Girding for Funding Cuts . . . and Battle, Too
By Michael Moran
Should the U.S. government be engaged in development, health, and capacity building funding at all?
Amid the sturm und drang — and tweeting — that has accompanied the new Trump administration’s efforts to put its stamp on immigration, trade, health care, defense, and myriad other policy areas, the fate of federal aid to the development sector and its support for NGOs of all stripes has been all but forgotten.
Mathematically, at least, this is how things size up: the impact of the U.S. foreign aid budget on overall U.S. spending is — as has long been known — microscopic. In 2016 it was just over 1% of all U.S. federal outlays. Two other agencies targeted by early drafts of President Trump’s first budget, the National Endowment for the Arts (NEA) and the Corporation for Public Broadcasting (CPB), the latter funding public radio and television stations around the country, account for another 0.012% and 0.01% of 2016 federal spending, respectively. Let’s sharpen that perspective: the combined $593 million NEA-CPB budget amounts to just a bit less than the $600 million the U.S. Energy Department received in Obama’s final budget to research carbon capture technology.
Combined with the administration’s “America First” ethos and years of Republican candidates grossly inflating the actual size of America’s foreign aid budget for political purposes, the NGO/development community is girding for severe disruption.
In all U.S. presidential transitions, shifting political winds put some programs at risk. The classic case has been U.S. funding for family planning services, axed by Ronald Reagan in 1981, restored by Bill Clinton in 1993, cut again by George W. Bush in 2001, and revived yet again when Barack Obama took office in 2009. (See a pattern?) True to form, one of Trump’s first moves was to end U.S. funding for the various programs that funnel money to NGOs, the United Nations, and other global organizations engaged in family planning activities.
But the cuts under discussion go much deeper, extending well beyond the political fetishes of a particular party or faction and going straight to the very heart of the matter. The question is: Should the U.S. government be engaged in development, health, and capacity building funding at all? Inevitably, the State Department’s USAID (U.S. Agency for International Development) budget appears the most imperiled, with the administration pushing for cuts of spending and staffing in the area of 40%.
“The president said we’re going to spend less money overseas and spend more of it here,” Trump’s budget director Mick Mulvaney said at the end of February. “That’s going to be reflected in the number we send to the State Department.”
For many in the development sector, particularly, this has created a series of related dilemmas. On the one hand, Trump’s victory and his unconventional use of social media — to target groups, companies, programs, and whole countries that annoy him — has lit a fire under private donors.
Take groups focused on immigration rights. Many experienced a surge of support following the election. For instance, in early 2017 the University of Minnesota Law School received a $25 million donation from the Robina Foundation — the single largest gift in the school’s history. The foundation says that $23.5 million will fund the law school’s newly named James H. Binger Center for New Americans, $1 million will establish the James H. Binger Professorship in Clinical Law, and $500,000 will support scholarships for law school students.
Tech executives, who have been particularly outspoken in opposition to the administration’s visa and refugee ban targeting certain Muslim-majority countries, have made major donations to the ACLU. Google went further, telling employees it would match donations up to $2 million for gifts to the ACLU, the International Rescue Committee, the UN Refugee Agency, and the Immigrant Legal Resource Center.
“There is no doubt that the new surge of funding is tied to people’s concerns about where Trump is taking us,” says Minky Worden, director of global initiatives at Human Rights Watch. “But it’s not just the money. It’s about cuts to professional staff in places like USAID. That does long-term harm.”
This new flow of hyper-motivated funding creates its own constraints, however. Many NGO executives were unwilling to discuss the extent to which their quest to survive is coming into conflict with their mission statements — or at least with major donor perceptions of what those missions are.
“On a strategic level they’re going to have to articulate how the work they do promotes U.S. interests,” says Steven Zausner, a partner at Office: FMA, a strategy and financial advisory firm that works extensively with the NGO community. “We live under an administration that has articulated ‘America First,’ so if you’re an NGO, you are going to have to articulate how your mission is not just relief but how it promotes American interests. Aid for aid’s sake is just not going to fly.”
Zausner points out that most USAID program contracts already include riders about financial sustainability and private sector participation — which could provide the basis for defending programs that might otherwise appear ripe for Trump’s budget scythe. “Those riders usually represent about 15% of program funding,” he says. “That may need to grow to become a majority.”
One development consultant and economist, who has spent decades working on NGO issues both in and out of government, echoed Zausner’s comments. This veteran expects to see a pivot in messaging from many programs, stressing their role in the “Combating Violent Extremism” (CVE) policy rubric, a catch-all approach advocated by many development and policy experts as a way to blunt recruitment and sympathy for extremist groups like ISIS.
The longtime consultant, who currently works with U.S. aid agencies, continued: “It may be very difficult to keep working in some countries — ‘countries that hate us,’ as Trump put it during the campaign — unless you can map out strategies and programs that can be impactful in terms of CVE programs. Countries with political and economic stability issues, and disaffected segments of the population, are perfect case studies. The pivot would be to shift the dialogue from a purely humanitarian approach that alleviates human need to one that attempts to show a kinder, gentler face of the U.S. government, something aimed at winning hearts and minds.”
Whether such programs can reposition themselves under current circumstances is debatable. There are strong voices inside Trump’s administration who support development, diplomacy, and other “softer” aspects of U.S. spending. When the administration announced its plans in February to raise U.S. defense spending by a whopping $54 billion, reporters riffled through their memories to revive a 2013 quote from defense secretary and retired Marine Corps Lt. Gen. James Mattis, who testified then that “if you don’t fund the State Department fully, then I need to buy more ammunition ultimately.” Mattis went on to say that “it’s a cost-benefit ratio. The more that we put into the State Department’s diplomacy, hopefully the less we have to put into a military budget as we deal with the outcome of an apparent American withdrawal from the international scene.”
It is doubtful that such pragmatic sentiments represent core thinking in the Trump administration, and Mattis, a more conventional American national security and foreign policy thinker than many others at the center of Trump policymaking, so far has not demonstrated that he has the president’s ear.
As with much early policymaking in any new administration, the details will be hashed out by Congress. Politically, it appears unlikely that the Congress — whether sympathetic Republicans or Democrats wielding parliamentary rules to obstruct progress — can prevent these cuts.
“My sense is that the real priority for Trump and Congress becomes tax reform and the infrastructure bill, which means other things have to go,” says Raj Kumar, founder and editor in chief of Devex, a website and consultancy that focuses on the development sector. “Because tax reform rules the day on the Hill and so much of the GOP caucus is focused on deficit reduction, foreign assistance will not be a priority. So there’s a derivative effect. Congress basically says, ‘we’ve got to cut a bunch of discretionary programs,’ and foreign aid and a lot of other assistance to NGOs falls into that basket.”
That is worrying not only for the immediate future, but for the long term, too.
“If these cuts lead to a significant reduction in the level and professionalization of staffing, that’s a real problem,” says the veteran consultant. “USAID is still struggling to recover from less radical staffing cuts in the early 1990s. A 40 percent cut, if applied to staffing, will have a deep impact on development program design and implementation. That’s the long-term effect — one that lasts even if a more development-friendly administration follows this one.”
Mike Moran is visiting media fellow, International Peace and Security, Carnegie Corporation of New York.
