MCC Budget Caught in the Crosshairs…Again

The House is set to mark up an FY2010 supplemental appropriations bill tomorrow that includes $45.5 billion in new funds and close to $12 billion in rescissions—including a $150 million cut to MCC’s FY2010 funds. Meanwhile, the same committees are tackling the full FY2011 appropriations bill, and we can expect additional MCC cuts. I don’t envy appropriators’ tough job to balance money and politics, but I also can’t understand why the MCC always seems to be caught in the crosshairs. While we wait for reviews and policy directives to bring clarity to the rest of U.S. foreign assistance, the MCC seems like the one place that is already getting much of it right.Last week, President Obama set out the core principles of a new U.S. approach to global development. To recap, the new approach will be:

• More selective
• Leverage other donors, philanthropy, diaspora and the private sector
• Underscore country ownership and mutual accountability
• Drive policy with analysis

To my mind, the MCC is already doing these things, and so far, doing them well. The MCC is selective by design. It focuses on a limited number of good performing countries that have demonstrated (and objectively measured) commitment to good governance, investing in people, and economic growth. At a recent event with Liberian President Ellen Johnson Sirleaf, Senator Jack Reed (D-RI) spoke of the active Liberian diaspora in his district eager to see Liberia qualify for MCC programs. MCC compacts have also worked with the private sector. In Ghana for example, large-scale pineapple farms brought on local small farmers and provided them with the technical assistance to produce higher-value crops themselves. And MCC staff, including new CEO Daniel Yohannes, are exploring ways to do more. Most importantly, the MCC model is designed to put countries in the driver’s seat and to be responsible for the design and implementation of MCC programs focused on poverty reduction and economic growth. There are minimal MCC staff in compact countries, and it is up to local MCC representatives to make it work, or risk losing funding (which has happened in MCC, and rarely happens elsewhere). The MCC also has publicly available data and analysis that is updated quarterly for each compact country. And they use their monitoring and evaluation tools and policy analysis to make important mid-course corrections as evidenced in the threshold review, indicator adjustments, income category definitions and so on.In addition, the MCC—unlike USAID and the new food security and global health initiatives—has a full management team up and running. It has a streamlined structure (just 300 staff) and a board that combines U.S. government officials from State, USAID, the U.S. Trade Representative, Treasury and  four civil society representatives—an innovative approach I haven’t seen replicated elsewhere. The MCC is also using creative communications tools and seems to be working closely with key congressional offices on the activities and challenges they face.I don’t mean to say that the MCC is perfect and we should let them off the hook. On the contrary, the MCA Monitor will continue to monitor and call the shots like we see them. But the point is the MCC is already ahead of the game. All of these attributes of a “new  approach to advancing development” are part of the core model of the MCC. Putting MCC’s already reduced budget—a mere $1.28 billion proposed in FY2011 as compared to the $5 billion originally intended—on the chopping block undercuts these good development principles, and from what we can tell so far, good development results too. The proposed FY2010 supplemental rescission of $150 million in MCC funds is the most troubling. The MCC has already negotiated with partner countries on the FY2010 funds it thought it had; a cut at this stage in the game means they will have to renege on good faith agreements they made with partners in compact countries, undermining country ownership and development goals.I also worry that current legislative proposals to give MCC concurrent compact authorities may backfire and be used as an excuse to cut funds one year with the assumption they could be added back (but likely won’t be) the next year. Again, the choices in Congress aren’t easy. For example, the supplemental includes $2.93 billion for Haiti ($130 million above the president’s request), roughly three times the annual operating budget for the MCC’s twenty compact countries. There are enormous challenges to spending that money well in Haiti, but who will oppose it?While we keep waiting to bring clarity to the rest of U.S. foreign assistance, the MCC seems to be one of the few places in the U.S. development apparatus that has a clear mission, mandate and structure as well as the management team and tools in place to get things right. Why then would we undercut it in the appropriations process? I’m hoping that our congressional leaders and the administration will stop seeing the MCC as the first pot to cut and start seeing it as a first step towards a new and better U.S. approach to development.