Cuts to the 150 Account: Searching for a Constructive Path Forward in Foreign Aid

With major cuts to foreign assistance expected in the Trump administration’s budget preview later this week, CGD’s US Development Policy Initiative hosted experts from across the political spectrum to discuss what these cuts might mean. In a heated debate (well, at least for a think tank event), CGD’s Scott Morris, CAP’s John Norris, AEI’s Danielle Pletka, and Heritage’s Jim Roberts found a few areas of agreement, if more in the way of constructive suggestions to Congress and the Administration on ways forward:

An Evidence-Based Review before Cutting

There was a semblance of agreement among the panelists that any major budget cutting should be informed by a review of US assistance agencies and programs—designed to provide an evidence-based assessment for cuts. One area where smart cuts could be found according to both Norris and Pletka: big programs that were put forward more for diplomatic than development reasons and have failed to achieve development outcomes. This would include taking a hard look at our assistance, including presumably, foreign military financing, to Israel, Egypt, and Pakistan. Consideration of programs once thought to be sacred cows brought to mind Norris’s collaboration with then-CGD’s Connie Veillette on Engagement Amid Austerity, which included a country-by-country analysis of US economic and security assistance.

Shuffle and Cut the Bureaucracy

We heard a few suggestions of cutting special envoys and, as Roberts suggested, fully integrating USAID into State to save money and make US development assistance more effective. It was not clear was how much money this could save, though it’s presumably nowhere near the billions the Administration is looking to find. Norris called into question the effectiveness argument made to support integration, pointing out that when State has tried to insert itself into development programming, such as with Iraq or Pakistan, US efforts have often been at their least effective, and even counterproductive.

Use the Multilaterals

Morris made a valiant, if somewhat lonely, case for using the leveraging power of the multilateral institutions in US development assistance. While others argued this wasn’t politically viable, Morris acknowledged the challenge but noted the Trump administration would have a hard time reconciling its efforts to persuade the rest of the world to carry more of its fair share while walking away from the very institutions that help distribute burden-sharing.

Rethink our Instruments

US bilateral development programming is focused primarily on grants. Morris suggested now might be the time to explore a lending instrument, perhaps out of MCC. Tailoring our various development tools for a partner country’s needs and financing capacities could create gains in both efficiencies and effectiveness.

There are, of course, ideas for achieving efficiencies worth a look: food aid reform; cash transfers; and outcomes-based funding models All of which are likely to receive increased attention from CGD and others moving forward. But only so many efficiencies can be achieved, particularly with limited appetite for new instruments. So the immediate question for Congress and the administration to grapple with is will a 37 percent cut to diplomacy and development in exchange for a 3 percent budget increase to defense make Americans safer?