White House Targets Foreign Aid Cash With Caps Limiting Spending

(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.

Pressure from Congress and Secretary of State Michael Pompeo led the Office of Management and Budget to lift a freeze on about $4 billion imposed Aug. 3. Now the administration is trying a different tack: limiting spending to 2% of unobligated funds per day, and then asking Congress by Aug. 20 to cancel the unspent money, according to the people, who asked not to be identified discussing private deliberations.

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 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.

“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 global health and development assistance, among other things.

The latest tussle began Aug. 3, when OMB ordered the State Department and the U.S. Agency for International Development to halt spending on remaining foreign-aid funding set aside in 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 in the spring.

Spending Freeze

After pushback from Congress and the State Department, the OMB lifted the spending freeze on Friday but imposed the spending cap of 2% per day. That essentially freezes the funding because aid money is generally distributed in much larger chunks, according to the people.

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 current expectation is that the White House will now ask Congress by Aug. 20 to cancel the unspent money, in a process known as rescission. And while Congressional leaders oppose the White House effort, federal law requires that Congress-approved funding be spent by the end of the fiscal year, which ends Sept. 30.

Congress is on recess until early September so it’s not clear lawmakers could organize a response in time.

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.

To contact the reporter on this story: Nick Wadhams in Washington at nwadhams@bloomberg.net

To contact the editors responsible for this story: Bill Faries at wfaries@bloomberg.net, Justin Blum

bloomberg.com” data-reactid=”27″>For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.