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FY15 Budget Request Puts Heavy Emphasis on Initiatives

Friday, March 7th, 2014
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See below for a guest post from Casey Dunning, Senior Policy Analyst at the Center for Global Development. Dunning writes about the President’s 2015 budget request. The original post appeared on CGD’s blog.

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President Obama launched the opening salvo in the FY2015 budget process with his recently released request, and while some of his foreign assistance proposals seem destined to go the way of the cutting room floor, you certainly can’t fault the request for having a specific point of view.

The FY2015 international affairs budget request is edgy (a word I’ve never used to describe a budget request) in what it chooses to prioritize and push for, given basically flat funding. Indeed the $50 billion request is actually 1 percent below enacted FY2014 levels due to a downsized Overseas Contingency Operations (OCO) account. The base International Affairs FY2015 request stands at $44.1 billion with an additional $5.9 billion for the OCO account.

Here are the priorities, highlights, and surprising reversals that stand out the most. There are quite a few, hence the longer post.

  • Power Africa powers up. This is the first budget request since the launch of the Power Africa Initiative last June.  President Obama wastes no time in seeking to advance this signature initiative, both rhetorically and monetarily. The only actual line item at this point is a $77 million USAID allocation for technical assistance, risk mitigation, and regulatory reforms. But the budget request draws on the resources of the MCC (see more on MCC’s budget request here), OPIC, Export-Import Bank, and USTDA – all of which see increased budgets. If the bipartisan support around theElectrify Africa Act is any indication, funding for expanded energy access in Africa stands a good chance of making it into a final FY2015 appropriations bill.
  • OCO decreased in $ and expanded in scope. The OCO request sees a $600 million decrease compared to FY2014 enacted levels. The President’s request also puts forth a big substantive shift by expanding its country scope. In the past, OCO was almost exclusively reserved for Afghanistan, Pakistan, and Iraq. However, the FY2015 request devotes $1.5 billion for Syria and to support transitions throughout the Middle East and North Africa. This shift away from a singular focus on the “Frontline States” represents a recognition that these three countries can no longer dominate US foreign policy interests.
  • Feed the Future lives on. With its contemporary cohorts dead (Global Health Initiative) or under-resourced (Global Climate Change Initiative), the Feed the Future Initiative stands out in the FY2015 budget request with a $1 billion allocation, roughly 5 percent higher than in FY2013. The multi-year Feed the Future effort is due to wrap up in 2015 (at least for the first phase), and the budget request aims to ensure the initiative finishes strong.
  • Aid for humanitarian efforts in Syria is up; aid for efforts everywhere else down. The FY2015 budget request singles out humanitarian efforts in and around Syria to the tune of $1.1 billion. (And this doesn’t include additional aid for opposition groups and transition funding in Syria).  At the same time, other humanitarian assistance accounts get slashed by over $1.5 billion, with the Migration and Refugee Assistance account getting hit the hardest (a 33 percent cut). Due to large carryover funds, this cut shouldn’t mean a direct hit for humanitarian assistance, but expect some scrambling if any new crises strike.
  • Global Health is no longer a sacred cow. For the first time since 2000, the funding request for global health programs has decreased. This year’s global health request still stands at a mighty $8.1 billion (a full 18 percent of the base budget request). But, this level represents a 4.6 percent drop compared to enacted levels last year.
  • The aid spotlight swings to Afghanistan, leaving Pakistan in the dark. Aid to Afghanistan grew in this year’s budget request as compared to FY2014 appropriations, increasing 4 percent to $1.4 billion. This increase stands in stark contrast to the 44 percent reduction in aid to Pakistan. This near halving comes as a result of the conclusion of the Kerry-Lugar-Berman aid bill and the availability of sizeable carry-over funds. Yet, the reduction sends a worrying signal at a time when the US and Pakistani governments are in the midst of a successful Strategic Dialogue process.
  • USAID operating expenses, ever the unsexy line item, get a needed boost. The FY2015 budget request proposes a 21.4 percent increase to USAID OE after a painful FY2014 cut. OE funds are necessary in providing adequate levels of personnel to implement, manage, and monitor programs around the world while giving USAID the ability to lead Feed the Future, robustly contribute to Power Africa, and institutionalize its USAID Forward reforms.
  • USAID’s Global Development Lab given funding to experiment. Meant to be a legacy of Administrator Raj Shah, the newly founded Global Development Lab is funded at $146.3 million in the budget request. The Lab is born out of a merger of two offices (and their resources): the IDEA office and the Office of Science and Technology. Administrator Shah is due to officially launch the Lab in late March so details are still sparse, but the new entity aligns with the budget request’s emphasis on innovation, technology, and the modernization of development.
  • Multilateral institutions get much-need attention. FY 2015 looks to be a catch-up and consolidation year as funding requests are up slightly for the regional development banks, multilateral debt relief programs, and most of the environmental trust funds. The request also offers the first official announcement of the US pledge to IDA-17 and includes funding for the long-delayed IMF quota reform package, which the administration is separately seeking to move more quickly in an emergency Ukraine assistance package.
  • Opportunity, Growth, and Security Initiative makes a big splash, and will most certainly drown. This new initiative – clocking in at $56 billion, with half for defense and half for non-defense programs – is a veritable grab bag of funding allocations. Less than $1 billion is meant for international affairs programs, but these allocations are directed to multiple programs including the MCC, GAFSP, the Global Fund, Feed the Future, USAID’s Global Development Lab, maternal and child health, and the Broadcasting Board of Governors. While the extra allocations would no doubt be welcome additions to these entities, the chances of this initiative making its way through Congress are slim to none.

The budget request does an admirable job of honing in on key initiatives and programs that President Obama sees as transformative in power and scope. It also includes a scaled-back but important development-related reform – a proposal to make food aid more flexible, allowing this assistance to reach an additional two million people each year. Stay tuned to the Rethink blog for updates on how each of these initiatives fare as the FY2015 appropriations process gets underway on the Hill.

For a detailed breakdown of the FY2015 budget request including specific line-item changes, see USGLC’s excellent analysis here.

The President’s Budget: What to Expect When We’re Expecting

Friday, February 28th, 2014
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See below for a guest post from Liz Schrayer, Executive Director of the U.S. Global Leadership Coalition and MFAN Executive Committee Member. Schrayer writes about her expectations for the President’s 2015 budget request. This original post can be found on USGLC’s blog.

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On Tuesday the President will unveil the Administration’s FY15 budget and begin yet another round of negotiations with Congress on funding priorities.  The decisions will ultimately have a real impact on the international stage, so here is what’s worth watching once the budget is announced:

  • Cut or Not Cut? The first item to watch is whether or not international affairs programs receives an overall cut, and if so how big will it be? Will it be a small “haircut” or disproportionately cut compared to other non-defense programs? Remember, the Murray-Ryan budget deal brokered last December left little room for increasing discretionary programs for this year — only about $600 million overall.  So no programs are getting much of an increase.  The good news is that Secretary Kerry is a tough negotiator, and the Administration is well aware of the important humanitarian and diplomatic security needs throughout the globe.
  • How Much for War Funding? Over the past three years, some funding for international programs has come from the Overseas Contingency Operations account (OCO) to cover the enormous cost of diplomatic and development efforts in Frontline States and some of the emergency and unanticipated security costs in other hotspots.  These additional funds (upwards of $10.5 billion last year) have been vital sources of funding but have to be absorbed into base funding as we withdraw from two wars.  Unfortunately, some years, the Administration limited their request for OCO resources to only Afghanistan, Pakistan, and Iraq despite consistent Congressional direction to expand the scope of OCO.

While we are strong advocates for increased base funding, we have encouraged the Administration to make a more realistic OCO request and maintain current levels ($6.5 billion) to deal with humanitarian crises in Syria and elsewhere.  So watch if the Administration’s OCO request includes some expansion beyond the Frontline States to deal with these crises.

  • Presidential Initiatives?  Budgets always provide roadmaps of priorities – both programmatic and country.  The Administration has several priority programs – food security, global health, climate change, Power Africa – and it will be interesting to see how the budgets of key agencies are affected.  Here are a few items to watch:
    • Presidential Initiatives – Will the Administration continue to ask for strong funding for key priorities such as Feed the Future, global health, and their most recent effort in Power Africa? How will a re-energized focus on climate change impact the international scene?
    • Given the crises in Syria, Central African Republic, and South Sudan, how will humanitarian crises, peacekeeping and continued security requirements be reflected in the budget?
    • As the U.S. and Europe try to shore up the Ukrainian economy with a rapid aid package, what pressures might that place on other spending?
    • Will the Administration attempt to build on partial gains made recently on reforming U.S. food assistance?
    • How will the budget reflect challenges in places like Egypt, Afghanistan and Pakistan?
  • Continued Commitment on Reform? A signature of this Administration has been to build on the reforms of the Bush era in bringing accountability and transparency to our foreign assistance programs.  Last year the MCC scored highest on the Aid Transparency Index, making the Corporation the most open aid agency in the world.  USAID Forward has led the way with a significant scale-up of its evaluation and learning capacity so we can better understand what impact our programs are making.  Will we see continued investments in operating funds at USAID, State Department and other smart power agencies and what will happen w­­ith new efforts in science, technology and innovation?

There are lots more questions to ask, and we will be up late into the night as soon as all the numbers come out to answer these and other questions about how we see the budget impacting international programs.

The spotlight will quickly shift to Capitol Hill, where Secretary Kerry and other Administration officials will defend the President’s request in hearings and where Chairman Ryan is expected to mark up a competing FY15 budget in March.

Expectations for the President’s 2015 Budget

Wednesday, February 26th, 2014
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See below for a guest post from Connie Veillette, Senior Fellow in global food security and aid effectiveness at The Lugar Center and MFAN Co-Chair. Veillette writes about what she expects to see in President Obama’s forthcoming 2015 budget request. The original post can be found on The Lugar Center’s blog.

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The President’s 2015 budget is scheduled for release on March 4.  This marks another year that its release has been delayed despite provisions in the Budget Impoundment and Control Act of 1974 that designates the first Monday in February for its submission to Congress.  This year’s delay largely reflects late congressional action in completing the 2014 budget and appropriations processes. Of course, late budget releases inevitably contribute to the end of the fiscal year deadline (September 30) also being ignored.

The President has signaled that he wants to move past our current period of austerity that has defined White House and Congressional budgets for a number of years. What will this mean for foreign assistance and development issues? Will foreign aid still comprise just 1% of the total budget? Will it include dedicated funding for the President’s new Power Africa initiative? Where do administration initiatives such as Feed the Future, the Global Health Initiative, and other new ventures fit? My crystal ball is notoriously cloudy, but here’s where I think some of this will go.

Feed the Future, the administration’s food security initiative that targets 19 countries with activities that stimulate agriculture and related sectors, will likely stay level funded at a little over $1 billion, give or take a couple hundred million for nutrition/health programs or climate change activities. Since these issues are so intertwined, some funding can be counted toward multiple objectives.

Speaking of which, Secretary Kerry’s interest in climate change may well be reflected in the budget with increased funding. Last year’s request for the Global Climate Change Initiative was a slight cut from previous years. Figuring out how much to spend in 2014 will be made more difficult by the fact that the two accounts (Development Assistance and Economic Support Fund) used to fund it took a hit in the omnibus spending bill. Given the administration’s interest in global agriculture, there could be much more done to help small holders adapt to changing growing conditions.

Momentum around food aid reform has been building for at least a couple of years. The administration’s far-reaching reform proposal in last year’s budget was watered down just enough to give hope to reformers while still providing comfort to status quo supporters. I expect that the original 2014 proposal will again find its way into the upcoming budget. I also expect little progress in calendar year 2014 given that the Farm Bill, in which the compromise was included, was signed into law just this month.

It was announced in January that the new Global HIV/AIDS Coordinator will be from the Centers for Disease Control and Prevention (CDC). This means that the largest portion of the Global Health Initiative will be run by a non-development agency. The CDC certainly knows its stuff, but using health as an economic growth springboard isn’t one of them. Nevertheless, global health programs remain popular on the Hill and within the administration. The administration might actually propose a slight cut in health programs knowing that Congress will add the money back in.

Power Africa is the latest administration initiative with the goal of doubling access to power in sub-Saharan Africa. The White House’s intent is to fund Power Africa at $7 billion over five years through a number of U.S. agencies (USAID, OPIC, Ex-Im Bank, MCC, and African Development Bank) and private companies. I would expect a $1 billion request as the first down payment.

Funding for the Millennium Challenge Corporation (MCC) has been maintained well below $1 billion for the last several years despite bipartisan support. With six country compacts in the pipeline, three of which are Power Africa countries, I would expect that the 2015 request will top the $1 billion mark.

Selectivity and focus became catchwords during austerity. Some of us even wrote tomes on how to get more value for our aid dollars. Even if austerity is a thing of the past, and I don’t believe it is or should be, making our aid dollars go further by paying greater attention to efficiencies and effectiveness is a good thing. Having said that, I don’t expect much selectivity and focus in the form of transitioning middle income countries off aid, closing and paring back U.S. aid missions, or getting out of sectors in which we have little comparative advantage.

Many of the administration’s initiatives are quite ambitious but none will achieve their objectives if U.S. agencies are not equipped to deliver results.  USAID Forward, a rebuilding framework to strengthen USAID, find efficiencies and reward innovation, will likely see a modest increase above FY2014 levels. Keep in mind that Congress cut these programs by 10.9% from the 2013 sequestration level so I’m not going out on a limb with this one.  The requested 2015 level will likely allow for a continuation of initiatives but not a robust expansion. The critical parts of USAID Forward, in my opinion, are the rebuilding of in-house expertise, the evaluation of the agency’s work, and learning to work with local aid groups and civil society in what USAID calls Local Solutions. (For analysis on the use of local systems to implement USAID programs, see this Center for American Progress report.)

There are many more accounts and programs that I haven’t the space to cover. We at TLC will be doing some deeper dives come March 4. Stay tuned.

 

2013 SOTU’s Vision For Global Poverty & Progress: How Far Have We Come?

Friday, January 31st, 2014
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See below for a guest post from George Ingram, senior fellow at Brookings and MFAN co-chair. Ingram writes about celebrating the progress made to achieve the ambitious development goals President Obama outlined in his 2013 State of the Union address and recognizing there is still work to be done. The original post can be found on Brookings’ Up Front blog.

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For those of us who care about poverty and progress in developing countries, missing from President Obama’s State of the Union address last night was any serious discussion of development.  It therefore is useful to recall the strong vision on development he presented in the State of the Union address a year ago.  In a single, but powerful paragraph, he stated:

“We also know that progress in the most impoverished parts of our world enriches us all—not only because it creates new markets, more stable order in certain regions of the world, but also because it’s the right thing to do.  In many places, people live on little more than a dollar a day.  So the United States will join with our allies to eradicate such extreme poverty in the next two decades by connecting more people to the global economy; by empowering women; by giving our young and brightest minds new opportunities to serve; and helping communities tofeed, and power, and educate themselves; by saving the world’s children from preventable deaths; and by realizing the promise of an AIDS-free generation, which is within our reach.”

The italics are mine—to demonstrate that this short paragraph contains a commitment to 9 key components that together comprise an ambitious development agenda, headlined by the “eradication of extreme poverty,” but also noting the critical roles of empowering women, improving education and ending preventable child deaths.

Despite only a slight nod to development this year, the assumption is that this paragraph remains the Obama administration’s operative vision to which the administration can expect to be held accountable and against which global progress can be measured. A cursory assessment on each of those 9 key components would suggest encouraging progress:

  • Eradicate extreme poverty. The past decade has witnessed unexpected progress in reducing world poverty. The Millennium Development Goals (MDGs) call for cutting poverty in half by 2015, a target that has been met early. The portion of people living on less than $1.25/day fell from 47 percent in 1990 to 22 percent in 2010. By several calculations and with a continuation of current trends, extreme poverty could decline to 3 percent by 2030.  The administration, specifically USAID, has been struggling to translate its commitment to eradicate extreme poverty into a coherent strategy—not such an easy task given the complex nature of development and conflicting U.S. interests—but the administration’s policies and initiatives do translate into tackling poverty through direct means and through promoting economic growth and prosperity in developing countries.  It is noteworthy that USAID today issued a refreshed mission statement that puts poverty alleviation in the center: “We partner to end extreme poverty and to promote resilient, democratic societies while advancing our security and prosperity.”
  • Connecting more people to the global economy. In December, the ill-fated Doha Round finally produced the Bali Package that brings results which, while modest, are valuable in expanding trade access for developing countries. The principal near-term development trade agenda rests in the hands of Congress: whether the Senate will overcome a myopic single-senator hold to secure renewal of the GSP (Generalized System of Preferences) that has already expired, and whether Congress will renew the African Growth and Opportunity Act before its expiration in 2015.
  • Empowering women. The administration’s record on empowering women is considerable and simply needs to stay on a steady course, from USAID’s and the Millennium Challenge Corporation’s (MCC) policies and programs that advance gender inclusiveness, and the State Department and USAID’s efforts to tackle trafficking and violence against women.
  • Giving the young and bright to new opportunities to serve.  The FY2014 appropriations bill provides a modest increase in funding for the Peace Corps, and it is reported that the White House will soon significantly scale up the Young African Leaders Initiative (YALI) for both African and American youth.
  • Feed. The U.S. bilaterally, and in collaboration with other countries, is making a significant investment in the ability of the world to feed its growing population. Food security is being advanced by Feed the Future, through which the U.S. made a $3.5 billion pledge as part of an $18.5 billion global commitment to address hunger, and the more recent New Alliance for Food Security and Nutrition, a public/private global effort announced at the 2012 G8 Summit to lift 50 million people in Africa out of poverty by 2022.
  • Power.  Power, which was mentioned last night, was tackled in 2013 with the new initiative Power Africa, a unique public/private program that links improvement in government policies and regulations with packaging the finance needed to “power” proposed energy investment projects.  The U.S. government has committed to providing $7 billion of finance that will generate $14 billion from financial partners.
  • Educate. Despite several decades of considerable progress in bringing education to the world’s children, some 57 million children remain out of school.  USAID and other donors have moved from just focusing on getting kids through the school door to making sure there is a learning experience inside the classroom. Thanks to continued support for education in Congress, funding is bumped up slightly for FY2014.
  • Preventable childhood deaths. The story is encouraging.  The global under-5 mortality rate has been cut nearly in half, from 90 deaths per 1,000 live births in 1990 to 48 in 2012, or from 12.6 million to 6.6 million children a year. Encouragingly, the rate in reduction has sped up from 1.2 percent during 1990-1995 to 3.9 percent for 2005-2012. This increased pace in reducing preventable child mortality suggests that concerted effort could produce even more progress.
  • AIDS-free generation. Leaders are lining up behind the concept of an AIDS-free generation. The United States, through PEPFAR, has been leading the charge to stem this scourge.  As of September 30, 2013, 6.7 million individuals are receiving life-saving antiretroviral treatment, a fourfold increase from 1.7 million in 2008. In FY2013, 240,000 babies, who otherwise would have been infected, were born HIV/AIDS free. The world is rid of small pox; we are three countries short of defeating polio; the concept of an AIDS-free generation may sound fanciful today, but the trends and treatments are with us and the goal could be achieved with expanded political will and behavioral change.

At a time when we would wish we were closer to reaching the MDGs, and our optimism is burdened by continued poverty and the accompanying hunger, ill-health and strife, it is important to celebrate the progress that has been made and the good efforts that are being made by the U.S. government, private U.S. organizations and individuals, and their counterparts around the world.

It also is important to note that there remain other significant parts to the development agenda and commitments to be fulfilled—making our aid process more accountable through better evaluation, transparency, and learning; moving from good policy to actual implementation of local ownership, starting with listening to the needs and solutions of local institutions and individuals; effectively promoting open, democratic political institutions and civil society; and leveraging the talents and experiences outside of government, including the private sector, nongovernmental organizations and academia.

We must both commend the progress that has been made and push harder on the ambitious agenda that remains to reduce poverty and bring economic opportunities to those left out.

 

President Notes Value of Foreign Aid in Major Speech

Friday, May 24th, 2013
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President Obama delivered a major speech Thursday at the National Defense University in which he outlined the future of US counterterroism efforts. In so doing, he highlighted the importance of other tools in our national security arsenal, including foreign aid. See below for an excerpt from his speech in which he talks about this new strategic framework and the value of foreign assistance.

“So the next element of our strategy involves addressing the underlying grievances and conflicts that feed extremism — from North Africa to South Asia.  As we’ve learned this past decade, this is a vast and complex undertaking.  We must be humble in our expectation that we can quickly resolve deep-rooted problems like poverty and sectarian hatred.  Moreover, no two countries are alike, and some will undergo chaotic change before things get better.  But our security and our values demand that we make the effort.

This means patiently supporting transitions to democracy in places like Egypt and Tunisia and Libya — because the peaceful realization of individual aspirations will serve as a rebuke to violent extremists.  We must strengthen the opposition in Syria, while isolating extremist elements — because the end of a tyrant must not give way to the tyranny of terrorism.  We are actively working to promote peace between Israelis and Palestinians — because it is right and because such a peace could help reshape attitudes in the region.  And we must help countries modernize economies, upgrade education, and encourage entrepreneurship — because American leadership has always been elevated by our ability to connect with people’s hopes, and not simply their fears.

And success on all these fronts requires sustained engagement, but it will also require resources.  I know that foreign aid is one of the least popular expenditures that there is.  That’s true for Democrats and Republicans — I’ve seen the polling — even though it amounts to less than one percent of the federal budget.  In fact, a lot of folks think it’s 25 percent, if you ask people on the streets.  Less than one percent — still wildly unpopular.  But foreign assistance cannot be viewed as charity.  It is fundamental to our national security.  And it’s fundamental to any sensible long-term strategy to battle extremism.

Moreover, foreign assistance is a tiny fraction of what we spend fighting wars that our assistance might ultimately prevent. For what we spent in a month in Iraq at the height of the war, we could be training security forces in Libya, maintaining peace agreements between Israel and its neighbors, feeding the hungry in Yemen, building schools in Pakistan, and creating reservoirs of goodwill that marginalize extremists.  That has to be part of our strategy.”

Obama NDU speech