International Organizations, Financial Institutions Face Deep Cuts in Spending Bill

By Emily Cadei, CQ Staff

April 12, 2011 – 10:50 a.m.

International organizations and financial institutions took one of the biggest hits among foreign aid programs in the new 2011 fiscal year spending measure Congress is set to vote on this week.

The Senate and the House essentially split the difference between their two earlier proposals for the State Department and foreign operations spending in the new bill (HR 1473). At $48.3 billion, the measure will keep spending for American diplomatic and development programs at approximately the same level as fiscal 2010.

But it does represent a cut of $8.4 billion from President Obama’s funding request for fiscal year 2011, less than the $11.7 billion proposed in the House-passed spending measure (HR 1), but more than the $6.5 billion in the Senate draft.

Many programs, however, still face significant cuts compared to fiscal 2010. Top among them is the United Nations and other international organizations, which will see a more than 20 percent cut in American contributions compared to fiscal 2010 — from $1.7 billion to $1.3 billion. The measure prohibits pay raises for foreign services officers.

The bill also will cut more than $100 million from the International Clean Technology Fund and Asian Development Fund from fiscal 2010 levels, and $45 million from the African Development Fund — all financial institutions that invest in different aspects of international development.

The Millennium Challenge Corporation, a quasi-independent development agency focused on eliminating global poverty, also faces significant cuts. Its appropriations are down $205 million from fiscal 2010 and $380 million from what the president requested in fiscal 2011.

The account for economic aid to developing countries was reduced by $379 million from fiscal 2010 levels — a 6 percent cut — and $1.9 billion from the president’s fiscal 2011 request.

Some programs, however, have reason to celebrate after escaping far more punishing reductions that were proposed in the House earlier this year.

For example, the United States Institute for Peace, which was established by Congress to combat conflict situations, faces a $10 million cut from its fiscal 2010 funding in the final appropriation, which amounts to a reprieve from the original House GOP bill that would have all but obliterated its $49 million budget. Likewise, the Peace Corps budget will be cut by $25 million from its fiscal 2010 level, which is far smaller than the $69 million cut it faced in the House.

Rep. Nita M. Lowey, D-N.Y., the ranking member on the House Appropriations Subcommittee that funds the State Department and foreign aid programs, applauded the final bill for blocking some of the deepest cuts in the House-passed bill.

“National security is a three-legged stool of defense, diplomacy and development,” Lowey said in a statement. “I am pleased the agreement reached by the White House and congressional negotiators would restore many of the ill-advised cuts passed by the House of Representatives in February.”

Lowey also cheered the exclusion of language that was in the House bill to bar funding for international aid groups that offer or discuss abortion as a possible method of family planning. Known as the “gag rule,” it has been a political football for years, with alternating Republican and Democratic presidents instituting and then rescinding the policy.