ONE’s Analysis of the President’s FY2012 Budget Request for Key Poverty-Focused Development Accounts

ONE is dedicated to supporting developing countries in the fight against extreme poverty and disease and in efforts to promote equitable, sustainable economic growth and the principles of good governance.  Funding levels alone do not ensure positive outcomes in development. They are in fact only one piece of the puzzle but they are a critical piece that allows for smart investments to be made. In fact, outside the budget that we outline below, it is important to note that the Administration has also been undergoing a review of the manner in which its assistance is delivered which is critical in these tight fiscal times so that every dollar’s value can be further enhanced. 

Every year shortly after delivering the State of the Union address, the President submits his budget request to Congress for the following fiscal year. This budget request details how much the President believes the country should spend and how it should best be allocated across competing priorities. Congress then evaluates this request and each chamber typically creates its own draft spending plan before they then work to reconcile their plans and pass a budget bill.

The majority of the poverty-focused development accounts can be found in what is called the International Affairs Budget (also called the “Function 150” or the “150 account”). The International Affairs Budget includes the totals requested for foreign operations that are administered by the State Department, the United States Agency for International Development (USAID), the Millennium Challenge Corporation and other agencies.  But in total, it represents only a small fraction of the total budget. In fact, all international affairs spending has comprised only 1-2% of total spending for the U.S. in recent years.

FY2012 presents new challenges in an extraordinarily constrained budget environment.  These challenges will require hard choices and a laser focus on making certain that sufficient resources are available for global development programs with proven records of providing the greatest impact and results. The new Congress in particular is committed to finding savings in the budget and has proposed some radical cuts for this year and beyond even to this small sliver of the total budget pie. The President has also announced a freeze on non-security discretionary funding putting an even larger bullseye on the International Affairs Budget.

Evaluating the FY2012 request is made even more difficult by the fact that Congress has yet to finish its FY2011 budget. Because the fiscal year began before a bill was approved, Congress passed what is called a “continuing resolution” (or a “CR”) that would keep the government operating at roughly the level that was previously approved for FY2010.  The most recent CR however, expires on March 4 and must be either extended or replaced by a final budget plan. Thus members of the House have been working on a revised version that they unveiled on February 11. Because there is no conclusive baseline to consider for FY2011, ONE’s analysis will focus primarily on FY2010 budget levels which represent the last Congressionally-approved spending blueprint.

In total, President Obama requests $53.0[i] billion for the core International Affairs Budget (the 150 Account), a 3% increase over FY2010 base levels.  In a departure from the past, this year’s budget also  includes a separate account, called Overseas Contingency Operations (OCO), which houses resources for the frontline states ofAfghanistan, Pakistan and Iraq. The President is creating this new International Affairs Budget account to clearly separate  funding for continuing, regular programs (the core budget) and  resources linked to extraordinary, temporary needs (OCO), such as those in Afghanistan, Pakistan, and Iraq.  The Defense Department has maintained an OCO account since the early 2000s.  The transfer of some major responsibilities in the frontline states from military to civilian control in FY2012, including police training in Iraq and counterinsurgency in Pakistan, means that the increases for the International Affairs OCO account are significant.

Although the core International Affairs Budget for FY2012, with growth of only 3%, l may not reflect the sort of increases either in total or for individual accounts as have been requested in previous years, these resources are  important because they fund some of the most effective programs and Administration priorities for development, demonstrating a commitment to moving forward on those important initiatives, some of which are outlined below:

More analysis of the budget line items and how they compare to previous spending will be forthcoming in the next few days. As for action on the Hill, before turning to the FY2012 budget, the House and Senate will work to pass some sort of a revised CR for FY2011 before the current one expires on March 4. The budget committees for each chamber will decide the rough outline of what should be spent within each major category of the budget (i.e. how much in total will be dedicated to the International Affairs Budget).  Once that is decided, attention shifts to the Appropriations Committees where each subcommittee, including State Department and Foreign Operations, will outline their own draft spending plan that stays within that limit of the overall budget. In theory, if all goes according to plan and on time, these proposals would be adopted by the full committees of each chamber, then reconciled so that before the new fiscal year begins on October 1, 2011, the U.S. would have a new spending plan for FY2012.