Understanding the International Affairs Piece of the Federal Budget Pie

By Nancy Jacobsen, member of DFW’s Advocacy Committee and the CA, Tiburon-1 chapter

Remember the pie chart from the Advocacy Committee blog in the September issue of The Dish? Many of you may have been surprised to learn that only 1% of the U.S. federal budget goes to international affairs. This month, we are going to dive more deeply into how that 1% is broken down and how the federal budget, including the amount designated for international affairs, is determined. It is important to know how this process works if we are to understand how we, as DFW members, can make an impact on behalf of women and girls.

What does the International Affairs budget pay for?

The International Affairs (IA) budget – also known as the”150 account” – pays for a wide range of U.S. diplomatic and development activities abroad. This account pays for everything from embassy salaries to children’s health programs. While the IA budget represents about 1% of the overall federal budget, only half of this is used for poverty-reducing foreign aid.

The IA budget covers multiple U.S. agencies and departments, as well as funding international consortiums and aid programs. Here are the parts that are most relevant to DFW’s mission:

Global Health (16%):  Funding for maternal/child health, vulnerable children, nutrition, family planning, global health security as well as specific funds to fight deadly diseases such as HIV/AIDS, malaria, tuberculosis, polio and new pandemics such as Ebola.

Humanitarian Aid (13%):  Material or logistical assistance, typically provided in response to natural and man-made disasters, such as floods, earthquake and famine. Included in this category is International Disaster Assistance (IDA) and Migration and Refugee Assistance (MRA).

Development Aid (5%) and Economic Aid (10%): U.S. aid that is targeted first and foremost toward improving the lives and livelihoods of poor people, separate from aid targeted for diplomatic and security purposes.

U.S. Agency for International Development (USAID) Operations (3%): USAID is the lead U.S. government agency that works to end extreme global poverty and enable resilient, democratic societies to realize their potential.

Millennium Challenge Corp (MCC) (2%): Established in 2004 to deliver aid under the premise that aid is most effective when it rewards countries for good governance, economic freedom, and investments in people. The MCC signs 5-year compacts to fund programs that the country itself identifies through a consultative process.

Peace Corps (1%): Provides volunteer opportunities for young Americans and seniors to teach and consult in developing countries in order to promote world peace and friendship. DFW has partnered with the Peace Corps to increase educational opportunities for adolescent girls around the world.

The international affairs budget is approved and allocated by Congress on an annual basis as part of the federal budget process.

How is the federal budget determined?

The federal budget includes both discretionary and mandatory sending. Mandatory spending is government spending on certain programs that are required by existing law, including entitlement programs such as Social Security and Medicare. Discretionary spending must be approved annually by Congress. Legislators have less control over mandatory spending. The international affairs portion of the federal budget is considered discretionary spending.

This is how the process is supposed to work:

Step 1 – On or before the first Monday in February, the President submits to Congress a budget request for the next fiscal year that begins on Oct 1.

Step 2 – Based on the President’s budget request, the House and Senate budget committees pass their own budget resolutions that serve as a framework for budget decisions and set overall spending limits but does not decide funding for specific programs.

Step 3 – The House and Senate’s Appropriations Committees determine the precise amount of spending allowed for all discretionary programs. There are 12 Appropriation Subcommittees, each of which has jurisdiction over funding for a different area of the federal government (i.e. agriculture, energy, defense, homeland security, state and foreign operations, etc.).

Step 4 – The House and Senate debate and vote on the appropriations bills from each of the 12 subcommittees and reconcile any differences. Typically, most House bills are passed by early August, and the Senate passes its bills by mid-September.

Step 5 – Once a final appropriations bill passes both the House and the Senate, the bill is sent to the president for his signature. The President may veto the bill and send it back to Congress or sign it into law.

The goal is to finish the whole process by September 30, since the fiscal year starts Oct 1.

For more information on the federal budget process, check out the National Priorities Project website.

How the Budget Process Really Works

While the process described above may seem complex, in reality it is even more complicated! In recent years, the President has submitted his requested budget late. The House and Senate have passed only a few, if any, of the 12 appropriations bills. Congress has relied upon Continuing Resolutions (CR’s) and Omnibus Spending bills, which roll all spending into a single bill, to keep the government running until a budget agreement can be reached.

Current State of FY18 budget

The Administration released its detailed FY18 Budget request in May. This request included a 32 percent or $19.1 billion cut to the International Affairs budget, and a 42% cut to gender equality and women’s empowerment funding. According to the U.S. Global Leadership Coalition, this is “one of the highest-level cuts proposed to a non-defense discretionary account”. It would have “reduced funding levels for development and diplomacy programs to levels not seen since 9/11 (adjusted for inflation) and brought funding as a percentage of Gross Domestic Product (GDP) to its lowest level since World War II (0.2%).”

Since the Administration’s budget request in May, both the House and the Senate have rejected the Administration’s deep cuts to the International Affairs Budget, but they have still proposed varying levels of cuts to these programs compared to current levels. Here are a few highlights:

Global Health – House and Senate versions of the IA Budget protect funding for Global Health compared to the Administration’s request. The Global Health portion of both versions is close to the same level as FY17.

Humanitarian Aid – Both the House and Senate budget proposals cut humanitarian assistance, although the cuts are not as deep as those proposed by the Administration. The House cuts this account by 36% and the Senate cuts this account by 29%.

Development and Economic Assistance – Congress largely rejected the steep funding cuts (44%) and the proposal to consolidate accounts as requested by the Administration. However, the House and Senate still make modest cuts to development assistance.

Millenium Challenge Corporation and Peace Corps – Here, the House and Senate differ. While the Senate funds both entities at FY17 levels, the House cuts MCC funding by 12% and Peace Corps funding by 3%.

In addition to the House and Senate funding proposals, Congress has passed a short-term Continuing Resolution (CR) that funds the government through December 8.

For a complete comparison of the Administration’s request vs the Congressional appropriations, check out this report and analysis by the U.S. Global Leadership Coalition.


Next month’s blog:  DFW is collaborating with Oxfam America to produce a special report on the impact of the U.S. International Affairs budget on women and girls globally. We will share information from this comprehensive report in next month’s issue of The Dish.