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Foreign Aid Boost Is Expected in Bush Budget

Funds for President's Initiative, the Millennium Challenge, Would Double to $3 Billion

By Paul Blustein
Washington Post Staff Writer
Sunday, February 6, 2005; Page A06

President Bush will propose a substantial increase in foreign aid in the fiscal 2006 budget that he will submit to Congress tomorrow, although the boost for one of his signature aid programs will fall well short of the amount he promised.

Budget figures show that Bush will propose $9.5 billion for bilateral humanitarian and development assistance, about $2.1 billion more than the current level. That would make aid one of the few areas of nondefense spending to get an increase under a budget that administration officials have described as the most restrained in years.

The Government Printing Office stockpiles one of the larger books in the president's budget request package that goes to Congress tomorrow. (David Scull -- Bloomberg News)

The main reason for the increase is a proposal to double, to $3 billion, the spending by the Millennium Challenge Corp., a new agency set up under a presidential initiative to direct aid to poor countries with sound policies. The program is intended to distribute aid much more effectively than in the past, based on evidence that foreign largess works best when given to governments that have records of relatively low corruption, respect for the rule of law and other such indicators of good governance. Even with the doubled amount, however, funding for the program will still be shy of the $5 billion that Bush initially pledged to spend in 2006.

Bush has prided himself on raising aid spending well above the levels of the 1990s. The United States has long drawn criticism from aid advocates for spending much less, as a percentage of its economy, than other wealthy nations. The president has responded with high-profile initiatives, which, along with the Millennium Challenge, include a plan to dramatically increase spending on programs to fight HIV/AIDS in the developing world. Those initiatives have won him plaudits from champions of the poor such as the Irish rock star Bono, but even with the additional money, U.S. contributions still total about 15 cents for every $100 in gross domestic product, compared with 80 cents to 92 cents for nations such as the Netherlands, Denmark and Norway.

News of the 2006 budget figures evoked mixed reactions from aid organizations.

"We acknowledge and welcome the overall increase in the international affairs budget," said Mary McClymont, chief executive of InterAction, the largest American alliance of overseas relief and development groups, in an e-mail. "However, we think the way it is prioritized and allocated does not give sufficient importance to core humanitarian and development assistance programs, many of which are funded at last year's levels or cut."

Defending the decision to propose $3 billion for the Millennium Challenge Corp. instead of the $5 billion that Bush initially promised, an official of the agency noted that Congress has refused to appropriate as much as Bush requested. "It's a tough budget environment, there are a lot of people competing for this, and the fact that the president is willing to double [spending] in this environment is pretty good," said the official, who declined to be identified because the budget has not yet been released.

But critics point to the White House for failing to set up the agency quickly enough to merit more congressional funding. "Not only has President Bush broken his word on funding for the Millennium Challenge, he has not put in the effort required to turn this excellent idea into a lifesaving reality for the world's poorest people in the three years since it was announced," said Jamie Drummond, executive director of DATA, a group founded by Bono, in an e-mailed statement.

Bush's proposed spending on HIV/AIDS programs will total $3.2 billion, which is about in line with the amount the president promised when he unveiled the initiative in his 2003 State of the Union address. And even excluding the Millennium Challenge and HIV/AIDS programs, total spending on bilateral development and humanitarian assistance will rise slightly.

But the figures show a major shuffling of money from some accounts to others. And aid experts said that almost certainly means that while more money will be pumped into countries on the front line of terrorism, such as Pakistan and Afghanistan, other traditional programs, particularly in Latin America, will be squeezed because they do not fall into categories that are getting proposed increases, such as the Office of Transition Initiatives. That program, for which the budget would increase funding more than sevenfold, to $325 million, is aimed at helping conflict-prone countries and those trying to overcome crises.

Partly in response to criticism from U.S. trading partners, as well as pressure to reduce the deficit, the administration is also proposing major changes in agricultural subsidies and payments to American farmers. The changes are being made with the aim of saving $5.7 billion over the next 10 years, sources said. U.S. agricultural spending would be reduced by 3 percent in fiscal 2006.

The plan would limit government payments to farmers to $250,000 a year and close a loophole that has allowed some farms to collect many times that amount by dividing ownership among a number of corporations and relatives. Another loophole that has allowed large rice and cotton growers and cooperatives to collect very large subsidy payments would also be targeted, sources said.

Developing countries have charged that many aspects of the U.S. farm subsidy system hurt Third World farmers and do not comply with trade agreements.

But any effort to cut the payments would face strong opposition from the American Farm Bureau Federation, which opposes any changes in the farm program until the current law expires in 2007.

Staff writer Dan Morgan contributed to this report.

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