(Bloomberg) — The White House is stepping up its efforts to block the State Department from distributing several billion dollars in foreign aid by the end of the fiscal year, imposing daily limits on spending until it can ask Congress to cancel the funds later this month, said three people familiar with the matter.
After freezing about $4 billion in spending starting Aug. 3, the administration has now lifted the pause but ordered that spending be limited to what translates as about 2% of unobligated funds per day, according to the people, who asked not to be identified discussing private deliberations.
The administration, in a drive spearheaded by Acting Chief of Staff Mick Mulvaney and his successor at the Office of Management and Budget, Russell Vought, is also leaning toward asking Congress to cancel the unspent money, a process known as rescission, as early as Aug. 20, they said.
The move to cap spending is the latest development in a multi-year battle by President Donald Trump’s White House to cut foreign assistance funding even over the objections of Secretary of State Michael Pompeo, one of Trump’s most loyal cabinet members. The president’s proposed budgets for the last two years sought to cut funding by about 30%, only to have Congress reject the request.
“Mulvaney has had a bee in his bonnet going back to his days in the House of Representatives about State and USAID and has been trying again and again and again to cut one of the most minuscule parts of the budget that has high impact and broad bipartisan support,” said Liz Schrayer, chief executive of the U.S. Global Leadership Coalition in Washington. “He’s tried it multiple times and Congress just keeps stopping him. They’re really angry.”
National Security Goals
A bipartisan group of lawmakers and Pompeo, along with officials at the U.S. Agency for International Development, had protested strongly after the Office of Management and Budget imposed the freeze on Aug. 3, arguing that it hurt U.S. national security goals and contradicted the will of Congress. The money must be spent by the Sept. 30 end of the fiscal year or be returned.
Congressional leaders were particularly incensed because the effort came just days after Congress passed a two-year debt ceiling extension and budget bill that allowed for a $1.3 trillion spending cap.
“Slashing crucial diplomacy and development programming would be detrimental to our national security while also undermining Congress’s intended use for these funds,” said a letter last week from senior congressional leaders, including Idaho Republican Jim Risch and New Jersey Democrat Robert Menendez, the chairman and ranking member, respectively, of the Senate Foreign Relations Committee.
Peacekeeping Operations
Pompeo successfully fended off a similar bid last year to limit foreign aid spending but so far has been unable to prevent the White House from targeting the money this year. The funds would go to United Nations peacekeeping operations, narcotics control and development assistance, among other things.
The latest tussle began when OMB ordered the State Department and USAID to halt spending on remaining foreign-aid funding set aside for the 2018 and 2019 fiscal years to review why the money hadn’t been spent yet and what it was intended for.
Such money is often spent at the last minute, in part because months are required simply to move funding through the system after it’s obligated and then delivered to the accounts of the agencies responsible for distributing it.
Administration officials, however, have argued that the spending reflects everything that’s wrong with America’s foreign aid strategy, such as giving money to governments that are hostile to the U.S. or coming up with programs of limited utility just to spend money that’s been appropriated.
Spending Freeze
Critics of the administration approach argue that the spending cap of 2% per day essentially freezes the funding because aid money is generally distributed in much larger chunks.
An administration official, who asked not to be identified discussing the matter, said the administration had requested a temporary pause and the funds were now available. The official declined to discuss the 2% daily limit.
While Congressional leaders oppose the White House effort and the potential rescission, Congress is on recess until early September so it’s not clear lawmakers can organize a response before the end of the fiscal year on Sept. 30.
Public affairs officials at the State Department and USAID didn’t immediately respond to requests for comment on Monday. A Senate aide, who asked not to be identified discussing the matter, said it appears the administration is still planning to try to circumvent lawmakers.
(Updates with details of administration approach in 10th paragraph.)
To contact the reporter on this story: Nick Wadhams in Washington at [email protected]
To contact the editors responsible for this story: Bill Faries at [email protected], Justin Blum
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