Sequester, CRs, and Development—Oh My!

As Senator Paul's filiblizzard, if not the snowquester, hit DC, the House passed a new continuing resolution for the remainder of FY13, which would fund the government at $982 billion, rather than the current $1.047 trillion to account for sequestration.  The White House doesn't love it but won’t veto it, and we can expect to see amendments in the Senate giving some agencies more flexibility.It’s unlikely that State and USAID will be the beneficiaries of those amendments, so, if signed into law as currently drafted, what does the CR mean for US efforts in the developing world?The CR would extend funding at last year’s levels subject to sequestration cuts. These cuts will be dramatic for State and USAID’s development efforts, and details are still uncertain.The CR would also zero out the remaining US FY13 payments to a few MDB accounts, including to the Enterprise for the Americas Multilateral Investment Fund, to IDA for costs incurred under the Multilateral Debt Relief Initiative, and to the African Development Fund for costs incurred under the Multilateral Debt Relief initiative. Those cuts aren't very surprising given the President’s Budget Request for FY13 and the numbers in the FY13 House State and Foreign Operations appropriations bill.But beyond the impact of the sequestration cuts, it’s what the CR doesn't do that really matters for US efforts in the developing world:

• The CR does not give USAID or State the flexibility to take on a world where US priorities have shifted since the last consolidated appropriations bill became law in December 2011. By contrast, DOD, MilCon, and VA—and perhaps a few others once the Senate has at it—get an appropriations scalpel as opposed to the CR hatchet to reflect evolving US priorities.
• The CR does not increase the US quota for the IMF, without which, US leadership in the organization will decrease, leaving us with limited influence with the organization my new colleague Scott Morris calls the “world’s financial firefighter.”
• The CR does not give Treasury authority to transfer funds between its international assistance accounts to adequately fund US commitments to the MDBs, which could weaken US influence in the institutions (not necessarily a bad thing for developing countries, which could then gain more influence). The US would fall behind in its commitments at a time when we committed to funding our portion of the General Capital Increases, and voting shares could be changed accordingly. So much for leveraging scarce US budget dollars.

The Administration also requested additional anomalies that don’t appear in the CR, such as funding for peacekeeping operations, Sudan debt relief, and loan guarantee funding for countries in the Middle East and North Africa, such as Egypt, Syria, and Tunisia.But as others, including Sarah Jane Staats, the director of CGD’s Rethinking US Foreign Assistance has previously bemoaned, it’s the lack of a normal appropriations process that is really damaging USG efforts in development, among broader consequences. And while the President’s Budget Request is already delayed, let’s hope that the FY14 appropriations process will move forward as intended, letting reform-oriented, targeted cuts reflect new budget realities.[UPDATE 3/9/13: I'm encouraged by reports that the Senate measure would allow for increased flexibility for all agencies by allowing agency heads to shift funds between programs with Congressional approval.]