FY2005 Foreign Operations Budget Request
Summary and Analysis

On February 2, 2004, President Bush presented to Congress his budget blueprint for FY2005. The President's FY2005 budget flat funds or cuts many of the core accounts for humanitarian and development assistance. Although the $21.331 billion requested in the Foreign Operations budget represents a $2.5 billion increase over last year's request, most of that increase goes to key initiatives or assistance for allies in the war on terrorism. The biggest casualty of the Bush budget appears to be funding for key development and humanitarian accounts which are cut by $390 million from FY2004 enacted levels. While the budget request does include funding increases for the Millennium Challenge Account and the President's HIV/AIDS initiative, the funding levels for these initiatives fall short of the Administration's promises.

While the overall budget for foreign operations is increased significantly, most of these increases are for presidential initiatives. Funding for existing development and humanitarian programs actually falls below levels enacted in the FY04 omnibus appropriations. Funding for maternal and child health, family planning, infectious diseases and other non-HIV/AIDS health priorities are cut by nearly $100 million from FY04 levels as is funding for bilateral development assistance managed by USAID which is cut by $56 million and refugee programs managed by the Department of State which are cut by a total of $40 million from FY2004 levels.

One of the regions most adversely impacted by these cuts is Latin America. There is an 11.7 percent decrease from '04 levels in the Child Survival and Health programs for Western Hemisphere countries and a decrease of almost 10 percent in Development Assistance for the region from the '04 enacted levels, exacerbating a trend from the past two budget cycles.

KEY HIGHLIGHTS

Child Survival and Development Assistance

The Child Survival and Development Assistance accounts, which comprise the bulk of bilateral development assistance managed by USAID, are once again cut from prior year levels with Child Survival funding requested at $1.42 billion or $415 million below the FY 2004 enacted level, including $5 million cut in maternal and child health programs, $29 million cut in family planning, and $46 million cut in infectious diseases (TB, malaria and other). Additional cuts to the Child Survival account are in HIV/AIDS funding for non-initiative countries and US contributions to the Global Fund. Development Assistance is requested at $1.329 billion or $56 million below FY2004, including $212 million for basic education, a cut of $23 million from last year.

Humanitarian Assistance: Refugees, Disasters, Famine and Food Aid

The FY 2005 request level for Migration and Refugee Assistance is $30 million below the FY 2004 enacted level while ERMA is funded at $10 million below last year's level. The international disaster assistance and famine account is funded at $386 million of which $235 is straight-lined for disaster assistance at last year's level. $50 million is added for famine relief and $100 million is earmarked for Sudan reconstruction within this account. Funding for PL480, Title II food aid programs is also straight-lined at the FY 2004 level of $1.185 billion. As with last year, the President requests $100 million for a Complex Emergency Fund. This fund would be released through a Presidential Determination and would not be available through normal USAID or State Department disaster assistance channels.

HIV/AIDS

The President, in his 2003 State of the Union Address, announced a new initiative for HIV/AIDS during which he pledged $15 billion over 5 years, and which Congress subsequently authorized at a level of $3 billion annually. The FY2005 budget, which requests $2.8 billion for HIV/AIDS, continues the trend from FY2004 of under-funding that initiative for a two-year shortfall of $800 million.

Furthermore, the funding for the President's 14-country HIV/AIDS initiative for Africa and the Caribbean seems to be coming at the expense of bilateral and multilateral HIV/AIDS funding for all other countries. U.S. contributions to the Global Fund, under the President's request, are cut from $550 million in FY2004 to only $200 million in FY2005, and bilateral assistance to non-initiative countries, particularly in Asia and Latin America, is either reduced or straight-lined.

MCA

The President requests $2.5 billion for the Millennium Challenge Account. The amount requested falls $800 million below the $3.3 billion amount previously pledged by the Administration as a three-year plan to ramp up to a $5 billion increase in development assistance by FY2006.

Afghanistan

The budget identifies $1.2 billion in assistance for Afghanistan, including approximately $450 million in economic support, development, health and humanitarian assistance and $530 million in military assistance, peacekeeping, anti-narcotics and counter-terrorism money as well as $300 million for training the Afghan National Army and for defense.

Sudan

Assistance to Sudan is listed at $436 million, of which $100 million is PL480 Title II food aid , $100 million is in the International Disaster and Famine Assistance account, $70 million is in Development Assistance, $11 million is in Child Survival, $20 million is in ESF, and $25 million is from other accounts.

Other Key Accounts-Peace Corps, International Financial Institutions, and Debt Relief

There are some significant increases to other development accounts. For example, Peace Corps enjoyed a nearly $100 million boost from last year's level of $310 million. Funding for the World Bank's IDA program increased by $150 million and there is a $100 million boost for debt relief over FY 2004 levels.