Looking at the Future of the Foreign Affairs Budget

As Congress approaches the August recess, there are several unanswered questions and much unfinished business. This unfinished business includes: FY13 Appropriations, Finalizing FY13 International Affairs Budget, and looming sequestration.

FY13 Appropriations

Both the House and Senate Appropriations Committees have approved appropriations bills – yet it seems that there will be no movement to reconcile these bills by the Congress until after October 1st, when the new fiscal year begins. A key issue that is high priority for both chambers is the Continuing Resolution, a type of legislation used by the United States Congress to fund government agencies if a formal appropriations bill has not been signed into law by the end of the Congressional fiscal year.

As of yesterday, Congressional leaders reached a preliminary deal to fund the federal government through March of next year – a “rare breakthrough in a divided Congress that has battled ferociously over the budget for the past two years”. Under the Reid-Boehner deal, Congress would agree to fund the government for six months when the fiscal year expires Sept. 30, setting agency spending for the year at $1.047 trillion. If approved, the deal will ensure that the government will keep operating when the year ends. However, it is not certain that this bill will pass before Congress leaves this summer or even when they get back in September. There are opposing or uncertain forces in the Republican Party and among some Democrats. There is talk of putting unacceptable items in the bill that may draw a veto or prevent it from being taken up in the Senate.

Finalizing FY13 International Affairs Level

There are significant differences between the House and Senate FY13 International Affairs Budgets which will need to be addressed by Congress. The Senate’s State-Foreign Operations appropriations bill is about $4 billion above the House’s State-Foreign Operations appropriations bill.

Here is a snapshot of the differing bills:

Chart Provided by the US Global Leadership Coalition

State-Foreign Operations Appropriations Snapshot:


FY12 Enacted 

FY13 Request 

FY13 House Appropriation 

FY13 Senate Appropriation 
















The key differences in the bills come from the terms of funding of non-war related programs. The Senate, for example, went much deeper in proposing 53% less for the Frontline States compared with the Administration’s request. The Senate bill, overall, gives more money to development assistance programs, recommending 36% more for global disaster and refugee relief programs, as well as 21% more for development assistance – compared to the House bill.


The biggest and most talked about challenge for the Congress is the looming across-the-board cuts that will take place if the two parties cannot come to an agreement to reduce the deficit by $1.2 trillion. Sequestration was passed as part of the 2011 Budget Control Act, serving as the ultimate incentive for Congress and the White House to agree on a long-term deficit reduction deal.  The “Super Committee” failed to create a plan acceptable to the majority, in part because of Republican unwillingness to compromise on raising taxes on the very rich and putting the cost of the cuts on the middle class and poor.

Sequestration remains in force and has created fear within both parties. Half of the savings must come from Defense programs and half from non-Defense discretionary and entitlement programs – the impact of the size of cuts will be significant across the federal budget.

The consequences of sequestration would be detrimental for International Affairs funding – resulting in post-sequestration funding in FY13 of $47.7 billion – which would be 13% less than current levels.

Looking Ahead:

A range of scenarios surrounding sequestration are possible. Most likely, a long term agreement will not be reached at the end of the year which means lawmakers would either need to delay sequestration until sometime in 2013 or allow the cuts to go into effect January 2nd with the possibility of rolling them back retroactively. The election outcome will also influence the kind of deal made by Congress, and it could end unfortunately with a further large contraction of the US economy as we have seen in Europe and especially in Britain under conservative austerity programs, if those who want to further cut government domestic programs prevail.

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