011 Budget Control Act, providing Defense with $552 billion and NDD with $506 billion.  The Senate levels do not assume sequestration will apply in FY14.

The House, on the other hand, sets total discretionary spending at the sequestered level for FY14.  In addition, instead of applying 50% of the cuts to Defense and 50% of the cuts to non-defense, the House applies the entire sequestered reductions to non-defense discretionary programs.  Consequently, the House resolution provides Defense $552 billion, the same as the Senate and amounts set in the 2011 Act.  But the House allocates only $414 billion for NDD, $92 billion (18%) less than the allowable limit.  By projecting these calculations annually over the next decade, the House proposal saves Defense $551 billion that would have been sequestered while cutting NDD by $943 billion.

International Affairs Budget Snapshot

Note: All FY13 figures reflect 5% cuts due to sequestration