International Affairs Budget Trends, FY1980-FY2000

International Affairs Budget Trends, FY1980-FY2000

Order Code RL30515
CRS Report for Congress
Received through the CRS Web
International Affairs Budget Trends,
FY1980 – FY2000
Updated September 29, 2000
(name redacted)
Specialist in Foreign Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

International Affairs Budget Trends,
FY1980 – FY2000
Summary
There have been sharp debates during recent years in Congress and differences
between the executive and legislative branches on the appropriate level of funding for
U.S. foreign policy programs. Especially since 1995, the President and some
lawmakers have been critical of amounts ultimately enacted, charging that
congressional cuts placed foreign policy spending far below “traditional” levels and
jeopardized important U.S. economic, security, and diplomatic interests overseas.
Foreign policy spending has grown the past three years, largely through approval of
emergency supplementals in support of international contingencies and disaster relief
assistance.
Foreign policy spending supports a variety of U.S. government programs and
activities, including foreign economic and military assistance, contributions to
international organizations and multilateral financial institutions, State Department,
and U.S. Agency for International Development (USAID), operating expenses, and
export promotion programs.
International Affairs discretionary budget authority, measured in real terms, has
experienced several cycles over the past two decades. There were periods of rapid
growth followed immediately by sharp declines during the mid-1980s. After several
years of relative stable budget levels in the late 1980s and early 1990s, amounts fell
through FY1997. The foreign policy budget rose slightly in FY1998 but significantly
in FY1999. Estimates for FY2000 are slightly below FY1999. Foreign policy
funding for FY2000 ($23.3 billion), in real terms, falls 5.4% below the annual average
of $24.61 billion for the past 21 years. As a percent of total U.S. government
discretionary budget authority, international affairs spending is just slightly less than
the 4.06% annual average level since FY1980. However, as a percent of the total
federal budget, including discretionary and mandatory programs, foreign policy
resources are about one-fifth less than the average annual percentage (1.571%) over
the past 21 years.
Foreign aid budget authority experienced steady growth during the early 1980s
with a spike in FY1985, declining levels in the late 1980s, and a further steady
downward pattern since the end of the Cold War and Persian Gulf conflict. There
was a sharp drop in FY1996 followed by an increase in FY1998 that has continued
through FY2000. The current estimate for FY2000 of $15.39 billion is higher than
any year since FY1992, but lower than any time prior to FY1992, and 11.7% less than
the annual average over the past 21 years.
Funding allocations for the conduct of foreign affairs and public diplomacy,
activities largely overseen by the Department of State, have steadily risen, although
with short-term reductions in the mid-1980s and the FY1996/97 period. Unlike other
elements of the International Affairs budget, diplomatic programs for FY2000 are
funded at a level about 28% higher than the average annual level of the past 21 years.

Contents
International Affairs Discretionary Budget Authority . . . . . . . . . . . . . . . . . . . . . 4
International Affairs Discretionary Outlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
International Affairs Budget and Total Discretionary Funds . . . . . . . . . . . . . . . . 9
International Development and Security Assistance . . . . . . . . . . . . . . . . . . . . . 12
Conduct of Foreign Affairs
and Foreign Information and Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . 16
State Department and International Organizations/Peacekeeping . . . . . . . . . . . 20
USIA and Exchange Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
List of Figures
Figure 1. International Affairs Discretionary Budget Authority, FY2000 . . . . . . 2
Figure 2. International Affairs Budget – Discretionary Budget Authority . . . . . 4
Figure 3. International Affairs Budget – Discretionary Outlays . . . . . . . . . . . . . 7
Figure 4. International Affairs Budget as a % of Total Federal Discretionary
Budget Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 5. International Affairs Budget as a % of Total Federal Budget
Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 6. International Development Assistance . . . . . . . . . . . . . . . . . . . . . . . 12
Figure 7. International Security Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 8. Foreign Aid (subfunctions 151 & 152) . . . . . . . . . . . . . . . . . . . . . . . 14
Figure 9. Conduct of Foreign Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 10. Foreign Information and Exchanges . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 11. Administration of Foreign Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Figure 12. International Organizations and Peacekeeping . . . . . . . . . . . . . . . . 21
Figure 13. USIA Salaries and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Figure 14. Educational & Cultural Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . 24
List of Tables
Table 1. International Affairs Discretionary Budget Authority . . . . . . . . . . . . . . 6
Table 2. International Affairs Discretionary Outlays . . . . . . . . . . . . . . . . . . . . . 8
Table 3. International Affairs Budget As a % of Total Discretionary Budget
Authority and Total Federal Budget Authority . . . . . . . . . . . . . . . . . . . . . 11
Table 4. International Development and Security Assistance
Subfunctions 151 and 152 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 5. Conduct of Foreign Affairs & Foreign Information/Exchanges . . . . . 19
Table 6. State Department & International Organizations/Peacekeeping . . . . . . 22
Table 7. USIA and Exchange Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

International Affairs Budget Trends,
FY1980 – FY2000
There have been sharp debates during recent years in Congress and differences
between the executive and legislative branches on the appropriate level of funding for
U.S. foreign policy programs. Especially since 1995, the President and some
lawmakers have been critical of amounts ultimately enacted, charging that
congressional cuts placed foreign policy spending far below “traditional” levels and
jeopardized important U.S. economic, security, and diplomatic interests overseas.
Foreign policy spending has grown the past three years, largely through approval of
emergency supplementals in support of international contingencies and disaster relief
assistance.
Foreign policy spending supports a variety of U.S. government programs and
activities, including foreign economic and military assistance, contributions to
international organizations and multilateral financial institutions, State Department
and U.S. Agency for International Development (USAID) operating expenses, public
diplomacy, arms control, and export promotion programs. Figure 1 illustrates the
major components of the International Affairs Budget Function and shows current
programmatic allocations for FY2000.
This report serves as a resource for the annual congressional debate on foreign
policy spending, providing context and trend analysis of the past 20 years. It
considers the full scope of the International Affairs budget, or Budget Function 150,
as foreign policy spending is designated within the context of the Budget Resolution.1
It also illustrates spending trends of the major components that make up Budget
Function 150. Data are presented in terms of both current dollars and constant
FY2000 dollars, the latter which takes into account the effects of inflation over time.
Amounts are expressed as discretionary budget authority and outlays, representing the
amount of funds Congress maintains direct control over through enactment of annual
appropriation bills. Excluded are amounts for mandatory Foreign Service retirement
programs, as well as resource flows of the Foreign Military Sales Trust Fund and
other mandatory accounts that are not regulated through the appropriations process.
Data also exclude funding for International Monetary Fund quota increases and for
other IMF facilities, amounts that Congress has approved on five occasions in the past
1 In this report, the terms international affairs, foreign policy, foreign affairs, and Function
150 are used interchangeably to refer to the International Affairs Budget Function.

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20 years.2 In each illustration, actual dollar trend lines are compared with 20-year
annual averages of spending.
Figure 1. International Affairs Discretionary Budget Authority, FY2000
2 The United States participates in the expansion of IMF resources or the creation of a new
IMF facility, at irregular intervals. Although Congress provides new budget authority through
appropriations for the full amount of U.S. participation, the transaction is considered as an
exchange of assets between the United States and the IMF, and results in no outlays from the
U.S. treasury. In short, the appropriations are offset by the creation of a U.S. counterpart
claim on the IMF that is liquid and interest bearing. Including budget authority figures for
the IMF creates “spikes” in selected years and tends to blur continuing trends in funding
levels. Because of this, and the fact that IMF budget authority does not result in an outlay or
have any impact on the federal deficit or surplus, amounts are excluded from this report.

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Changes in Budget Scorekeeping Procedures and Problems with Precise
Analysis of Spending Trends
Following enactment of the Budget Enforcement Act of 1990, the United States
began applying in FY1992 different procedures for appropriating funds for credit
programs. Prior to FY1992, Congress would appropriate the full value of direct loans
issued by the U.S. government. For commercial loans guaranteed by the United States,
Congress placed annual limitations on the total amount of these guarantees, but was not
required to appropriate any funds. Under the terms of “credit reform,” Congress must
now appropriate the subsidy value of both direct loans issued and loan guarantees backed
by the government. In simple terms, the subsidy value, as determined by OMB, is an
amount that represents the risk to the U.S. government in issuing or backing the loan,
plus the extent to which, if any, the loan carries a concessional interest rate below market
value. Accordingly, there are inherent problems with comparing trends before and after
FY1992 for any element of discretionary spending that includes credit programs.
Several credit programs operate within Function 150, including direct loans under
Foreign Military Financing (FMF) and (prior to FY1999) P.L. 480 food programs, loan
guarantees issued by the Agency for International Development’s (USAID) Urban and
Environmental Credit Office, and direct loans and loan guarantees managed by the
Export-Import Bank and the Overseas Private Investment Corporation. Two examples
illustrate the mixed impact on appropriation requirements of the “credit reform” policy
changes that took effect for FY1992. In FY1997, Congress enacted a $60 million
subsidy appropriation for FMF direct loans, an amount that allowed the Defense
Department to issue military aid loans with a total face value of $540 million. Prior to
FY1992, Congress would have had to appropriate the full $540 million instead of the $60
million subsidy that backed the loans. On the other hand, in the case of a loan guarantee,
Congress approved in FY1997 a $3.5 million subsidy appropriation permitting USAID’s
Urban and Environmental Credit program to guarantee $29.4 million in loans. These
represent loans issued by commercial lenders for which the United States government
guarantees repayment. Before FY1992, no appropriation would have been required. As
seen in the two examples, Congress appropriated in FY1997 $63.5 million in support of
these programs. Budget rules that existed in the pre-credit reform period would have
required an appropriation of $540 million to implement these two activities in exactly the
same way they were carried out in FY1997.
Because OMB has not adjusted its figures for pre-FY1992 credit programs,
comparisons between the two time periods cannot be totally precise. Nevertheless, an
assessment of funding trends before and after FY1992 is still useful in identifying an
illustrative pattern of spending decisions. While the application of post-credit reform
procedures, on balance, probably tends to overstate somewhat the degree of reductions
in Function 150 spending during the mid-1990s, the extent of this overstatement does not
appear to be sufficient to override the general conclusion that cuts in the international
affairs budget were substantial. Comparison of the increases in FY1999 and FY2000
for Function 150 resources with pre-1992 levels face the same methodological problems.
At a subfunction level, however, where no credit programs exist, such as for State
Department and U.S. international exchange programs, the credit reform changes have
no effect on measuring and comparing discretionary spending.

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International Affairs Discretionary Budget Authority
International Affairs discretionary budget authority, measured in real terms, has
experienced several cycles over the past two decades. There were periods of rapid
growth followed immediately by sharp declines during the mid-1980s. After several
years in the late 1980s and early 1990s of relative stable budget levels, amounts fell
– at first gradually, and then sharply – through FY1997. The foreign policy budget
rose slightly in FY1998 but significantly in FY1999 and FY2000 compared to
amounts during the mid-1990s. The increases in FY1998 and FY1999 represented
the first back-to-back years in which the international affairs budget grew compared
with the previous year since FY1990/1991.
Figure 2. International Affairs Budget – Discretionary Budget
Authority
The early-to-mid 1980s were marked by a steady increase in foreign policy
spending, largely the result of rising amounts of security assistance allocated for
strategic purposes in Central America, Pakistan, and “military base rights countries”
such as the Philippines. At the same time that this growth in security-related aid
peaked in FY1985, Congress approved two major supplementals: a $2.25 billion
economic aid package for Israel, Egypt, and Jordan, and about $1 billion in famine
relief for Africa. All of these factors combined to set foreign affairs discretionary
budget authority at $36.1 billion, in FY2000 dollars, a level about 36% higher than
the current amount.
Absent the unique combination of these international demands that spiked aid
spending in FY1985, and with intensifying pressure in Washington to reduce the
federal deficit, Function 150 discretionary spending, like other federal spending, fell

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abruptly in FY1986, and declined further in the next two years. The following period
— FY1988 through FY1993 — marked a relatively stable level of foreign affairs
budget authority, ranging in most years at roughly between $24.3 and $25.9 billion
annually, as calculated in FY2000 dollars. To a considerable extent, this steady
period can be attributed to annually negotiated budget agreements between the
Administration and Congress for major discretionary spending categories, one of
which was international affairs. A small, temporary upsurge occurred in
FY1990/1991, primarily the result of a supplemental appropriation for aid to Panama
and Nicaragua, additional costs associated with the Persian Gulf War, including
supplemental assistance for Israel and Turkey, and added expenses for U.S. agencies
operating in the Gulf region.
Although the foreign affairs budget had been on a long downward trend since
FY1985, the drop in FY1994 was the first significant annual decrease in real terms
since FY1988. The 3.7% real cut for FY1994 was followed by two years of
increasingly larger reductions in real spending for foreign policy programs. FY1995
discretionary budget authority dropped 5.5% below FY1994, followed by an 11.9%
cut in FY1996. Reductions continued for FY1997, although at a more modest 1.6%
level.
This downward cycle reversed in FY1998, with international affairs budget
authority rising by 3.5% in real terms over FY1997, followed by a far more significant
rise – 21.1% – in foreign policy spending for FY1999. Only the 34% increase
between FY1984 and FY1985 has exceeded the annual growth in foreign affairs
budget authority that occurred in FY1999. In addition to approving modest increases
for programs throughout the Function 150 account, Congress further agreed to nearly
$1 billion for U.S. arrearage payments to various international organizations and
multilateral development banks, about $1.5 billion for security upgrades at American
embassies and missions around the world, and large supplementals for Central
American victims of Hurricane Mitch ($1 billion) and for Kosovo humanitarian aid
relief ($1.1 billion).
Foreign policy funding for FY2000, in real terms, falls below FY1999 by 2.9%,
even though the budget continues relatively stable levels for regular international
affairs programs. FY2000 further includes two special funding initiatives: a $1.8
billion one-time aid package in support of the Wye River/Middle East peace accord
and about $1 billion for a Colombian counternarcotics program. With the exception
of FY1999, the FY2000 foreign affairs budget is larger than any since FY1993. The
FY2000 Function 150 discretionary budget authority of $23.3 billion, nevertheless,
is 5.4% below the annual average of $24.61 billion for the past 21 years.

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Table 1. International Affairs Discretionary Budget Authority
($s - billions)
Function 150
Function 150
Fiscal Year
Current $s
Constant FY2000 $s
1980
12.874
25.496
1981
12.194
21.928
1982
14.222
24.026
1983
16.017
25.834
1984
17.396
26.957
1985
24.057
36.126
1986
20.279
29.628
1987
18.800
26.602
1988
18.079
24.671
1989
18.537
24.301
1990
20.027
25.326
1991
21.321
25.901
1992
20.927
24.677
1993
21.194
24.279
1994
20.854
23.373
1995
20.166
22.079
1996
18.122
19.452
1997
18.150
19.138
1998
18.991
19.799
1999
23.414
23.986
2000 (est)
23.288
23.288
Budget Authority excludes International Monetary Fund in selected years.
Source: Office of Management and Budget and CRS calculations.

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International Affairs Discretionary Outlays
Once Congress approves budget authority for International Affairs programs, the
pace at which the funds are actually spent – or outlayed — varies widely. Salaries and
expenses of USAID, assistance to Israel, and voluntary contributions to several
international organizations, for example, outlay quickly, normally within the same
fiscal year. Funds for bilateral development aid and contributions to the World Bank
and other multilateral development institutions may not be spent for several years. As
a result, the “spikes” and rapid reductions that characterize budget authority trends
are flattened somewhat in outlay patterns.
Figure 3. International Affairs Budget – Discretionary Outlays
Function 150 outlays peaked in FY1986, lagging one year behind the high point
of international affairs budget authority, fell sharply the next year, then continued on
a generally upward trend through FY1993. As budget authority took a substantial
downturn in FY1994, outlays followed immediately, declining from $23.3 billion to
under $20 billion two years later. Although foreign affairs budget authority began to
climb in FY1998, outlays hit a twenty-year low point of $18.9 billion, in real terms,
reflecting the sharp appropriation cuts of the two previous years. With significant
increases in budget authority for FY1999 and FY2000, some of which target fast-
disbursing, emergency requirements, Function 150 outlays have risen to an estimated
$21.3 billion for this year. Although they are at the highest level since FY1995,
FY2000 foreign policy outlays fall 6% below the $22.67 billion annual average for the
past 21 years.

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Table 2. International Affairs Discretionary Outlays
($s - billions)
Function 150
Function 150
Fiscal Year
$s - Current
$s - Constant FY99
1980
12.775
25.300
1981
13.648
24.543
1982
12.881
21.760
1983
13.603
21.941
1984
16.267
25.207
1985
17.390
26.114
1986
17.708
25.871
1987
15.224
21.542
1988
15.743
21.483
1989
16.584
21.741
1990
19.056
24.098
1991
19.698
23.929
1992
19.160
22.593
1993
21.570
24.710
1994
20.806
23.320
1995
20.116
22.024
1996
18.336
19.682
1997
18.982
20.015
1998
18.101
18.871
1999
19.519
19.996
2000 (est)
21.305
21.305
Source: Office of Management and Budget and CRS calculations.

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International Affairs Budget and Total Discretionary
Funds
Another way of analyzing trends in International Affairs resources is to draw
relationships between foreign policy spending and overall funding for total federal
discretionary programs. This is relevant especially for the present debate over
budgetary priority-setting decisions since it is within the roughly $622 billion
discretionary request for FY2001 that international affairs requirements must
compete.
Figure 4. International Affairs Budget as a % of Total Federal
Discretionary Budget Authority
Although the patterns are similar to those for budget authority dollar trends, the
degree of sharp growth and decline are muted somewhat when measuring
International Affairs discretionary BA as a % of total budget authority. One of the
most notable trends is the substantial continuity in the amount of the budget authority
devoted to international affairs, especially during the eight year period, FY1988 to
FY1995. Although dollar amounts for foreign affairs may have risen somewhat in
FY1991 and fallen through the next four years, Function 150's proportion of total
discretionary budget authority deviated only slightly from a sustained level of 4%
annually. In short, even though the foreign policy budget fell steadily in the early- to
mid-1990s, it declined at roughly the same pace as the total for all other programs
funded through discretionary spending. But in FY1996, this 4% share of total
discretionary budget authority that had been sustained for eight years ended, and
Function 150's proportion fell to 3.61%. In FY1997 and FY1998 it fell further to

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about 3.55% of discretionary BA. What this meant was that at a time when Congress
and the President had reduced total discretionary budget authority, resources for
foreign policy programs declined even faster than other federal programs.
With the approval of higher amounts for Function 150 in FY1999 and FY2000,
including embassy security, Central America hurricane relief, Kosovo humanitarian
aid, Plan Colombia, and the Wye River/Middle East Peace supplementals, the foreign
policy share of total discretionary budget authority rose once again to 4%, the highest
level since FY1995. Currently, Function 150's share of total U.S. government
discretionary budget authority is about 2.1% less than the 4.06% annual average level
since FY1980.
International Affairs as a percent of total federal budget authority reflects a
similar pattern as discretionary BA between FY1980 and FY2000. But as the non-
discretionary portion of the federal budget has grown considerably relative to
discretionary spending, Function 150, like other discretionary categories has fallen
steadily over the past 15 years. International Affairs, which had fluctuated between
1.65% and 2.34% of total federal budget authority through FY1985, has declined in
nearly each year since through FY1997. Foreign policy spending grew slightly in
FY1998 and FY1999 relative to the total budget, but fell modestly in FY2000 to
1.29%. Except for FY1996-98, FY2000 is the lowest point over the past 21 years
and is about one-fifth below the average annual percentage (1.57%) represented by
Function 150 as a share of total federal budget authority.
Figure 5. International Affairs Budget as a % of Total Federal
Budget Authority

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Table 3. International Affairs Budget As a % of Total Discretionary
Budget Authority and Total Federal Budget Authority
Function 150
Function 150
Fiscal Year
%-Discretionary BA
%-Total BA
1980
4.208%
1.921%
1981
3.638%
1.647%
1982
4.072%
1.763%
1983
4.204%
1.841%
1984
4.186%
1.884%
1985
5.356%
2.339%
1986
4.713%
2.000%
1987
4.291%
1.820%
1988
4.064%
1.656%
1989
3.997%
1.550%
1990
4.032%
1.557%
1991
3.904%
1.538%
1992
3.933%
1.426%
1993
4.040%
1.437%
1994
4.049%
1.364%
1995
4.016%
1.310%
1996
3.606%
1.146%
1997
3.539%
1.105%
1998
3.555%
1.122%
1999
4.015%
1.318%
2000 (est)
3.977%
1.285%
Budget Authority excludes International Monetary Fund in selected years.
Source: Office of Management and Budget and CRS calculations.

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International Development and Security Assistance
Function 150 is divided into five broad categories of subfunctions. Subfunctions
151 and 152 include development aid and security assistance programs, respectively,
and are commonly referred to as the “foreign aid” budget.
For development assistance, there have been several periods of decline and
growth since 1980. The highest point of spending in real terms occurred in FY1980,
followed closely by FY1985 when the United States provided large amounts of
emergency food relief for famine-stricken Africa and paid some overdue contributions
to multilateral development banks. Development assistance budget levels rose more
gradually in the early-to-mid 1990s, prompted mainly by the opening of aid programs
in Eastern Europe and the former Soviet Union. Development assistance experienced
one of the sharpest annual cuts during the past two decades in FY1996 when spending
fell, in real terms, by 22% from the previous year, and continued to drop slightly in
FY1997. Congress reversed this pattern during the next two years when development
aid grew annually, in real terms, by 19% and 22%, respectively. The FY1999 total
of $9.19 billion – an amount that was boosted by large supplementals especially for
Central American hurricane relief and Kosovo humanitarian aid – was the largest
since FY1985. Development aid spending in FY2000 declined somewhat to $7.79
billion, even with the addition of a $1 billion supplemental for a counternarcotics
initiative in Colombia. Overall, the size of development aid discretionary budget
authority at present is nearly identical to the subfunction’s annual average of $7.83
billion since FY1980.
Figure 6. International Development Assistance

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Security assistance accounts have experienced even wider budgetary swings over
the past two decades, but in general, funding levels have fallen significantly since the
mid-1980s. Following implementation of the Camp David accords in 1979, security
aid resources grew steadily during the early-to-mid 1980s when the United States
significantly increased assistance to Central America, Pakistan, and military base
access countries, including the Philippines, Spain, and Portugal. The winding down
of Cold War-related conflicts has contributed significantly to the reduction in security
assistance budgets. By FY1994, security aid had largely been reduced to a
concentration on Israel, Egypt, and other Middle East programs, plus relatively
smaller sums for new and prospective members of NATO. Unlike development aid,
which dropped significantly in FY1996/97, funding for security assistance increased
in each of those years, and continued to rise through FY2000. The 26% increase in
security aid for FY2000 was largely due to congressional approval of a $1.8 billion
package in support of the Wye River/Middle East peace accord providing
supplemental assistance to Israel, Jordan, and the Palestinians. The FY2000 level of
$7.6 billion is the largest amount, in real terms, for security assistance since FY1992,
but remains 21% less, in real terms, than the average annual amount of $9.6 billion
over the past two decades.3
Figure 7. International Security Assistance
3 Credit reform budget process changes probably have had a greater impact in the security aid
part of the Function 150 budget than anywhere else. If it were possible to adjust pre-1992
levels to conform to current budget scoring methods, the decline in security aid would not be
as severe as these figures indicate. The cuts, however, would still be sizable.

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The combined “foreign aid” budget authority trends — subfunctions 151 and
152 — are generally the same as those for development and security assistance:
steady growth during the early 1980s with a spike in FY1985; declining levels in the
late 1980s; a further steady downward pattern since the end of the Cold War and
Persian Gulf conflict; a sharp drop in FY1996 followed by an increase in FY1998 that
has continued through FY2000. The current estimate for FY2000 of $15.39 billion
is higher than any year since FY1992, but lower than any time prior to FY1992. It
is about 11.7% less than the average annual amount ($17.44 billion) over this period.
Figure 8. Foreign Aid (subfunctions 151 & 152)

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Table 4. International Development and Security Assistance
Subfunctions 151 and 152
Discretionary Budget Authority
($s billions)
“Foreign Aid”
Intl Development
Intl Security
Fiscal
Subfunctions
Subfunction 151
Subfunction 152
Year
151 & 152
Current $s Constant $s Current $s Constant $s Current $s Constant $s
1980
5.624
10.425
5.066
10.033
10.690
20.458
1981
4.420
7.948
5.068
9.114
9.488
17.062
1982
4.474
7.558
6.863
11.594
11.337
19.152
1983
4.711
7.598
8.142
13.132
12.853
20.730
1984
5.069
7.855
8.943
13.858
14.012
21.713
1985
6.496
9.755
13.730
20.618
20.226
30.373
1986
4.760
6.954
9.543
13.942
14.303
20.896
1987
4.902
6.936
8.213
11.621
13.115
18.557
1988
5.022
6.853
8.598
11.733
13.620
18.586
1989
5.296
6.943
7.666
10.050
12.962
16.993
1990
5.696
7.203
8.393
10.614
14.089
17.817
1991
6.778
8.234
9.061
11.007
15.839
19.241
1992
6.655
7.847
6.682
7.879
13.337
15.726
1993
6.992
8.010
5.491
6.290
12.483
14.300
1994
7.699
8.629
4.531
5.078
12.230
13.707
1995
7.761
8.388
4.626
5.065
12.387
13.453
1996
6.084
6.531
5.038
5.408
11.122
11.939
1997
6.005
6.332
5.159
5.440
11.164
11.772
1998
7.225
7.532
5.372
5.600
12.597
13.132
1999
8.975
9.194
5.869
6.012
14.844
15.206
2000est
7.793
7.793
7.600
7.600
15.393
15.393
Source: Office of Management and Budget and CRS calculations.

CRS-16
Conduct of Foreign Affairs
and Foreign Information and Exchanges
Funding allocations for the other two international affairs subfunctions —
Conduct of Foreign Affairs and Foreign Information and Exchanges — present a
substantially different long-term perspective, although like the others, they have
experienced cuts in the FY1996/97 period and increases more recently. Further, the
Conduct of Foreign Affairs sub-account received for FY1999 the largest single year
increase — 52% above FY1998 — for any year during the past two decades.
Figure 9. Conduct of Foreign Affairs
Due to the consolidation of U.S. foreign policy agencies beginning in FY2000,
it is no longer possible to calculate a precise long-term consistent budget analysis of
subfunctions 153 and 154. Operating expenses of the U.S. Information Agency
(USIA), an independent entity until FY2000, had previously been grouped in
subfunction 154 along with other foreign information, broadcasting, and exchange
programs. USIA merged with the State Department on October 1, 1999, and
beginning in FY2000, OMB budget presentations combine public diplomacy
administrative expenses of the former USIA with the State Department as part of
subfunction 153. Education and exchange programs, previously managed by USIA,
remain part the subfunction 154 budget, together with international broadcasting
programs and several small research foundations. As a result, FY2000 estimates for
subfunction 153 are artificially too high when compared with prior years while
subfunction 154 is artificially too low. In order to present a consistent trend analysis,
the data and graphic illustrations set out in this section have estimated the amount of
public diplomacy for FY2000 included in subfunction 153, subtracted that amount
from the Conduct of Foreign Affairs account, and added it to subfunction 154.

CRS-17
For the Conduct of Foreign Affairs, a category that is largely made up of State
Department operational costs and assessed contributions to the U.N., other
international organizations, and peacekeeping, the general trend has been steady
growth between FY1980 and FY1994, with sharper increases occurring in the mid-
1980s when the U.S. implemented a diplomatic security initiative, and the early 1990s
when U.N. peacekeeping payments grew. Budget authority fell from $5 billion in
FY1994 to $4.3 billion in FY1995, to about $4 billion the next two years, and to $3.9
billion in FY1998. Following the August 1998 bombings at U.S. embassies in Kenya
and Tanzania, the Administration proposed and Congress approved a $1.5 billion new
embassy security initiative for FY1999. This, combined with a $475 million
appropriation to clear a portion of U.S. arrears at the United Nations,4 pushed
subfunction 153 resources for FY1999 to $5.9 billion, the highest amount in either
nominal or real terms over the past two decades. Absent the special FY1999
supplemental, the level for FY2000 is down to $4.9 billion (after adjusting for the
transfer of public diplomacy resources to subfunction 154). Unlike other areas of
Function 150, funding for the Conduct of Foreign Affairs in FY2000 is 28% higher,
in real terms, than the average annual level of $3.84 billion over the past 21 years.
Over the long-term, add-ons for enhancing diplomatic security, establishing new
embassies and consulates in the former Soviet Union, and paying higher peacekeeping
bills, have all been major reasons for the upward spending trend in subfunction 153.
But an additional factor is the comparatively large proportion of State Department
personnel costs met in this spending element as compared to the foreign aid accounts.
Salaries and other expenses usually have cost-of-living increases built in so that at a
minimum, they keep pace with inflation. Foreign aid accounts, on the other hand,
include a much smaller proportion of personnel costs relative to total spending.
Foreign Information and Exchanges, a category that includes USIA operations,
its exchange programs, international broadcasting, and the National Endowment for
Democracy, received an estimated $1.15 billion for FY2000 (including public
diplomacy funds), a level 13.5% less than the annual average amount of $1.33 billion
during the past two decades. Similar to State Department funding levels,
discretionary budget authority for information and exchange programs rose steadily,
in real terms, during the 1980s. Downsizing and consolidation of U.S. international
broadcasting operations, cuts in exchange programs, and reductions for USIA salaries
and expenses have been the main areas reduced since FY1995.
4 Although Congress appropriated $100 million in FY1998, $475 in FY1999, and $351
million in FY2000 for U.N. arrears, the funds did not become available until passage in late
November 1999 of legislation authorizing the payments (H.R. 3427, as enacted by reference
in P.L. 106-113, the Consolidated Appropriations Act for FY2000.

CRS-18
Figure 10. Foreign Information and Exchanges

CRS-19
Table 5. Conduct of Foreign Affairs & Foreign Information/Exchanges
Subfunctions 153 and 154
Discretionary Budget Authority
($s billions)
Conduct of Foreign Affairs
Foreign Info & Exchanges
Fiscal
Subfunction 153
Subfunction 154
Year
Current $s
Constant $s
Current $s
Constant $s
1980
1.295
2.565
0.518
1.026
1981
1.423
2.559
0.555
0.998
1982
1.609
2.718
0.587
0.992
1983
1.739
2.805
0.688
1.110
1984
1.911
2.961
0.808
1.252
1985
2.394
3.595
0.950
1.427
1986
2.874
4.199
0.970
1.417
1987
2.455
3.474
1.031
1.459
1988
2.545
3.473
1.056
1.441
1989
2.667
3.496
1.126
1.476
1990
2.827
3.575
1.317
1.665
1991
3.129
3.801
1.243
1.510
1992
3.950
4.658
1.303
1.536
1993
4.208
4.821
1.248
1.430
1994
4.505
5.049
1.496
1.677
1995
3.934
4.307
1.421
1.556
1996
3.708
3.980
1.131
1.214
1997
3.765
3.970
1.119
1.180
1998
3.715
3.873
1.224
1.276
1999
5.758
5.899
1.210
1.240
2000 (est)
4.903
4.903
1.145
1.145
Source: Office of Management and Budget and CRS calculations.

CRS-20
State Department and International
Organizations/Peacekeeping
Administration of Foreign Affairs and International Organizations and
Peacekeeping represent the major components of subfunction 153. Administration
of Foreign Affairs includes a number of accounts funding salary and operational
expenses of the State Department. Discretionary budget authority increased sharply
in the mid-1980s with implementation of a diplomatic security initiative. Funding rose
again in the early 1990s, largely due to increased diplomatic costs during the Persian
Gulf War and for the construction of a new U.S. embassy in Moscow. Levels
declined through FY1998, remaining relatively stable at about $2.69 billion for the
three year period, FY1996-1998, and slightly below the $2.79 billion 21-year annual
average. As noted above, the significant increase for FY1999 — by over 50% — was
the result of a $1.5 billion add-on for diplomatic security upgrades in the wake of the
embassy bombings in Africa.
Figure 11. Administration of Foreign Affairs
The FY2000 amount of $3.34 billion (excluding public diplomacy funds)
continues the multi-year embassy security initiative, but at reduced amounts compared
with the previous year. The current funding level is 20% higher than the annual
average over the past two decades.
The category of International Organizations and Peacekeeping (also referred to
in appropriation acts as International Organizations and Conferences) includes both
U.S. assessed contributions to the U.N. and a broad range of international agencies,
as well as United States assessed payments to U.N. peacekeeping operations. For
roughly the first ten-year period of the past two decades, U.S. assessed contributions

CRS-21
declined steadily, in real terms. Beginning in 1990, however, at a time the U.N.
launched an unprecedented number of new peacekeeping operations, discretionary
budget authority rose dramatically over a six year period. In real terms, from $697
million in FY1989, U.S. assessed contributions grew to $2.172 billion in FY1994
when Congress agreed to a large peacekeeping supplemental appropriation. With
fewer new U.N. operations initiated and increasing budget pressures in the United
States, U.S. payments fell significantly the next four years. Following congressional
approval of $475 million and $351 million in back dues owed the United Nations for
FY1999 and FY2000, respectively, amounts for the past two years have grown
significantly. FY1999/2000 funding are, with the exception of FY1994, the highest
in real terms over the past two decades, and 53% more than the annual average
amount of U.S. assessed contributions to international organizations and conferences
($1.13 billion).
Figure 12. International Organizations and Peacekeeping

CRS-22
Table 6. State Department & International Organizations/Peacekeeping
Discretionary Budget Authority
($s billions)
“State Department”
Intl Organizations
Fiscal Year
Admin of Foreign Affairs
& Peacekeeping
Current $s
Constant $s
Current $s
Constant $s
1980
0.822
1.628
0.507
1.004
1981
1.138
2.046
0.466
0.838
1982
1.181
1.995
0.466
0.787
1983
1.219
1.966
0.527
0.850
1984
1.335
2.069
0.596
0.924
1985
1.877
2.819
0.559
0.839
1986
2.446
3.574
0.477
0.697
1987
2.089
2.956
0.420
0.594
1988
2.036
2.778
0.515
0.703
1989
2.058
2.698
0.521
0.683
1990
2.242
2.835
0.702
0.888
1991
2.190
2.660
0.910
1.105
1992
2.614
3.082
1.035
1.220
1993
2.808
3.217
1.379
1.580
1994
2.575
2.886
1.938
2.172
1995
2.563
2.806
1.397
1.530
1996
2.482
2.664
1.254
1.346
1997
2.553
2.692
1.244
1.312
1998
2.550
2.658
1.212
1.264
1999
4.823
4.941
1.628
1.668
2000 (est)
3.342
3.342
1.730
1.730
Sources: Senate Appropriations Committee, Department of State, and CRS calculations.

CRS-23
USIA and Exchange Programs
USIA, which was consolidated within the State Department on October 1, 1999,
had maintained a relatively stable budget level through FY1995. USIA salaries and
expenses appropriations (excluding VOA and other broadcasting costs), in real terms,
averaged between $500 and $600 million annually. During the 1990s, spending
patterns fall into two distinct periods. Between 1990 and 1995, funding remained
more constant than the previous decade, averaging about $525 million per year.
Appropriations have declined since 1995 to an average of about $463 million, in real
terms. The FY1999 level of $465 million (the last year for which there was a USIA
salaries and expenses account) represents the lowest level, when calculated using
constant dollars, since 1983, and is 12% below the $522 million annual average for
the entire 17 year period.
Figure 13. USIA Salaries and Expenses
Educational and cultural exchange budgets, with the exception of a brief surge
in the mid-1990s, have maintained relatively stable levels of funding since 1983. After
eight years during the late 1980s and early 1990s of appropriations around $200
million per year (in constant terms), Congress increased spending for exchange
programs during the period, FY1992-1995, to an annual average of about $250
million. Like other foreign policy programs, however, funds for USIA exchanges fell
in FY1996 by nearly one-sixth, in real terms, and have remained at approximately
$200 million since. Funding of $205 million for FY2000 is slightly less than the 18
year annual average of $209 million.

CRS-24
Figure 14. Educational & Cultural Exchanges

CRS-25
Table 7. USIA and Exchange Programs
Discretionary Budget Authority
($s billions)
USIA
Educational & Cultural
Fiscal Year
Salaries & Expenses
Exchanges
Current $s
Constant $s
Current $s
Constant $s
1983
0.371
0.598
0.084
0.135
1984
0.313
0.485
0.100
0.155
1985
0.360
0.541
0.140
0.210
1986
0.345
0.504
0.134
0.196
1987
0.362
0.512
0.145
0.205
1988
0.427
0.583
0.150
0.205
1989
0.409
0.536
0.150
0.197
1990
0.418
0.529
0.154
0.195
1991
0.442
0.537
0.163
0.198
1992
0.464
0.547
0.194
0.229
1993
0.489
0.560
0.242
0.277
1994
0.476
0.534
0.241
0.270
1995
0.475
0.520
0.233
0.255
1996
0.445
0.478
0.200
0.215
1997
0.448
0.472
0.185
0.195
1998
0.453
0.472
0.198
0.206
1999
0.454
0.465
0.201
0.206
2000 (est)
NA
NA
0.205
0.205
Source: Senate Appropriations Committee, OMB, State Department, and CRS calculations.

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