Yesterday, following months of negotiations, proposals that blew apart, and mounting anxiety over the state of the US economy, lawmakers and the White House finally came together with a deal. The budget package signed by President Obama allows the US debt ceiling to rise, permits borrowing to meet the nation’s obligations, places a down-payment of $917 billion on deficit reduction over 10 years, creates a new Congressional Committee tasked with finding additional deficit savings, and sets a deadline of December 23 for Congress to pass a reduction package of at least $1.2 trillion.
Why is this bad for US global development programs that save lives, help grow the economies of developing nations and lift millions of people out of poverty, all efforts that promote American values and national security?
Everyone realizes that the United States needs to get its fiscal house in order and sacrifices will be necessary all around. Most will argue that the budget deal signed yesterday will negatively impact all areas of Federal discretionary spending. And they’re right.
But the way the budget package is shaped, particularly by placing International Affairs within a Security category along with Defense that is cut by $10 billion below levels assumed by the House for FY2012, places global poverty spending in an extremely vulnerable, if not an untenable position. After facing a nearly 10 percent cut in FY2011, the non-war portion of the International Affairs budget would fall by another 12 percent if levels proposed by the House Appropriations Committee are adopted for FY2012. The budget deal signed yesterday makes the latter a more probable outcome, but worse, it may result in further cuts below the House plan.
The deficit reduction legislation establishes discretionary spending caps (the amount appropriated by Congress) for each year through FY2021. In FY2012 and FY2013, there are separate caps for Security and non-Security programs. International Affairs falls within the $684 billion Security cap along with Defense, Homeland Security, and Veterans Affairs. The cap for FY2012 is about $4.5 billion less than current spending for these agencies. More problematic, however, is that the House, to varying degrees, has already acted on appropriation bills for all funding included in the Security cap, action that sets spending at about $694 billion, or $10 billion more than permitted under the cap.
Now, the House Appropriations Committee will need to go back and revise its earlier allocations. While there is no certainty how the reductions will be distributed, there has already been strong concern voiced by a number of lawmakers about not jeopardizing defense resources. That’s not good news for International Affairs, an account that has already been slashed with disproportional cuts applied to global development activities. Another disproportional reduction to International Affairs within the Security cap would be crippling to many poverty fighting priority programs, including global health and Feed the Future.
The Senate, which has barely started the appropriation process, will also divide up the $684 billion Security cap and negotiate with the House this fall over final funding levels for FY2012. The resource constraints are enormous and going head-to-head with Defense spending is not a position that favors International Affairs.
And the situation could get worse in FY2013. The Security cap grows by only $2 billion (0.3 percent) so that whatever the outcome in FY2012, there is virtually no opportunity for gaining back any of the losses.
Beyond the discretionary spending caps, if lawmakers and the President are unable to agree on further cuts and/or revenue enhancements that total $1.2 trillion, it will trigger a sequestration, or an across-the-board cut in spending of whatever amount less than $1.2 trillion has been achieved in this second stage. Consequently, International Affairs and all other budget elements, with a few exceptions, would face another round of cuts. Defense resources will absorb 50 percent of the across-the-board reductions, a strong incentive for Congress to reach agreement in December.
For FY2011 and FY2012, nearly all savings have been achieved by cutting discretionary spending, a portion that represents about one-third of the total Federal budget. Without also including adjustments to the other two-thirds -– entitlements and revenues -– it is difficult to see how sustainable deficit reduction goals can be achieved. Continuing to have discretionary programs shoulder nearly all the burden won’t solve the problem. Moreover, additional disproportionate cuts to global poverty fighting programs will have a catastrophic impact on the lives of the most vulnerable around the world without making a consequential dent in addressing America’s deficit crisis.
Decisions made in the next five months over how to allocate the limited resources allowed under the new budget deal need to be done responsibly, equitably and in ways that do not ignore the plight of those living in poverty or put at risk global development programs that are important to long-term US national interests. Those decisions also need to include all aspects of the US budget if we are to be successful in solving our fiscal crisis.