Let's be smart about foreign aid in the debates ahead

Smartly, some among the Obama foreign assistance team have been scrutinizing their agency budgets for some time and identifying where cuts can be made. In a speech three weeks ago hosted by the Center for Global Development, Raj Shah, the Administrator of the U.S. Agency for International Development, acknowledged that USAID would need to do “more with less” or at least with a stagnant budget. Administrator Shah previewed some reductions, announcing the graduation from foreign aid of at least seven countries by 2015, the closure of expensive offices in Europe and Tokyo, and administrative savings of $50 million over five years.

Honestly, I wanted to hear about more cost savings. Administrator Shah says there will be a lengthy list of reductions when the President delivers his 2012 budget to Congress. That will be absolutely necessary, but the list also should include something really note-worthy to demonstrate his administration’s commitment to shaving costs. 

There will certainly be many reduction proposals that make sense, or at least are worthwhile debating.  One suggestion, however, simply does not make sense. Two weeks ago, the House Republican Study Committee released a plan that would cut everything USAID spends on salaries and all other items that allow it to function as an agency. In short, the plan would abolish USAID. We had that debate in the 1990s when some wanted to move USAID responsibilities to the State Department. Serious discussions took place over how to implement the transition and what would be required to facilitate State’s assumption of becoming a foreign aid implementing agency. In the end, USAID remained intact, although the debate further weakened the agency’s capacity and reduced its independence from the State Department.

Now, the RSC is again calling for USAID’s termination, but offers no suggestions on where or who would manage the roughly $18 billion in programs overseen by the agency. And if the assumption is that the State Department or some other government agency would assume this responsibility, rolling their budgets back to 2008 would not exactly prepare for an orderly transition. Who would conduct oversight to ensure the funds are spent as intended and not lost to corruption or mismanagement? And most of all, who would provide the development expertise of experienced USAID staff that are responsible for planning, implementing, and measuring impact of our foreign aid dollars?

Equally unfortunate is that this proposal comes at a time when Administrator Shah has launched some of the most innovative reforms seen at USAID in decades. Building on the Bush Administration plan to increase the human capacity of the agency, new USAID hires mean a reduction of 12-15% of overhead costs of contractors that USAID had relied on as their own ranks declined. No longer will evaluations be conducted by those who implemented the projects, but by a third party with the results released publicly within three months. Greater emphasis will be placed on science and innovation in order to begin applying better and more cost-effective development tools. In short, Administrator Shah is demanding that USAID be more accountable for meeting its goals and will provide the information necessary for the rest of us to make that evaluation.

Fortunately, the House leadership has not endorsed the RSC proposal and, based on the early signs from the Appropriations Committee, does not appear to be heading in that direction. We will closely watch the House debate and the myriad of amendments offered next week.

This month marks the beginning of what is sure to be a difficult and contentious year-long, and perhaps years-long, debate over U.S. spending. Foreign aid should and will be part of that discussion and cuts are certain, whether they come from the Administration or Congress. But my hope is that they will be “smart” cuts that will not minimize the goal of advancing American interests, scale back aid programs that have proven to be effective, or stifle promising new initiatives that will bring greater efficiency, accountability, and impact to that less-than-1% of the budget that is foreign aid.

Larry Nowels is the U.S. Policy Director for ONE, a nonpartisan grassroots advocacy organization committed to fighting extreme poverty and preventable disease in the developing world.