The President’s FY16 budget request launches what is sure to be an especially excruciating budget and appropriations process this year with battles over sequestration cuts not yet resolved and Republicans in control of Congress. But with advance messaging focused around a “visionary” budget from a president freed from election politics, we were excited to read the International Affairs request. And, well, visionary it is not. It (reasonably) reads a bit more reactionary, with crises such as ISIL, Syria, and even unaccompanied minors, dominating the rationale behind much of the request.
As Ben Leo recently pointed out, we tend to focus disproportionate attention on dollars when what really matters is results. He’s right, of course, but old habits are hard to break. So here’s a read of what the administration’s budget could signal for US development policy.
All About That Base? The Topline Numbers
The president’s request for decreased Overseas Contingency Operations (OCO) funding comes with an increased request for base funding, bringing the total international affairs request for FY16 up to $54.8 billion. But even as the FY16 request for OCO shrinks, the priorities it would support are expanding (e.g., “efforts to counter Russian pressure and aggressive actions”). OCO funding is allegedly an impermanent resource, with a phase-out expected by FY20, but we worry this magic (read: off-budget) money might be too difficult to let disappear—and at the expense of bringing base funding back up. So we’ll be looking closely at OMB’s expected plan on transitioning dollars from OCO back to base, as well as how the spending bills shake out.
It’s Not Easy Being Green: Financing the Green Climate Fund
The budget sends a strong message to a Congress that hasn’t quite come to terms with the danger posed by climate change with an estimated $1.29 billion for international climate programs, including a newly minted request for the Green Climate Fund. Back in November, the president announced a $3 billion pledge to the GCF – created to assist developing countries with climate change adaptation and mitigation efforts – and he needs Congress’ help to make good on that promise. It will be an uphill battle. Even absent a formal request, the FY15 CRomnibus included a prohibition on contributions to the GCF, but by including $500 million for the GCF ($350 million through the State Department and $150 million through Treasury), President Obama signals he is serious.
Come Together: Passing IMF Quota Reform and Committing to the MDBs
Failure to act on IMF quota reform since 2010 has—and continues—to undermine US legitimacy in international financial policymaking. Not the greatest plan as economies elsewhere start to look shakier. So it was a relief to see the administration is continuing to press for IMF quota reform in this budget request. The budget also continues our existing commitments to the MDBs, including starting to pay down arrears.
Toast of the Town: A Budget Boost for MCC
One of the bigger headlines from the international affairs account was the $1.25 billion request for the Millennium Challenge Corporation. Read more about what this budget boost could mean for MCC, here.
Sitting, Waiting, Wishing: What Will Come of the PEPFAR Impact Fund?
With the total down about 3 percent, attention on this year’s global health request is almost sure to focus on programs facing reductions. However, the budget does include a new $300 million PEPFAR Impact Fund, designed to reward countries that target areas facing the highest burden of HIV/AIDS. This new Fund could be a promising development, an opportunity to prioritize the spending of scarce US resources and incentivize thoughtful allocation of resources in recipient countries. But big questions remain about how the Fund would operate and what data it might rely on, so we’ll reserve judgment and anxiously await more details.
Don’t Stop Believing: The Future of OPIC
As the development landscape continues to shift, an unleashed OPIC that can take on the demand for US private investment is critical, so it was good news to see an increased request for OPIC’s administrative expenses and its credit subsidy, which OPIC says would support up to $3.6 billion in loans, risk insurance, and guarantees. The request also taps $20 million for an equity financing program. Increased support and equity authorities for OPIC will be increasingly important, particularly as Power Africa takes off.
The bad news for OPIC (and development), however, is that President Obama is looking to reprise part of a federal agency consolidation effort from 2011. FY16’s budget proposal would consolidate OPIC, as well as other agencies, into the Commerce Department. But here’s the thing, OPIC is a development agency, not an export promotion agency. Read why this idea doesn’t deserve an encore, here and here.
The Circle Game: Food Aid Reform Proposals Return
The administration continues to pay lip service to reforming the wasteful, antiquated system of US food aid delivery, requesting authority to use up to 25 percent of funds under the United States’ largest international food aid program for cash transfers, food vouchers, and local or regional purchase. Unfortunately, the same ask failed to gain traction in Congress last year. The administration argues efficiency gains from increased flexibility justify a lower topline number.
A modest request of $20 million for another opportunity to source food aid locally made the cut this year. Let’s hope members of Congress consult the evidence, remember the Local and Regional Procurement Program was their idea, and appropriate the funds.
Looking for more? Check out USGLC’s helpful analysis.
Disclaimer
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.
