My memo on past and present efforts by Congress to condition aid to Pakistan (and its decidedly mixed results) is up:
After a year of successive blows to the U.S.-Pakistan relationship and growing mutual mistrust, the prospect of continued American military and economic aid to Pakistan in the coming fiscal year is now increasingly contentious. This month Congress is considering how much money to provide to Pakistan as well as what kind of strings to attach for fiscal year 2012, which began in October but is now being funded by Congress on a month-by-month basis. Informing the debate over record-level aid to Pakistan are disputes between Washington and Islamabad over the transition and reconciliation processes in Afghanistan, the discovery of Osama bin Laden’s presence in Pakistan and Pakistan’s anger over multiple unilateral actions on its territory, and a renewed American domestic political focus on cutting government spending costs at home.
This sort of controversy is by no means new. American aid to Pakistan has gone through a series of peaks and valleys over the past 30 years as American strategic priorities shifted from nuclear counterproliferation (beginning in 1979) to cooperation against the Soviet Union (1980 to 1989) to concern over military rule (1999 to 2008) to counterterrorism and the conflict in Afghanistan (2001 onwards). Along the way a variety of laws and amendments to those laws have dictated how Congress and the executive branch dealt with this aid: sometimes boosting it, often cutting it, occasionally ending it only to kick-start it again as foreign policy priorities swiftly shifted in the region.
There are several interesting recently-released Afghanistan reports — specifically Giustozzi and Franco’s report on the Taliban and state education, released by the Afghanistan Analysts Network yesterday, and Nixon and Hartzell’s report on potential ways to structure peace negotiations in Afghanistan, published today by the U.S. Institute of Peace. All of the entries in this Document Dump series I’ve done so far have been Afghanistan-related, however, so I thought it best if I varied it up a bit and saved those for another time.
I’m getting ahead of myself a bit here with the choice of the FY2012 National Defense Authorization Act, since I actually have a longer memo in the works at my day job that will more fully examine the details of both current and past legislation governing U.S. assistance to Pakistan. But that piece is stuck in limbo at the moment waiting on the omnibus appropriations bill to pass, and in the meantime I might as well give a quick review of the Pakistan-related material in this bill, which appears on its way to passage this week after the White House’s intial plans to issue a veto over detainee language (which I’m not qualified to comment on) were dropped.
Document: National Defense Authorization Act for Fiscal Year 2012 (aka FY12 NDAA) Author: The specific document under consideration here is the Conference Report, a product of meetings between House and Senate legislators to reconcile the competing versions of the bill which passed in May and early December, respectively. A full list of the committee members who drafted this compromise version runs from pages 1267-1289 of the pdf, but as chairs of the House and Senate Armed Services Committees, Rep. Buck McKeon (R-CA) and Sen. Carl Levin (D-MI) drove much of the process. Published: December 12, 2011 Source: As of this writing, the full conference report and final bill have yet to be published on THOMAS, although previous versions of the House bill (H.R. 1540) and Senate bill (S.1867) can be found and the final bill text will likely be uploaded in the next day or two. I found the conference report (112-329) via the House Armed Services Committee website. I’ve also uploaded a copy in my Scribd library.
Key Content: The main Pakistan-related aid accounts controlled by the Department of Defense (over whom this bill has jurisdiction) are the Coalition Support Fund (CSF) and the Pakistan Counterinsurgency Fund (PCF).
Coalition Support Funds — The bill renews the CSF program for another year and increases its annual budget slightly to $1.69 billion; the administration had requested $1.75 billion. As a reimbursement program for Pakistani military operations carried out in support of the U.S. counterterrorism mission, CSF depends on Pakistani claims to determine how much is actually paid out. In recent years the U.S. has been a little more stringent in how it scrutinizes Pakistani claims; since the pace of Pakistani military operations along the northwest has dropped off in recent years, there’s no guarantee that all this money would necessarily be released. (Section 1213, pg 834-836) There are no conditions on CSF spending, but the bill does require a report from the Pentagon to Congress on how CSF money is being used and an assessment of its effectiveness. (Section 1231, pg 849-850)
Pakistan Counterinsurgency Fund — The bill renews the PCF but for the first time places limits its disbursement. 60% of the funds appropriated (which would be approximately $660 million if the administration’s $1.1 billion request for PCF is met by Congressional appropriators) are frozen until the Defense Department submits a report to Congress outlining what Pakistan’s counterinsurgency capability needs actually are and how the fund will be used, among other issues. The report must also include a discussion of Pakistani cooperation in counter-IED efforts; fertilizer from Pakistan is reportedly a component in many Afghan bombs and has become a signature issue for Sen. Robert Casey (D-PA), who pushed the provision. (Section 1220, pg 842-847). The remaining 40% of PCF money (i.e., approximately $400 million) is free to be spent in the meantime, however, and beyond the submission of the report there are no further restrictions on its use. Previous versions of the bill were actually somewhat stricter on the use of the PCF, holding up 75% of PCF money until a report was submitted (House version), and requiring a certification by the administration of cooperation on the IED issue (Senate version). The conference report details these compromises on page 1549 (although it oddly does not mention dropping the previous Senate IED certification provision, which can be found in Section 1230 of S.1867, pg 575).
Unanswered Questions: The authorization bill here approves the creation (or in this case, continuation) of program accounts through which U.S. government agencies (in this case, the Department of Defense) can spend money and carry out their activities, but it doesn’t actually release the money — that comes through the appropriations bills, which have yet to pass (for both DOD and the State Department / USAID, the other big agencies with jurisdiction over U.S. assistance to Pakistan).
Earlier versions of the House and Senate foreign appropriations bills have additional new requirements, adding new layers of administration certification of Pakistani cooperation on a range of counter-terrorism, Afghanistan, and nuclear-proliferation-related goals before any military or non-military aid is released. (The House was somewhat stricter in its language on this than the Senate.) For military appropriations, the House and Senate appear to have gone along with administration funding requests, and only imposed a new reporting requirement on how PCF would be spent. All that could theoretically still change during the negotiations over the omnibus appropriations bill, though. I’ll elaborate more on the details of these bills in my forthcoming memo for CAP, once the omnibus clears.
Even with these new restrictions in place, Congress still defers to the administration to make the certification of cooperation, and gives it considerable leeway to set its own benchmarks. As I said in the interview with Nitin earlier today, I don’t see the White House eager to provoke new crises in the relationship with Pakistan given how bad it’s gotten over the past year, but if it continues on the current track it is possible Congress could be more assertive about setting its own levels of assistance (potentially down to zero) in future funding bills.
When this money is appropriated, it’s an open question how much the U.S. will actually be able to spend (or choose to), even without requirements in this new bill. While the White House portrayed it as a voluntary suspension when it froze $800 million in combined CSF and PCF funds this summer, I suspect that decision was forced to a considerable degree by the Pakistani ejection of almost all U.S. trainers from the country in the wake of the Raymond Davis episode at the beginning of the year. We still don’t have final figures on the disbursal rate for PCF money in FY2010 or 2011, but I expect it would be a challenge to actually spend even $400 million over a year without any actual trainers in Pakistan to spend it on, so the practical effect of the new Congressional restrictions (should the administration choose to trigger them by withholding reports or certification) may be limited.
Additional Context and Further Reading:
Direct Overt U.S. Aid Appropriations and Military Reimbursements to Pakistan, FY2002-FY2012 — CRS fact sheet on what’s been appropriated to Pakistan, including the administration’s requests for the current fiscal year (but not including appropriations for that year, since they’re still under debate with the omnibus, and not including what’s been actually spent.) See the CRS U.S. Aid to Pakistan report for more details on the aid relationship.
A Primer on Understanding Budgets Part One,Part Two — These posts take a more generalized view on budget analysis, but include some general tips on how to dissect the budget process.
My upcoming memo on the history of U.S. legislative conditions on aid to Pakistan, as soon as Congress gets its act together and passes the damn omnibus and can make final edits.
Gulliver at Ink Spots gets into the weeds on the issue of just who in the U.S. government controls the Pakistan Counterinsurgency Fund, which is not nearly as clear-cut as this post makes it sound.
As a post-script to the budget analysis series, here are some brief highlights from current legislation for the 2012 Fiscal year related to Afghanistan.
House Foreign Appropriations (passed subcommittee): No money may be obligated to the government of Afghanistan (I would assume this means contractors are still ok) until the State Department certifies that the government is
making “significant progress” on the IMF’s conditions for the resumption of a program;
“demonstrating a commitment” to reducing corruption and improving governance, including prosecutions and transparency measures;
taking “significant steps” to facilitate public participation;
… and that it (State) has a “unified U.S. government anticorruption strategy” and that funds will be programmed to support Afghan institutions in support of this; that local Afghan representatives will be consulted on program design, implementation, and oversight; and that more money will be used to hire oversight and monitoring officers.
There is also some women’s participation on reconciliation language. SIGAR and the Inspectors General of State and DOD are also supposed to submit a joint audit plan of U.S. civilian assistance within 45 days of passage.
Senate Foreign Appropriations (passed committee): Has most of the general conditions on direct aid to the Afghan government as above, but is less specific than the House on the IMF point; Senate just requires a report by 90 days from enactment on whether an agreement has been reached and if not what steps have been demanded by the IMF for that to happen. (It looks like this will be moot by the time this passes anyhow.)
It also specifies that Secretary of State must certify to the committee that an Afghan agency receiving U.S. funds has been assessed and is considered qualified to receive funds and that there is a written commitment to benchmarks, oversight, etc, for the funds received. USAID and State are supposed to coordinate on this and the bill does not specify what those benchmarks should be.
It specifies at least $75M for rule of law programs, $250k of which goes to the State inspector general for oversight.
It specifies that no money appropriated may be used “to enter into a permanent basing rights agreement between the United States and Afghanistan.”
House Foreign Authorization (passed committee): Requires a report to Congressional committees from State and DOD on the Task Force for Business and Stability Operations in Afghanistan’s activities.
It also says that it is “the sense of Congress” that “as the very large US diplomatic presence diminishes in Afghanistan and Iraq”, State should reassign five Foreign Service officer billets to the Caribbean.
There is no Senate Foreign Authorization bill yet.
House Defense Appropriations (passed House): appropriates $475M Afghan Infrastructure Fund, which is supposed to be run by State but whose money appears to be owned by DOD and can be used by them (more likely) if State agrees that’s ok. This money is supposed to be in support of “the counterinsurgency strategy”, and it appears there is a pretty wide leeway on its transfer to State for use in economic activities. No reporting requirements or conditions on this that I see, other than a notification to Congress when funds are transferred.
It also appropriates $12.8B for the Afghan security forces fund. CERP gets $400M, projects of which are capped at $20M. Senate Defense Appropriations is an essentially identical bill and has passed committee but not the full Senate.
Bars the Secretary of Defense from awarding any contract in Iraq or Afghanistan to an “adverse entity” directly engaged in hostilities against the U.S. or its coalition partners, although he is also the one to determine who qualifies as such.
It renews the authorization for the use of funds in support of reintegration, and bumps authorization for the Afghan Infrastructure Fund up to $475M (from $400M last year) as the appropriations bill did, although specifies that DOD can’t use more than 85% of that until it submits a report on how it will be used during this fiscal year.
Renews the Task Force for Business and Stability Operations for another year and gives it $75M.
It authorizes as much as $425M in CERP and requires quarterly reports to Congress on how that money is being spent. Specifies that CERP programs over $5M must be reported to Congress with an accompanying “sustainment plan”.
Essentially echoes House’s language on “adverse entity” contracting, reintegration fund authorization, infrastructure funds, TFBSO, and CERP.
Requires an unclassified report on US military strategy in Afghanistan, “including the extent to which the strategy has changed or is expected to change in light of the death of the death of Osama bin Laden.”
Bars the use of any funds “to establish any military installation or base for providing for the permanent stationing of US armed forces in Afghanistan.”
Bars State and DOD from using any more than 75% of the Afghan Infrastructure Fund until they certify that “women in Afghanistan are an integral part of the reconciliation process between the Afghan government and the Taliban.”
Requires a report on the “long-term costs” (including veterans casualties and benefits, force maintenance, etc) of the war, as well as projected future costs.
Previously in Part One, I outlined some of the basic analytical questions that may help in analyzing a budget, and went into detail specifically on those related to understanding the content of the budget itself – how much is being spent (the budget scope), how is it being divided up (the budget priorities) and how does it compare to other budgets (the budget context).
But a budget is much more than just a series of numbers and how they stack up next to one another on an Excel sheet. The process of gathering resources, identifying priorities, and applying them to achieve goals is at the core of every organization’s strategy, and it is an inherently political process. Understanding how that process work requires understanding a budget’s sources and how they impact decision-making; the budget actors who set the priorities by which the money will be distributed; and knowing who will be responsible for budget execution in the end. I’ll cover all of these aspects in this post, again using the specific case of the U.S. involvement in Afghanistan for my examples. The last post sought to answer the relatively easy question of how much does the U.S. spend in Afghanistan? This one will cover the much more complex question of how does it get spent?
Part Two: How Does the U.S. Spend Money in Afghanistan?
Budget Sources: The way an organization gains resources and revenue will have a major impact on its structure and priorities; the top priority of any organization is usually to gain more resources or at very least to preserve access to those it currently maintains. Generally speaking, an organization is going to be faced with a tradeoff between maintaining a diverse sourcing of revenue, which increases resiliency but also potentially increases aggregate constraints, and single sourcing of revenue, which reduces the breadth of constraints but makes those that are in effect more severe. To use a business example, Amazon.com has a variety of different revenue streams, from its huge variety of online sales offerings to its new Kindle content ecosystem to cloud server hosting, each of which on its own maybe brings only a moderate amount of money to the company. Amazon can afford to lose some money on one part of the organization or another (Kindles are being sold at a loss right now in order to bring people into the service ecosystem where Amazon will hope to make back the money), but its margins of profit are thin and it doesn’t necessarily have a lot of freedom to concentrate a lot of resources at the expense of others and expand rapidly into new areas. Google, on the other hand, derives a massive share of its revenue just from its lucrative search ad business, which has given it a lot of cash on hand to throw into experimental projects that don’t necessarily need to pay off in the immediate term if ever; if the online ad market ever tanks, however, it will face serious problems, and it always has to prioritize the health of that revenue stream. Many organizations are going to be a mix of the two, and this is not a perfect example, of course; Amazon started with a concentration in book-selling and Google’s now diversifying into other sectors like mobile phones.
When analyzing a government organization, the most common form of diverse resourcing will be some form of taxation – income and sales taxes generally being the big ones, the former more progressive and the latter more regressive in terms of which parts of society feel the greatest impacts. Single source revenue usually comes from rents collected by virtue of the state’s exclusive control over access to various valuable assets – things like licensing fees, trading access (customs duties), and (often the big one) state-owned natural resources. The other big source for some countries and many non-governmental organizations is going to be donor aid; this can also be viewed as a form of rent, particularly when that aid is given in exchange for some form of strategic cooperation or access (as would be the case for U.S. aid to both the Afghan and Pakistani governments). Some governments also successfully generate revenue through state-owned businesses or sovereign investments, although the actual productive track record on these has not always been great. Finally, organizations can take out loans (usually on fairly favorable terms if they represent a state), although these too eventually require some form of resource income in order to repay them.
Organizations that depend on public tax revenue are more resilient in that no one single contributor bears responsibility for funding any more than a small fraction of the government’s operations. If taxpayer Colin Cookman happens to be unhappy with the exact ways in which the government is slicing up its cut of his paycheck between its various agencies, it doesn’t matter much (particularly since he lives in D.C. and has no representation). As a whole, however, the government is going to have to be concerned with public reactions to their budgeting priorities, since it doesn’t don’t have other large assets that can make up for the loss if a large portion of the taxpayer base revolts and stop contributing (or demands a change in priorities through an election). That taxpayer-constituent / government relationship represents the basic core of the social contract in a democratic state. Rentier economies suffering from the “resource curse” by contrast don’t have to give a damn about what the vast majority of their populations think, since state seizure of the major rent-producing assets is often enough to fund government operations (and allow it to coopt or marginalize any rivals) without any need for public input. The risk of this (besides becoming totally disassociated from the concerns of a large portion of the public) will be that if the asset price of your commodity of choice drops (or your big single donor gets upset with how you have decided to spend the money), you have very little alternative budget sources available (this is why all the major oil producers rely on cartelization to keep their commodity prices high). To use another example, non-governmental organizations that rely on a large endowment for their operations usually can afford to have very specific and not necessarily widely-shared priorities compared to those that rely on small-dollar donations, and have to devote far less of their energy to active grass-roots mobilization and cultivation.
Afghanistan Case: The U.S. government does of course generally depend on public taxation as the main source of its operating funding. When taxes got high enough and decision-makers disconnected enough from the priorities of those contributing that money, we fought a revolutionary war over the issue of who would get to control how our resources were going to be spent. Our elected representatives in Congress now control the budget in matters of both war and peace, and their need to be able justify those military operations to their constituencies does serve as something of a check on what we are willing or not willing to fund in Afghanistan. (Pres. Obama and U.S. Congress members primarily justify the ongoing intervention to the public on domestic U.S. counterterrorism concerns, so in this regard it’s not surprising that Afghan state-building has not been a big priority.) Again that’s not to say there’s always a direct relation between popular opinion and the ability to fund war operations; Congress has become increasingly deferential to the executive branch on the details of military operations around the world in the past half century, which probably not coincidentally coincides (particularly over the past quarter-century) with an increased reliance on external debt financing that further removes the direct costs of spending from the current generation of voters and taxpayers. (The other factor moderating constituent concerns is an all-volunteer military force that only draws from a small percentage of the overall U.S. population). As our national conversation has refocused on debt issues and our economic liabilities in the past few years, you’ve seen much stronger criticism of the Afghan war’s relative costs to benefits for U.S. security.
A pretty good mirror case to the U.S. system is that of the Afghan government, which is extremely donor-dependent for both its basic operating costs and any capital investments in its security establishment or other public services. I would argue Afghanistan definitely qualifies as a rentier state, providing a single high-value good (counterterrorism cooperation) in exchange for large-scale international assistance. The Afghan government’s primary constituency is U.S. (and to a lesser degree other international) donors, not the Afghan public; elected members of parliament may get to review and vote on budgets, but it’s ultimately the Afghan Finance Ministry officials who work with donors in an attempt to coordinate money flows that actually set the country’s priorities (and even their ability to do so is limited by their dependency on what donors want to do with their money). This dependency on international aid by an Afghan central government is not unique to the U.S. intervention, as Barnett Rubin’s history of the Soviet period notes.
Protip: The Afghan government’s chances of collecting large-scale tax revenues from its public are limited, given its capacity limitations, security challenges, and the country’s general level of impoverishment. Its priority then is to to capture control over as much of external donor money as it can in order to fund its own priorities (first and foremost, consolidating its position against rivals). Doing so requires satisfying the concerns of U.S. officials, not necessarily those of the residents of Kandahar or Mazar-e-Sharif. If you’re wondering why the Afghan government is not particularly popular with many parts of the Afghan public and where all the distortion and waste in the U.S. intervention in Afghanistan comes from, this dynamic is at the core of your answer.
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Budget Actors: The process by which actors within an organization decide how resources will be split up amongst the various priorities of a budget account is the core of the political process. This is sometimes described as “governance” or “strategy” but it’s all essentially the same thing — you just have to remember that it is a political process and that the interests of any specific actor may not necessarily be identical to what we assume the interests of the whole would or should be. The actors who control the process of prioritization (either by actual statutory authority or their ability to broker agreements between the competing interests) are in most cases going to be the most powerful parts within an organization, so identifying them and understanding the ways by which they assign priorities is going to be one of the most basic tasks required of an analyst attempting to understand how another organization works and what it wants.
The budgeting process can be separated into three distinct phases which correspond to three different types of actor — requests, wherein members of an organization attempt to advance competing priorities for the distribution of resources; authorizations, wherein approval is granted for a certain level of spending among the priorities, usually based on certain conditions; and appropriations, wherein the final approval is granted to release funds. (The actual disbursal, or spending of the money, will usually be done by the original requesting agency, and is dealt with in further detail in following section on Budget Execution.)
Requesting agencies are generally going to be pushing for the highest levels of resources they can get; authorizers will attempt to control the process by which it gets spent by adding conditions and other requirements; and appropriators potentially exercise the ultimate authority by agreeing to dole out the money (or not). Some organizations involve multiple layers of authorization before the final appropriation is approved; others regularly grant budget requests with minimal debate over their particulars. Some actors play different roles at different times. Organizations with greater internal checks and balances will separate some or all of these functions into different offices or agencies in order to avoid a concentration of decision-making power in any one actor. Without this separation of powers, organizations can potentially end up with seriously distorted or unsustainable budgets — it’s why we generally don’t let employees independently set their own salaries or implementing agencies choose their own funding levels without some higher approval and oversight process.
Afghanistan Case: Since we’re dealing with the U.S. system here and how it spends money in Afghanistan, that means understanding Congress (which has control over the budget source in our system of government, public tax revenue) and how it works. There are a variety of different backgrounders floating around on this process that you can Google but, in brief, it begins with the various agencies of the executive branch — the State Department, Defense Department, USAID, CIA, etc — formulating their requests, which the White House reviews and presents as an annual budget proposal package, usually in February of the year. (With the exception of a very, very few programs, like Social Security or Medicare, Congress is extremely loathe to enact multi-year budget appropriations, and thus everything is up for renewal every year.) The budget proposal then goes to Congress (usually starting in the House of Representatives) where the action begins.
The two houses of Congress (the House and Senate) have a long-established committee system which divides up legislative jurisdiction over various issues facing the government. If you think that this system of jurisdictions might tend to encourage narrow parochialism among members and uneven standards of accountability across the multiple agencies that collectively contribute to American foreign policy, you’d be right! But in any case, these committees — like the Senate Foreign Relations Committee or the House Armed Services Committee — have the power to authorize spending at particular levels (which may be higher or lower than those sought by the requesting agencies), create new program accounts or agencies to spend money in the future, and introduce new laws related to their jurisdiction.
These can come in a big legislative package (the FY 2012 Defense Authorization Bill, for example) or in bills dealing with a particular country, conflict, or program (the Kerry-Lugar-Berman bill authorizing expanded civilian assistance to Pakistan, for example). Authorization bills for the major categories of the U.S. government budget are supposed to pass every year and given the Congressional logjam, most smaller initiatives tend to get glommed onto them by amendment. It’s worth noting that the foreign aid authorization process in particular has been broken for the past several decades, effectively forcing State and USAID to rely on the same basic program accounts since the 1960s or otherwise on irregular, narrowly-focused legislation (like the aforementioned Kerry-Lugar-Berman) that amends this piecemeal. The act, as amended through 2002, can be found here.
The authorizing committees’ powers are separated from those on the Appropriations Committees and their various subcommittees (which deal separately with Defense, Foreign Operations, etc) who hold ultimate decision on the release of funds, which cannot be higher than the levels authorized by the authorizations process but can sometimes be considerably lower. Although they can’t technically enact anything that doesn’t have a specific monetary angle attached to it, Appropriations committee members are the ones who release the funds and not coincidentally tend to be the longest-serving (in a seniority system) and most powerful members of Congress.
Any legislation, including appropriations bills, that passes through committee has to go on to pass the full House or Senate (where it is potentially subject to further amendment) and then has to pass in a matching version in the other house of Congress. Any discrepancies in the two final bills have to be ironed out in a conference committee appointed by House and Senate leadership and then pass again in both branches of Congress. The THOMAS legislative search engine will be your friend when tracking all of these bills.
Protip: The “power of the purse” is Congress’ biggest institutional prerogative, but once budget funds are officially released to fund a particular program or agency, its ability to actually control how money is used can be limited, particularly in matters of foreign policy where the executive branch has wide leeway (and where Congressional ability to conduct oversight has been poor). “Sense of Congress” statements or Congressional “findings” that express a preference on how the money gets used are common, but generally speaking are not going to be binding. Congressional committees can threaten not to fund a budget account in the future their members don’t like how the administration is using its money, but this makes for a rather blunt policy instrument.
Three of the most common mechanisms used by Congress in both authorization and appropriations bills in an attempt to place closer controls on how money is spent are notification requirements that require agencies to let Congressional committees know when money has been spent or transferred; reporting requirements where the administration has to testify or prepare a lengthier report on how it is spending or planning to spend money; and the stricter certification requirements, where the president or one of his deputies must formally certify to Congress that certain standards are being met or otherwise trigger a fund cutoff. Beyond forcing the executive branch to share information with Congress, requirements can potentially create a public trail of documentation on a particular program account that Congress (and outside analysts) can use to make a closer assessment of the administration’s activities.
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Budget Execution: After the budget actors have divided up a budget’s resources among its various priorities and approved the money’s release, it still has to be spent. Here’s where the balance of power has the potential to shift back to the requesting and implementing agencies. As noted above, appropriators usually have limited direct control over these issues, and depend on their control over future funds (as well as whatever other non-monetary authority they are able to exert by means of law or custom) to compel implementing agencies to abide by their budget priorities.
Knowing whether or not those priorities are actually being met requires regular oversight and feedback mechanisms, which some organizations structure into their basic operations and others do not. Even organization that do review their own spending practices often don’t make this information public, which can make conducting outside analysis and oversight extremely challenging.
Is the money actually being spent at the levels appropriated in the original budget document? Agencies that fail to spend all of their appropriated funds are inviting other competitors for those resources to make the case that they would be better-spent elsewhere, so the pressure to spend all the money received even if it goes to waste will be high. Will money actually be spent in the ways specified by the budget framers? Appropriators sometimes give organizations considerable freedom to transfer money around between budget priorities, but most require a minimum a notification if this takes place.
Afghanistan Case: The U.S. government has a comparatively robust oversight framework in place to monitor how its budgets are spent, starting with the Congressional committees, which can compel testimony and reporting from the various agencies that they fund. As part of the budget process, agencies like the State Department and the Department of Defense prepare budget justification documents which are supposed to describe the activities they are carrying out and what future funding will be spent on. (This year’s State Department justification can be found here, for example.) Reporting or certification requirements enacted in other Congressional legislation are also intended to
Both the House and Senate also have dedicated Oversight committees which are supposed to carry out investigations and keep an eye out for waste or misuse of funding. Each U.S. government agency has its own in-house Inspector General, which in the case of Afghanistan is further supplemented by the Special Inspector General for Afghan Reconstruction‘s office (although after a tumultuous leadership history, there have been suggestions that SIGAR may be either folded into the State and DOD Inspectors General offices or merged with the Special Inspector General for Iraq Reconstruction to create a general wartime oversight body). The Government Accountability Office‘s investigators also conduct oversight when tasked to by Congress.
Protip: The last question to ask yourself when considering how a budget is spent is the most important one: what results did the money actually achieve for the organization? This is the hardest form of oversight to conduct because it requires tracking not just how money came or went (the outputs) but how the programs that were funded did or did not accomplish the goals set out for them (the outcomes). Conducting effective oversight requires identifying a desired outcome and identifying what metrics you actually need to look for in order to judge the success or failure of that effort; in Afghanistan, we have not done very well at this so far. Tracking outcomes is not only complicated but also potentially challenging to the interests of those who provide the information for assessment and who implement the programs. Tracking budget outputs is always easier and safer, but don’t confuse it for the reality on the ground.
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Thoughts? Critiques? Alternative frameworks for approaching budget analysis that I’ve failed to cover here? I’d appreciate any and all feedback in comments below.
colin cookman 