Analysis of FY 2006 Foreign Operations Budget

On November 14, President Bush signed Public Law 109-265 making FY 2006 appropriations for foreign operations, the bill that funds the majority of the U.S. foreign aid programs. The bill allocates $20.9 billion to all foreign operations spending. This is $630 million above the amount passed by the House and $1.2 billion below the amount passed by the Senate. Despite $1.19 billion increase over FY 2005, some accounts were funded below the FY 2005 level.

Overall, core humanitarian and development assistance (child survival and health, development assistance, disaster and famine assistance, the Office of Transition Initiatives, migration and refugee affairs, emergency refugee and migration assistance, and international organizations and programs) received an increase of $143 million over FY 2005 levels. Although most core accounts received a small increase over last year’s bill, both disaster assistance and the office of transition initiatives were funded below last year’s levels, $2 million, and $8.6 million below respectively. One explanation that has been offered for these levels is the potential for future supplementals to increase disaster and refugee activities as needed.

Within the core humanitarian and development accounts, Afghanistan received a total of $931 million for humanitarian, reconstruction and related activities, including a special designation of $50 million for programs to support Afghan women and girls. $70 million was designated for Sudan under the Development Assistance account. The conferees did not include a Senate provision to add $50 million for the African Union Mission in Sudan, but exhorted the Administration to "expeditiously submit a request for any necessary funding."

HIV/AIDS programs saw the biggest increases with an overall funding level of $2.8 billion, $268 million above what the President had requested. The Global Fund for AIDS, TB, and Malaria was funded at $450 million, an increase of $50 million over the levels in the House bill. The funds provided for the Global Fund will be enough to renew existing grants, assuming the $100 million provided in the Labor-HHS bill is agreed to. This represents the traditional U.S. commitment of 1/3 of the overall need. Additional funding is needed from the U.S for Round 5 and a round in 2006.

Both the House and the Senate funded the Millennium Challenge Account far below the president’s request of $3 billion. The agreed conference level split the difference between the House and Senate passed bills for a final allocation of $1.77 billion. This funding level is $282 million over what the program received last year. Congress also requested a report from the MCC on the input of indigenous civil society groups to signed compacts.

The final allocation’s $630 million increase over the House level left appropriators with limited ability to reach the higher Senate levels. However, about half of the $630 million increase went to the benefit of poverty-focused accounts. Including HIV/AIDS and MCA, there was an increase of $1.2 billion in poverty-focused assistance over the FY 2005 levels. Most of this increase was for presidential initiatives with only 13.7% of this increase going to core humanitarian and development programs.   

FY 2006 budget reconciliation efforts are also proceeding simultaneously with the progress of the individual appropriations bills, including Foreign Operations. As Members of Congress and the Administration continue to look for savings to offset spending for relief and reconstruction efforts in hurricane-ravaged areas, big cuts in mandatory spending such as Medicare, as well as an across-the-board cut for discretionary programs, such as foreign assistance, are still possible when the Congress returns in mid-December. An across the board cut somewhere in the range of .5% to 2% is currently being discussed.

• Foreign Operations makes up .836% of the total federal budget of roughly $2.5 trillion

• Poverty-focused development assistance (the seven core accounts, the HIV/AIDS initiative and the Millennium Challenge Account) are 40% of the Foreign Operations budget. The core accounts alone make-up 22% of the Foreign Operations budget.

• Since 2002, the Foreign Operations budget has grown 36%. The funding for the seven core humanitarian and development programs has grown 22%.