Picture this. A guy falls off the deck of a cruise ship. The captain throws him a life saver but can't stop the boat. Everyone on the deck is yelling at him to do this and do that. The poor guys swims for his life just to grab onto the life saver. And there he floats waiting to see if the captain will ever reel him him. That poor guy is the MCC in the FY09 State and Foreign Operations section of the Omnibus Appropriations Bill (page 49).
The topline number of the bill -- $36.6 billion -- is an increase from last year's $32.8 billion (not including emergency supplementals) and sends a strong signal of support by the Obama Administration for the civilian agencies and tools of U.S. foreign policy. Given the difficult budget environment, this outcome really is surprisingly good.
But at the individual account level, it remains unclear whether the distribution adds up to a high-impact development and foreign assistance strategy. Global health programs remain big winners, as do peacekeeping operations and relief operations. Yet programs like the MCA that aim to build strong economies and governments that can provide jobs to the healthy and educated people and encourage private investment after peace and stability has been restored, get slashed.
Appropriators provide $875 million to the MCC in FY09, a $670 million cut from last year and $1.35 billion below the request. Clearly, that is not a good outcome for the MCC and its partners that have worked hard to gain eligibility. Indeed, there is something foreboding about a major program going under $1 billion. But readers will remember it could have been much worse. The Senate version provided only $254 million to the MCC and capped administrative expenses at $85 million, calling for a pause in operations to focus implementing existing programs. You will recall my opinions on this. So, much credit to House Appropriators for providing a higher number in their bill, and to both House and Senate Appropriators for finding middle ground on the overall number and increasing the administrative expenses line to a workable number. They have thrown the MCC a lifeline.
That lifeline will keep the MCC afloat. The $95 million administrative expenses cap will at least give the MCC model -- small in-country presence supported by technical visits from DC -- a fighting chance to implement and evaluate well the existing portfolio. And it will allow the MCC to sign compacts with one, possibly two, new countries (Senegal and Moldova are closest). But it also comes with a lot of strings; some good, some odd:
-- limiting compact size to no more than $350 million: odd, given that the MCC's first CEO Paul Applegarth was under fire from Congress and the Administration for signing compacts that were not big enough to be transformational.
-- more reporting -- one report on actions to ensure U.S. small, minority-owned, and disadvantaged businesses are able to participate in MCC procurement and another report describing the MCC's post-compact country transition plans. These seem like things the MCC should be doing anyway.
-- Congressional notification if compacts are unlikely to complete in 5 years so Congress can consider extension. This is an interesting one, showing willingness to consider individual cases on their merits.
-- Congressional consultation prior to new Threshold Programs. The explanatory note raises Congressional concern that the Threshold Programs are not meeting their targets and that a review of their efficacy is needed before new programs begin. I agree with the overall concern, as laid out in our most recent report on the MCC, and hope that the MCC and Congress engage in a serious dialogue about either changing or scrapping the Threshold Program. I would, however, do that as part of the FY10 cycle of negotiations, laying a marker now, but not penalizing currently eligible countries so late in the fiscal year.
For those that believe the MCC is a powerful tool in our smart power toolkit, the FY09 budget is unfortunate despite the fact it could have been worse. While it has been given enough of a lifeline on which to survive, its future in the Obama Administration remains unclear. For the MCC, MCC fans, and most of all the countries that have and are working hard to earn access to this program, the Obama Administration needs to figure out whether it is going to let the MCC struggle to swim or pull it to safety.