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Tuesday, March 19, 2013

The Budget Control Act, Sequestration, and the Foreign Affairs Budget: Background and Possible Impacts

Susan B. Epstein
Specialist in Foreign Policy

Congress has an interest in the cost and effectiveness of foreign affairs activities that promote U.S. interests overseas. The Budget Control Act of 2011 (BCA, P.L. 112-25), as amended by the American Taxpayer Relief Act of 2012 (P.L. 112-240/H.R. 8, signed into law on January 2, 2013), requires across-the-board reductions (sequestration) in most federal defense and nondefense discretionary programs, projects, and activities, including those in foreign affairs. These automatic cuts went into effect on March 1, 2013. Of ongoing interest will be the impact of these cuts on State Department operations, foreign aid programs, and their ability to protect Americans and promote U.S. interests overseas.

According to a February 22, 2013, Pew Research Center survey, Americans surveyed support cuts in foreign aid spending more than any other government activity mentioned. Although still not the majority, 48% of those polled prefer a decrease in foreign aid, while 49% prefer it remains at the current level or is increased. When asked about the Department of State, 34% said they prefer the Department of State funding be decreased, while 60% support maintaining current State Department funding or increasing it.

At the same time that sequestration is being implemented, Congress is also working on continuing government funding through the remainder of the fiscal year. Currently, the government is operating under a continuing resolution (CR, P.L. 112-175) that provides stop-gap funding through March 27, 2013. Some believe that Congress might pass a CR that provides more flexibility for implementing the sequestration law. Whether or not a CR amends the acrossthe- board cuts, many expect the new CR funding levels to change the baseline of Office of Management and Budget (OMB) calculations and, thus, change the current estimates of sequestration cuts, including for foreign affairs spending accounts.

In addition, the Administration has indicated that it intends to submit its FY2014 budget request to Congress in April. It will identify President Obama’s priorities and plans for meeting the BCA caps in the next fiscal year.

This report discusses current OMB estimates of foreign affairs accounts sequestration amounts. For background on the current foreign affairs budget, see CRS Report R42621, State, Foreign Operations, and Related Programs: FY2013 Budget and Appropriations.

Date of Report: March 13, 2013
Number of Pages: 13
Order Number: R42994
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