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US Development Policy

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On January 31, the House passed a year-long FY2007 Continuing Resolution, including $32.56 billion for the International Affairs Budget -- $1.2 billion (+3.7%) higher than regular FY06 funding, but $2.53 billion (-7.2%) below the President's FY07request. Major takeaway: It pays big bucks fo fight a war or fight HIV/AIDS and malaria; the longer-term comprehensive fight against poverty and constraints to global growth in the other 60 odd developing countries gets chump change.
The big development assistance boost -- an increase of $1.3 billion over FY06 funding (and $300 million over the President's FY07 request) for Global HIV/AIDS and a $148 miilion increase ($26 million over the President's request) for malaria programs -- is, in and of itself, a great thing. But a serious commitment to development requires a comprehensive approach, and the remaining core development accounts -- CSH (less malaria), DA, ESF, SEED/FSA and MCA are either flatlined or decreased. and, together represent less than a quarter of the IA CR. The Millennium Challenge Account, purposefully designed to provide substantial sums of development assistance to poor but well governed countries receives a mere $1.75 billion in the FY07 CR, a slight decrease from FY06 funding. The U.S. Global Leadership Campaign runs a nice summary analysis of the CR IA budget. And my colleague Nandini Oomman writes a great blog on the highs and lows of the large increase in global HIV/AIDS funding. The Senate is supposed to take up the CR this week.
In the meantime, the President's FY08 budget hit the streets yesterday. And, we got our first look at the Administration's foreign aid reform budget within the $36.19 billion for International Affairs Budget. The request is an 11% increase over the House passed FY07 CR and 1.2% of the federal budget. Big winners: Iraq, Global HIV/AIDS and the MCA. As he did the past two years, the President requested $3 billion for the MCA, a request which, in my opinion, is both justified and needed to fund transformational compacts in eligible countries. And it is particularly important this year as there are increasing signs that USAID development assistance to MCA eligible countries is being cut in the foreign aid reform process. I'm in the process of analyzing the full budget and its development assistance component, made harder by large shift of USAID Development Assistance (DA) funding to ESF. In the meantime, IUS Global Leadership Campaign and DATA have great summaries.
With specific regard to the Millennium Challenge Account funding, the appropriations process has consistently and hugely reduced the funding requested by the President. With MCA and eligible countries in full stride, larger and technically sound compacts coming in, an apparent decrease in USAID economic growth funding to MCA eligible countries, and a need to approach US development assistance more comprehensively, the FY08 appropriations round is critical. What do you think?

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CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.