1. Budget Week in Congress: Action on House and Senate FY18 Budget Resolutions

This week saw a flurry of action on the budget in Congress with the House passing its FY18 Budget Resolution and the Senate Budget Committee marking up its own version. While each budget resolution lays out broad spending priorities, the FY18 budget resolutions are considered primarily to be vehicles for tax reform. Their sub-allocations, including for the International Affairs Budget, are less salient now that House and Senate Appropriators have completed their FY18 spending bills.

International Affairs Budget Snapshot

*Includes $4.3 billion provided in the FY17 Security Assistance Appropriations Act
**Based on CBO’s re-estimate of the Administration’s request

Senate

The Senate Budget Committee’s FY18 Budget Resolution sets out $516 billion for non-defense discretionary spending, equal to the FY18 Budget Control Act (BCA) cap. The resolution includes $39.5 billion in base funding for the International Affairs Budget, but does not specify the Overseas Contingency Operations (OCO) funding breakdown between defense and international affairs. Rather it provides an overall total of $77 billion for OCO – $27 billion below current levels and equal to the Administration’s FY18 request. With about one-third of the total International Affairs Budget currently funded through OCO, this steep cut to the total OCO funding level could result in a much lower total allocation for the International Affairs Budget.

Of note, the Senate budget resolution permits a Senator to strike OCO-designated funds in an appropriations bill during floor consideration. Budget hawks – including Foreign Relations Committee Chairman Bob Corker (R-TN) – have criticized the use of OCO to circumvent statutory budget caps as irresponsible. Given the dependence of many international affairs programs on OCO funding, this provision could severely limit funding for development and diplomacy programs. State-Foreign Operations Appropriations Subcommittee Chairman Lindsey Graham (R-SC) has voiced his strong opposition to the provision, which he views as unwise given the critical role OCO funding plays in supplementing the base International Affairs and Defense budgets at a time of growing global threats.

The back-and-forth during the lengthy mark-up previewed some of what we can expect as Congress and the Administration work towards a broader budget deal for FY18. Senator Tim Kaine (D-VA) offered an amendment that would have permitted adjustments to the resolution’s defense and non-defense discretionary spending levels in the event of a budget deal. As currently written, the resolution only allows for an adjustment to the defense spending cap. Budget Committee Chairman Mike Enzi (R-WY) opposed Senator Kaine’s amendment on the grounds that allowing adjustments to defense and non-defense spending would prematurely determine the outcome of negotiations between the Congress and Administration on parity in a budget deal. It should be noted that even without Senator Kaine’s amendment, the non-defense discretionary spending cap could – and likely will – increase under a budget deal. The amendment failed on a party-line vote of 11-12.

House

This week, the House passed its FY18 Budget Resolution on a party-line vote of 219-206, rejecting several alternative budgets during debate on the floor. As USGLC previously reported, the resolution sets out $511 billion for non-defense discretionary spending – $5 billion below the Senate Budget Committee and the FY18 BCA cap. It provides $48.3 billion for the International Affairs Budget, including $36.3 billion in base and $12 billion in OCO funding.

Next Steps

The Senate budget resolution is expected on the floor later in October. Once the Senate approves its version of the resolution, lawmakers will work to reconcile the budget resolutions – eventually making way for Congress to pass tax reform under budget reconciliation rules, which only requires a 51-vote majority in the Senate.

Meanwhile, momentum continues to grow for a budget deal that would lift the caps on defense and non-defense discretionary spending, with Members of Congress on both sides of the aisle acknowledging that a deal must be reached in the next several months to fully fund the government in FY18. As reported previously, the current FY18 Continuing Resolution funds the government through December 8. 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.

2. More Details Emerge on State Department Redesign Process

Bipartisan Members of Congress are continuing to press the Administration for details on the State Department’s “redesign” process following the Department’s submission of recommendations to the Office of Management and Budget (OMB) in mid-September. In a substantive hearing before the House Foreign Affairs Committee, Deputy Secretary of State John Sullivan was grilled by Members of Congress on the details of the redesign process – shedding more light on the Administration’s plan to create a more efficient, effective, and accountable federal government.

During the hearing, Members expressed support for reforms that improve efficiency and effectiveness at the State Department, but reiterated that the redesign must protect development and diplomacy as distinct disciplines. Deputy Secretary Sullivan addressed Members’ concerns about transparency throughout the process, stating that Congress would be consulted on all aspects of reform before any actions are taken by the Department. He confirmed that the proposals under consideration do not include merging USAID into State or moving the Consular Affairs or Population, Refugees, and Migration Bureaus into the Department of Homeland Security. He also acknowledged that some of the Department’s reform recommendations – particularly the proposal to modernize the Department’s IT platforms – will require significant resources in the future. Finally, Deputy Secretary Sullivan conceded that morale at the State Department is low due to “uncertainty,” but stated that he, Secretary Tillerson, and the U.S. government remain wholly committed to diplomacy and development.

After combing through more than 60 reports from think tanks and experts, USGLC found seven important areas of consensus for reforming the State Department and USAID as laid out in our Report on Reports released last month:

1. Ensure a distinct and independent U.S. Development Agency,
2. Reduce duplication and inefficiencies at the State Department and USAID,
3. Enhance efforts to promote economic growth,
4. Strengthen civilian tools in the fight against terrorism,
5. Bolster humanitarian assistance,
6. Increase focus on results in foreign assistance, and
7. Work with Congress to ensure robust resources and sustainable reform.

3. Bipartisan Foreign Assistance Legislation Moves Forward

In a show of bipartisan consensus around foreign assistance authorizing legislation, Congress has taken action on a number of bills in the past several weeks:

• READ Act Signed into Law (H.R. 601). On September 8, the President signed into law the Reinforcing Education Accountability in Development (READ) Act. The bill, authored by Reps. Nita Lowey (D-NY) and Dave Reichert (R-WA) in the House and Senators Marco Rubio (R-FL) and Dick Durbin (D-IL) in the Senate, authorizes USAID as the lead coordinating agency to develop a strategy to promote and strengthen basic education programs in developing countries.

• Women, Peace, and Security Act Passes Congress (S. 1411). The Women, Peace, and Security Act passed the House on September 25 and now awaits the President’s signature. The bill, authored by Senators Jeanne Shaheen (D-NH) and Shelley Moore Capito (R-WV) in the Senate and Reps. Kristi Noem (R-SD) and Jan Schakowsky (D-IL) in the House, requires a government-wide strategy to promote women’s participation in conflict prevention and resolution efforts around the world.

• Protecting Girls’ Access to Education Act Passes House (H.R. 2408). On Tuesday, the Protecting Girls’ Access to Education Act, introduced by Reps. Steve Chabot (R-OH) and Robin Kelly (D-IL), passed the House. The bill would prioritize programs that support access to education for displaced children, especially girls.

• Multilateral Aid Review Act Introduced (S. 1928). Senators Bob Corker (R-TN) and Chris Coons (D-DE) introduced their Multilateral Aid Review Act on Thursday. The bill would authorize a methodologically-based assessment to evaluate U.S. contributions to multilateral institutions.