Sacrificing the MCA to be Good Just Isn't Smart

Today, the full Senate will in all likelihood pass a supplemental appropriations bill that includes two amendments introduced by Senator Gregg (R-NH) that cut long-term international development funding from the Millennium Challenge Account to pay for additional emergency disaster assistance and political aid to Jordan. Says Interaction in their press release on the vote, "this sort of 'robbing Peter to pay Paul' will undermine economic development and agricultural productivity programs that would reduce the human impact and costs of future disasters."The two amendments passed out of Senate committee rescind a total of $525 million from the FY08 MCA budget to fund legitimate and urgent needs -- Burma cyclone relief, food security programs, and support to Jordan for Iraqi refugee programs. Funding these programs makes the U.S. look good. Funding right programs the wrong way, however, is not smart. Here's why:First, the amendments poach from the one agency dedicated to long-term global development and poverty reduction investments to service short-term humanitarian and political objectives. Ultimately this is a short-sighted response. It does not provide lasting solutions to the problems at hand or help as much the very countries the amendments are trying to help.-- In the case of food insecurity, the real answer is economic growth, particularly through investments in agricultural development, infrastructure and rural roads – the overwhelming portion of MCC investments. Indeed in recent testimony before the House Committee on Financial Services, CGD's Arvind Subramanian and former USAID Administrator Andrew Natsios both pointed to the need to be smart by not losing sight of long-term solutions to these immediate needs.-- In the case of Jordan, the impact of the amendments means the planned funding for FY08 countries shifts out to FY09, displacing the anticipated large MCC compact for Jordan.Second, the amendments undercut America's credibility as a trusted, credible partner. The rescission, should it hold, would bring the MCA's FY08 budget below $1 billion -- the lowest ever, including it's first year of operation -- and would be a devastating blow to poor MCA-eligible countries making tough reforms to improve governance, security and economic growth on the promise of funding at the finish line. It sends a signal that America is not a reliable partner in terms of following through on its promises and, ironically, undercuts long-term solutions to the very problems the offsets are intended to fix.-- Burkina Faso and Namibia are within weeks of finalizing their compacts and would be told they need to wait another year to see if there is money then. Countries identified as likely candidates for FY09 funding, including Jordan, would be pushed further back. See my earlier piece on how America loses face.-- The argument that the MCC is "sitting on all this unallocated money" is a myth compounded by a complicated accounting structure that makes it an easy target when looking for offsets during appropriations rounds. See my earlier blogs on this issue.Here’s the thing. There is a way to be good and smart at the same time. It requires long-term vision, patience and a real recognition that it is the combination of short-term emergency relief and longer-term economic and social development investments that promote our -- and the world’s -- security, economic interests and moral values. And it requires a U.S. foreign assistance strategy and architecture that protects the subordination of the long-term development dollars to meet short-term political needs.Assuming the supplemental appropriations bill passes today, I hope the Administration responds quickly and forcefully in its Statement of Administration Policy (STAP) that an alternative offset needs to be found. I mean, how about shifting resources from another politically-motivated, non-development foreign assistance account so at least we are robbing” Paul to pay Paul”.