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Overshadowed by other headlines, President Trump’s first budget request to Congress arrived on Capitol Hill yesterday to relatively little fanfare. With the president overseas, OMB Director Mick Mulvaney was left behind to make the case for the deep cuts the administration is proposing in FY2018. It won’t be easy. For months, members of Congress on both sides of the aisle have dismissed—and even roundly rejected—the spending figures advanced by the new administration, including in the area of foreign aid spending. And they’ve had ample opportunity to do so, starting with the release of the ultra-thinskinny budget in March, followed by leaked documents that added detail to planned reductions. The full budget features a 32 percent cut to topline funding for the Department of State and Foreign Operations, leaving few programs that would completely escape the axe.
FY16 EnactedFY17 RequestFY17 EnactedFY18 Request
While Director Mulvaney has suggested this is a “Taxpayer First Budget,” it’s hard to read this as a good deal for anyone. Value for money is an edict CGD experts have often championed when it comes to foreign aid spending. But deep cuts don’t inherently translate to efficiency. And improving effectiveness will require more than merging budget line items. Meanwhile, some of the moves proposed by the administration would undermine the accountability of foreign aid, threaten hard won gains in global health, put millions of lives at risk, cede US international leadership, and start the process of eliminating an agency that returns money to the Treasury each year while promoting US interests abroad.
Reducing accountability in foreign aid
FY16 EnactedFY17 RequestFY17 EnactedFY18 Request
Economic Support Fund
Economic Support, Democracy, and Development Assistance
My colleague Jeremy Konyndyk sounded the alarm last month when plans to merge USAID’s development assistance account into the State-managed Economic Support Fund (ESF) surfaced in a leaked document obtained by Foreign Policy. He outlined specific concerns that the move would result in future assistance being driven primarily by diplomatic and political goals with less accountability—including with respect to congressional oversight. And the documents that comprise the full budget seem to confirm the administration’s intent to target aid in just such a manner through the newly titled Economic Support, Democracy and Development Fund. But despite several nods to efficiency in language describing the move, using aid to pursue near-term foreign policy objectives is rarely efficient. Further, the administration provides only a fraction of the funding, reducing the newly-merged account by 25 percent compared to FY2017 funding levels.
Ignoring the evidence in global health
FY16 EnactedFY17 RequestFY17 OmnibusFY18 Request
Global Health Programs - USAID
Global Health Programs - State
Even in the face of—oft-remarked—bipartisan support in Congress, US global health funding took a hit in the administration’s budget request. Funding to fight HIV/AIDS globally through the President’s Emergency Plan for AIDS Relief (PEPFAR) would bear an 11 percent cut, raising questions about how the administration plans to ensure continued treatment for patients who currently receive antiretroviral drugs through the program.
Under the administration’s budget, USAID’s global health programs would be subject to a far more dramatic cut—just half of what Congress provided in the FY2017 omnibus. Though the budget proposes to redirect some Ebola emergency funds to fight Malaria ($250 million) and support global health security ($72.5 million).
And, worryingly, in making these deep reductions, the administration seems to be ignoring the evidence of what works in global health. For instance, despite interest from key White House staff in advancing women’s economic empowerment—the budget request would eliminate funding for family planning—access to which is so often a necessary precursor to women’s economic empowerment. Budget documents also remark on reductions in funding to combat polio. Polio is an awful disease, but thanks to coordinated efforts from public and private actors alike, the world has come incredibly close to eradicating it entirely. On an annual basis, the US investment in the fight is relatively small, but pulling back makes little sense. Not only would letting up give the disease the chance to regain ground, but if we’re able to reach global eradication we won’t ever need to appropriate money for the disease again. In the CGD book Millions Saved, my colleagues chronicle the incredible cost effectiveness of US efforts to eradicate smallpox, noting that the United States recoups its investments in savings every 26 days because it no longer needs to spend to vaccinate or treat the disease.
Hampering our humanitarian response
FY16 EnactedFY17 RequestFY17 EnactedFY18 Request
Food for Peace II
International Disaster AssistanceFY16 EnactedFY17 RequestFY17 EnactedFY18 Request
The world is staring down four famines while struggling to address the continuing flow of refugees from Syria. Congress recognized the heightened need for life-saving assistance in the FY2017 Omnibus, providing an extra $990 million to tackle famine. In stark contrast, the Trump administration’s budget would zero out US food assistance—under the United States’ largest international food aid program, known as Food for Peace Title II (or P.L. 480). The budget request suggests future food assistance will be provided, more efficiently, through the International Disaster Assistance account (IDA)—but rather than shoring up the account to shoulder the additional cost, it cuts IDA too. The US system for providing food assistance overseas is in serious need of reform. But that should open a window for the Trump administration to achieve meaningful efficiency gains—building on the work of reform champions Senators Bob Corker (R-TN) and Chris Coons (D-DE). Turning our back on those in desperate situations would have dire consequences and offer little budgetary savings.
The administration signaled plans to eliminate the Overseas Private Investment Corporation (OPIC), the United States’ chief development finance institution, in its skinny budget. In a global landscape where private investment is increasingly desired by developing countries, OPIC is crucial to helping US businesses gain footing in emerging markets. The administration cites concerns that OPIC displaces the private sector as justification for killing the agency (though not right away). But, in fact, OPIC helps private sector actors invest in frontier economies where they struggle to do so on their own. And OPIC is statutorily required to maximize private co-investment. Meanwhile, the agency returns money to the US Treasury each year. For more, see this new post from CGD’s Todd Moss and Joseph O’Keefe.
Failing our commitments to the International Financial Institutions
FY16 EnactedFY17 RequestFY17 EnactedFY18 Request
The Treasury Department’s share of the 150 account would see a 16 percent cut under the Trump administration’s request when compared to the level approved by Congress in the FY2017 omnibus. In nominal terms it is the smallest request since FY2007 and in real terms the smallest since 1964. Given President Trump’s vocal opposition to UN climate change programs, it’s unsurprising that the budget request does not include any funding for a US contribution to the Green Climate Fund. (President Obama pledged $3 billion to the multilateral fund designed to support developing countries mitigate and adapt to climate change, but he struggled to marshal support in Congress to pony up and managed only to transfer $1 billion before leaving office.) The administration’s request for the Global Environment Facility falls $34.2 million short of the US annual commitment to the fund’s last replenishment. Under the request, US contributions to the World Bank’s International Development Association (IDA) and the African Development Fund also come up short based on pledges made during replenishment sessions last December. It’s likely the United States will ultimately submit a lower pledge for each institution, causing other donors to grumble, at the very least. But the broader trend—where the United States fails to deliver on its commitments and cedes its leadership in these institutions—is even more worrying.
Congress chose to forge its own path in crafting an FY2017 spending bill. The odds seem good that members continue the trend. Rather than embrace severe cuts that will cost lives and undermine US global leadership, Congress should continue to work to ensure our investments in foreign aid are effective and deliver value for money. We outline some ideas here—expect more to come.
The first table in this post was updated on June 7, 2017 at 10am to reflect funding for the full international affairs budget. It previously showcased recent funding for the Department of State and US Agency for International Development.
OPIC is a little-known agency that helps U.S. allies develop into more stable and prosperous partners by providing loans and risk insurance to crowd in—that is, to incentivize—American investors. As the sole development finance institution of the U.S. government, OPIC was built to support U.S. foreign policy objectives by creating economic opportunities in developing nations.
That leaves worries about OPIC potentially distorting free markets. Conservative critics, including the new Office of Management and Budget Director, have long argued that OPIC can use its pricing and clout to crowd out private investors. Does this argument hold water? We argue no, for at least three reasons.
First, look at the markets targeted by OPIC. The agency is confined to frontier emerging economies where pioneering businesses and investors see potential for growth but where no commercial investment is available to co-invest.
Frontier markets are volatile and risky. Investors face problems from currency volatility to lousy infrastructure to the threats of military coups or expropriation. That’s why having an institution like OPIC is so important to opening up new markets and crowding in capital to these risky environments—like Jordan, Kenya, Iraq, or Cambodia.
When markets mature and risks diminish, other players like commercial banks step in and OPIC exits. For example, OPIC was once a major provider of political risk insurance in markets like India and South Africa. Now that gap is mostly filled by private insurers increasingly offering such coverage in the more mature emerging markets. OPIC has instead focused its political risk insurance to the most challenging markets such as Ukraine, Afghanistan, Nigeria, and Egypt.
Worries about market distortions are also misplaced because of OPIC’s mission and model. OPIC is required by its statute and its board of directors to maximize, not minimize, the private co-investment in each project. For every $1 that OPIC invests in a project, the borrower and other co-investors bring, on average, an additional $2.60 to the table.
Moreover, OPIC’s involvement in a market can crowd in others beyond bringing additional capital. The agency often helps (or insists) a host country implement market-friendly reforms. For instance, some of the biggest investor roadblocks in places like the Middle East or North Africa are crony capitalism, nepotism, and red tape. OPIC works to remove market distortions—such as local content requirements or onerous regulations—that thwart private investors.
Finally, OPIC’s role is far more than simply generating market access. The true litmus test of OPIC’s success is whether its activities support economic development and American foreign policy objectives. When the White House needs to marshal investment to support an ally—after the collapse of the Soviet Union, the Arab Spring uprising, or to bolster our counterterrorism partners in East Africa—OPIC gets the call. What better way to demonstrate U.S. commitment than an American business investing in a much-needed power plant, housing project, or hospital?
Jordan, for example, is a longtime friend of the U.S. and a cornerstone of regional stability. OPIC has helped crowd in private American investment into housing, water and energy. It has likewise spurred investment in Iraq, Afghanistan, Egypt, and Pakistan.
Could OPIC inadvertently distort a sector? In theory, yes. In practice, there’s no sign of it. The agency’s $22 billion portfolio is diversified across sectors, clients, and regions. Indeed, experts and commissions with bipartisan support have not only backed the agency, but even proposed scaling up and modernizing OPIC.
Development finance is a valuable foreign policy tool that pays for itself. Mobilizing viable private investment to tackle some of the hardest problems in developing nations—building infrastructure, creating jobs, and getting capital into the hands of the next generation of entrepreneurs—advances U.S. interests at no cost to taxpayers. The White House should take a deep breath and a closer look. OPIC doesn’t distort markets, it builds them.
Joseph O’Keefe is a former senior advisor to the President of OPIC. Todd Moss is senior fellow at the Center for Global Development and a former Deputy Assistant Secretary of State for African Affairs.
The Trump administration has had very little to say about foreign assistance, apparently preferring to let the budget knife do its talking. But if we want to discern some sort of guiding philosophy to aid coming from this White House, perhaps we should look no further than aid to Israel and Egypt, the number one and number two overall US foreign aid recipients. In a budget that imposes double-digit cuts to programs aimed at disease eradication and response to humanitarian crises, military aid to these two countries has been cut not even by a whisker.
To be fair, grant-based military support has little to do with non-military aid that supports poverty reduction, disease eradication, or responses to natural disasters. And yet, these programs all reside in the same foreign assistance budget account, which means that maintaining military aid, and at a level that already makes Israel and Egypt the largest aid recipients overall, requires even deeper cuts everywhere else.
And this is where a guiding philosophy seems to reveal itself. There is clear conviction behind funding for Israel and Egypt, which is driven by a variety of factors that probably hasn’t varied much from administration to administration. In contrast, there seems to be no conviction behind the objectives of all other non-military aid programs in this budget.
By any measure of the Trump administration’s first budget, many of the long-standing aims of foreign assistance are simply not much of a priority. This can have a perverse effect for those who are used to thinking of foreign aid in terms of long-standing goals like poverty reduction or more recent goals like addressing climate change in lower income countries. When these are your aims, you tend to develop some rigorous standards around questions of need—eg, countries with lots of poor people, high incidences of disease, and few domestic resources will tend to be prioritized for US assistance.
Consider then that the largest recipient of US assistance, and one of just a few countries to avoid cuts in this budget, also happens to be wealthier on a per capita basis than 93 percent of US counties and 42 of the 50 US states. That is not a defining vision of foreign aid that would seem to have most US taxpayers on board.
Emerging from the president’s budget proposal is an approach that sees foreign aid overwhelmingly as an instrument of geostrategic interests. Protecting military aid to Israel and Egypt amidst deep cuts elsewhere is one striking element of this approach. But it’s also reflected in the elimination of the USAID-based “development assistance” account, which has had clearly defined development-related objectives, in favor of a more strategically-oriented “economic support and development fund” based at the State Department.
This is a troubling path to be starting down, both for the opportunities lost if we abandon the priorities that have guided foreign assistance in recent years and for the risks that arise as we expose more of our aid budget to the loose objectives of “geostrategic” interests. Setting aside particular countries like Israel and Egypt, a great deal of US taxpayer money has been spent over the years in the name of these interests with too little accountability, clearly defined objectives, or scrutiny of outcomes. Let’s hope Congress is willing to step in and make a course correction with this misguided first year budget. And to be clear, the sensible path has less to do with making Israel and Egypt share the pain of the foreign aid cuts than it does with questioning the basis for the cuts to begin with.
A joint analysis with the Center on Budget and Policy Priorities shows the Trump Administration’s proposed budgets cuts could leave US development spending further behind than ever on its fair share.
The Trump administration’s March budget proposal contained dramatic cuts to foreign aid programs, defending these reductions by implying that the United States is paying more than its “fair share” of such aid. The underlying facts contradict this assertion. The United States currently contributes just 0.18 percent of its economy to developmental aid, compared to an overall average of 0.32 percent among the 29 countries examined by the OECD. This means the US already pays $26 billion a year less than its fair share of development aid, as the term is commonly understood, than other developed nations. Rather than closing at least some of this fair share gap, which is nearly unprecedented in magnitude, the initial Trump budget proposal, as well as the likely full budget the administration is expected to release May 23, would widen it considerably, to the largest gap on record. The United States would become the most deficient ever when it comes to providing its fair share of foreign aid.
The administration’s position on foreign aid
On March 16, the Trump administration laid out some of its budget priorities for the upcoming fiscal year. This initial so-called “skinny budget” cut foreign aid by about 28 percent next year—which would reduce ODA by approximately $9 billion, assuming the 28 percent reduction would apply to all development aid funding. President Trump’s personal introduction to this budget justified this dramatic cut in the following manner:
This [budget] includes deep cuts to foreign aid. It is time to prioritize the security and well-being of Americans, and to ask the rest of the world to step up and pay its fair share.
This language implies that other countries are paying less than their fair share of foreign aid while the United States is paying more than its fair share. The budget did not present any facts to justify this characterization.
What constitutes a “fair share”?
The best and most commonly used source on the amount of foreign or development aid provided by high-income countries is the OECD. It collects information on Official Development Assistance (ODA)—“government aid designed to promote the economic development and welfare of developing countries”—provided by 29 countries that are members of its Development Assistance Committee (DAC), which includes most of the world’s major donor countries.
Following international norms advanced by the United Nations and others, the OECD’s main metric of ODA commitment is how much aid a country provides as a percent of its available resources (as measured by its gross national income, which is one way to assess the size of a nation’s economy). The OECD thus assesses a nation’s aid commitment relative to its wealth or ability to make such a commitment.
From this standpoint, the average of all donor countries’ ODA as a share of their economies could be viewed as a reasonable “fair share” measure. This measure does not reflect any negotiated agreement on the “right” level of assistance, nor do we put it forward as the correct level, but it does measure countries’ actual assistance spending in relation to each other, something that President Trump himself seems to be calling for. And by this measure, the United States comes up short.
The US devotes $33.6 billion or 0.18 percent of its economy (using OECD’s gross national income measure) to ODA. In contrast, DAC countries on average devote 0.32 percent (Figure 1). The United States would need to have spent $26 billion more on ODA in 2016 to bring its spending up to 0.32 percent of the US economy. In other words, the United States now contributes $26 billion less than its fair share relative to comparable countries.
By the OECD measure, US assistance lags that of all the other most highly industrialized countries on the list—Canada, France, Germany, Italy, Japan, and the United Kingdom. The United States ranks 22nd out of the 29 countries examined in terms of ODA as a percent of gross national income.
The US is the largest donor in absolute terms, contributing one-third more than Germany (the second-largest). But the US economy is more than five times the size of Germany’s. Thus, Germany contributes 0.7 percent of its economy to ODA, well above the US’s 0.18 percent.
Figure 1: Net ODA as a Percentage of GNISource: OECD
As Figure 2 indicates, until 1972 the United States contributed its fair share or more of foreign aid. The current gap (0.14 percent of the economy) between US ODA and the DAC average is wider than in all but three years (1989, 1994, and 1995) on record since data collection began 57 years ago.
Figure 2: US ODA Spending Well Below DAC Average; Trump Proposes Cutting It Further
Spending on ODA as a Percentage of GNI
Note: The Development Assistance Committee (DAC) is an OECD forum for major bilateral providers of development cooperation.
Source: OECD and US Office of Management and Budget. CBPP calculation for Trump proposal.
Proposed cuts on the order of $9 billion would increase the annual fair share gap to roughly $35 billion. When measured as a percent of the economy, the gap between ODA funding from the United States and from all DAC countries would grow to the largest amount on record, with data back to 1960.
US aid would fall further short of need
Despite remarkable gains in poverty reduction globally in recent decades, largely in China, the need for grant-based assistance remains high in Sub-Saharan Africa and in poor countries in other regions. According to the United Nations, 836 million people still live in extreme poverty, with incomes of less than $1.25 a day; 795 million people are undernourished; and nearly 1,000 children die every day due to preventable water- and sanitation-related diseases. The famine threatening the Horn of Africa, with an estimated 20 million people at risk of starvation, dramatically underscores the need for adequate humanitarian relief.
US foreign aid is essential not only because of its humanitarian benefits but also because it addresses the root causes of many conflicts. As 121 retired generals and admirals wrote congressional leaders earlier this year:
The State Department, USAID, Millennium Challenge Corporation, Peace Corps and other development agencies are critical to preventing conflict and reducing the need to put our men and women in uniform in harm’s way. As [current Defense] Secretary James Mattis said while Commander of US Central Command, “If you don’t fully fund the State Department, then I need to buy more ammunition.”The military will lead the fight against terrorism on the battlefield, but it needs strong civilian partners in the battle against the drivers of extremism—lack of opportunity, insecurity, injustice, and hopelessness.
Importantly, this viewpoint reflects an understanding that US foreign assistance dollars are spent effectively overall. While not immune to failures, the body of evidence demonstrates clear, significant successes and an approach to foreign assistance spending that has focused increasingly on program effectiveness and results.
International efforts to target “0.7 percent” of donors’ economies as the correct standard for aid spending has its critics in the development community, and it is not realistic to expect the United States to soon meet this standard, even as leading donor countries like the United Kingdom, Germany, and Norway have. But if President Trump truly wants countries to pay their “fair share,” then the United States has some considerable stepping up to do under a reasonable approximation of this standard. Unfortunately, the president’s budget is a big step in the wrong direction.
Isaac Shapiro is a senior fellow at the Center on Budget and Policy Priorities.
With cuts to foreign aid on the horizon, the United States, now more than ever, needs to sharpen its tools to operate in a constrained budget environment. Key to this approach is a strong development finance institution that can leverage private investment to achieve development outcomes, as well as create opportunity for American companies abroad—all at less than no cost to the US taxpayer. At this event, Congressman Ted Yoho of Florida addresses the vital role the Overseas Private Investment Corporation plays in US development policy, and discusses how he came to support its mission. An expert panel discusses the conservative rationale behind OPIC, why its critics are wrong, and what can be done to strengthen the institution and leave it better prepared to address future development challenges.
Policy guidance issued recently by Office of Management and Budget (OMB) Director Mick Mulvaney on “Reforming the Federal Government,” along with Secretary of State Tillerson’s plans to streamline and reorganize the Department of State and US Agency for International Development (USAID), have set off rampant speculation across the development and foreign aid community. Many aid watchers fear this process will be used as cover for a pre-cooked outcome: perhaps providing an opportunity to subsume USAID into the State Department, retroactively justify plans to slash the foreign aid budget (already proposed in the Trump administration’s FY2018 budget blueprint), or wipe out a range of development tools and agencies.
These fears are probably premature. The announcement of President Trump’s intent to nominate Mark Green to be USAID administrator is a hopeful sign that the administration does not intend to do away with the agency (Green was reputedly seeking assurances to this effect before taking the job). And at the recent confirmation hearing for President Trump’s pick to fill the role of deputy secretary of state, the nominee, John Sullivan, spoke thoughtfully about the distinct missions and cultures of USAID and State. Looking past the OMB reform memo’s aggressive tone, the practical guidance it provides is actually quite sensible: agencies are to review their functions to identify any that are duplicative, non-essential to their mandate, inefficient, or provide a poor cost-benefit ratio. Additionally, they are to seek ways to maximize employee performance. These are reasonable requests, and not that different from prior reform efforts under past administrations.
As former senior officials at USAID and the Millennium Challenge Corporation (MCC), we—like most supporters of US foreign assistance—agree that there is room for improvement in the system (some of our colleagues at CGD have proposed specific reforms). But the devil is in the details. There is extensive evidence that development aid has saved lives and improved standards of living (nicely summarized by Steve Radelet here). And when deployed effectively, US assistance can be an important tool for addressing a range of global challenges: state stability, pandemics, urbanization, violent extremism, climate change, the youth bulge, and record levels of displacement and humanitarian suffering. Any review of the US foreign assistance structure should focus on how to enable that assistance to be deployed as effectively as possible.
So, how to judge whether this process is truly focused on improving effectiveness, rather than just justifying cuts or rationalizing a predetermined re-org? We have our eyes on six key elements to watch:
Does it address the changing global context? The world has changed dramatically since the passage of the Foreign Assistance Act of 1961, and the US foreign aid apparatus needs to keep pace in order to remain relevant. In the coming decade, extreme poverty will be increasingly concentrated in fragile states, while the poor-but-stable states will become decreasingly reliant on aid. US assistance will be most needed in the difficult and risky environments that have traditionally been consigned to humanitarian relief flows. In these countries a more “expeditionary” development approach will be required: one that is more rapid, nimble, and risk-tolerant than traditional USAID programming. The rising economies, meanwhile, will need less US money but will still need our partnership, technical support, and private sector facilitation. In an era of rising private flows to developing countries and constrained donor budgets, there is need for greater coherence across the USG’s array of financial tools—grants, risk-sharing tools, lending, and equity—to better mobilize private finance. A serious review should focus on adapting US development capabilities to this new landscape—and equipping government experts and institutions to operate effectively within it.
Does it roll back aid fragmentation? The biggest structural question on US foreign aid is not whether USAID and State should fully merge (short answer: no. Development and diplomacy are distinct disciplines, requiring differing timelines, expertise, training, and experience). Rather, it is how to streamline a badly fragmented US development architecture. There has been an awful lot of uncoordinated tweaking of the core aid architecture since 1961. While diplomacy is relatively unified under the State Department, development functions have evolved across 20-plus USG entities. The result is a messy spaghetti bowl of objectives and organizations, with a whole that is less than the sum of its parts. There is scant efficiency to be gained from folding USAID into State (and, the record shows, a lot of potential waste when assistance is focused on political deliverables rather than development results). But much could be gained by tackling the dilution and duplication of development policy authorities and resources across an alphabet soup of federal entities and initiatives. A serious review should take a hard look at these issues. There is no inherently correct number of agencies, but the test should be whether agencies and offices have clear and distinct roles, tied to clear capacities and comparative advantages, with an efficient system for coordinating efforts among them.
Does it engage the full State/USAID team? Any meaningful government review process depends on the interplay between seasoned career staff who know their institutions, and political appointees who can provide leadership, framing, and overall policy guidance. Get this wrong and it’s likely that this effort will be among the 70 percent of change management projects that fail. The fact that there are no senior political appointees in place at either agency apart from Secretary Tillerson himself does not augur well on this front (nor do media reports of tense relations between Tillerson and State’s career leadership). Online surveys, word clouds, and outside consultancies won’t do the trick here—meaningful reform can only flow from a sincere and substantive partnership between career staff and appointees. Deep involvement of the career teams at State and USAID is critical on two fronts. First, these are the people who know their institutions inside and out. They can see around corners, and draw on institutional memories, that the appointees simply can’t. (We say this as former appointees!) If they are engaged in a sincere and substantive way, they can provide a wealth of knowledge on potential improvements. A brand new (and still very thin) team of political appointees will struggle to generate serious reform ideas—or to have any realistic gauge of feasibility—without this input. Second, the career staff will ultimately be the frontline implementers of any changes. Without their buy-in, the reforms are less likely to have staying power.
Does it set clear targets and emphasize cost-effectiveness? As the saying goes, form should follow function: look out for clear targets vis-a-vis agency goals and units. It sounds basic, but a shockingly low number of government re-orgs (8 percent) have set detailed unit-by-unit targets. These are essential in the public sector, where benefits like pandemics halted and youth employed cannot be easily captured in dollar terms. Over the past 10-plus years, foreign assistance agencies—especially the President’s Emergency Plan for AIDS Relief (PEPFAR), MCC, and USAID—have increasingly focused on setting measurable targets, tracking progress and impact, and incorporating cost-benefit analysis into decision-making. Notably, this progress contrasts with much of the aid delivered by State and the Defense Department, where objectives may be more difficult to quantify and monitoring and evaluation policies and implementation have lagged. While there is still significant room for improvement at USAID and elsewhere, any proposal should recognize recent advances in measurement and accountability—and emphasize evidence of results and cost-effectiveness over simple cost-cutting.
Does it have buy-in beyond the administration? Recent history shows major structural changes to US foreign assistance need buy-in from key external constituencies and from Capitol Hill in order to endure. President George W. Bush’s tenure illustrated both scenarios. In launching both PEPFAR and the MCC, his administration did the hard work of cultivating strong stakeholder buy-in from NGO and faith leaders, who could continue advocating for the programs long after he left office. He also worked with Congress to build ownership on the Hill, leading to legislation that enshrined the programs into law. As a result, the initiatives are still going strong two presidencies later. On the other hand, the Bush administration’s “F process” reforms, which consolidated USAID budgeting in a new State bureau, were initiated with little outside consultation and scant support from the Hill. Thus, the reforms were vulnerable to reversal, and when President Obama jettisoned most of them after taking office, no one in Congress was inclined to defend them. There is strong bipartisan support for increased aid effectiveness and accountability, so the critical question is whether the administration will engage champions and build broad support for whatever reforms it decides to pursue.
Does it seek reasonable efficiencies or debilitating cuts? The FY2018 “skinny budget” released by the Trump administration in March envisions dramatic cuts in US foreign aid and diplomatic spending. These cuts were proposed well before any strategic review was underway, much less completed. This is cart-before-the-horse budgeting—letting an arbitrary budget level set strategy rather than matching resources to strategic aims. At less than 1 percent of federal outlays, the foreign aid budget has a comparatively negligible impact on overall US spending, and rolling it back by a third is a rounding error in the broader budget context. There are certainly efficiencies that can be gained, and there may be plausible arguments for cutting budget and staffing levels (though our own view is that both remain too low). But a re-org plan that proposes major changes to budget or staffing should have a correspondingly robust strategic rationale explaining how those cuts would affect US foreign policy objectives.
In the next few weeks, we’ll propose some ideas that respond to these principles and have strong potential to increase efficiency and effectiveness . . . stay tuned!
That sound you hear is the foreign aid community’s collective sigh of relief following the White House’s announcement of its intention to nominate Ambassador Mark Green as USAID administrator. With so much uncertainty about the future of US foreign assistance, engendered by skinny budgets, executive orders, and a rumor mill on overdrive, Green’s announcement amounts to a heavy dose of comfort that comes with a familiar name and a clear and sound track record as a development policymaker.
During much of his tenure as a Member of Congress, Green served on the House International Relations Committee, where he was involved shaping legislation authorizing two signature development initiatives of the George W. Bush administration—the Millennium Challenge Corporation (MCC) and the President's Emergency Plan for AIDS Relief. Following his departure from Congress, Green was subsequently appointed Ambassador to Tanzania, and went on to hold senior posts at the health advocacy organization Malaria No More , the US Global Leadership Coalition, and currently the International Republican Institute. In addition, Green has frequently lent his perspective to conversations on improving the US approach to development policy as a co-chair of the Consensus for Development Reform, and has twice served as a private sector member of MCC’s board of directors.
Let me offer this personal perspective on Ambassador Green based on his MCC board tenure. As a US Treasury representative at MCC board meetings from 2009-2012, I saw Mark Green in action as a board member, sitting alongside the administration’s development policy leadership (Secretary Clinton, Administrator Shah, WH advisor Gayle Smith, etc.). On the board, Green was polite but persistent on country and policy issues. While he certainly could find himself at odds with others on the board or MCC management on some of these issues, these were always honest and principled disagreements over what would best serve MCC’s underlying mission.
I very much hope that Green will bring the same principled commitment to the underlying mission of USAID, because he will inevitably have disagreements with the White House, with other US government agencies, and with USAID partners around the world. That comes with the job. His task is made much harder by the sharp turn inward that the Trump administration has already taken, and the retrenchment on the budgetary front that has come with it.
But Green’s nomination itself is a sign of hope that if we are entering a period of triage when it comes many USAID programs, we will at least have a responsible actor overseeing this difficult and fraught process, and hopefully one who will stand firm on behalf of his agency’s critical mission. On this front, he will have important Republican and Democratic allies on Capitol Hill, and as an alumnus of that body, he may do well to spend more of his time on the east end of Pennsylvania Avenue than the west end.
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