November 9, 2004
THE MILLENNIUM CHALLENGE ACCOUNT:
Will Congress Restore Funding To Meet The Administration's Request?
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On November 9, the Center on Budget and Policy Priorities hosted a media conference call with Nancy Birdsall, president of the Center for Global Development and David Beckmann, president of Bread for the World to discuss the prospect that Congress will significantly reduce the funding requested for the Millennium Challenge Account (MCA), "a new compact for global development" announced by President Bush in March 2002.
Setting the fiscal year 2005 funding level for the MCA is among the decisions facing Congress when it returns for its lame duck session November 15. The House substantially cut the President's request from $2.5 billion to $1.25 billion, and the Senate cut it further to $1.12 billion.
At the time he announced the program, the President pledged that the United States would "lead by example" and increase its core development assistance by 50 percent over the following three years, resulting in an annual increase of $5 billion by FY 2006. In return, recipient nations would agree to performance ratings in 16 areas relating to just governance, investing in people and promoting economic freedom.
The panelists assessed both the funding levels and the degree to which recipients are being held to standards of accountability on education, health, government deficits, civil liberties, political rights, and other issues.
RECENT CGD WORK ON THE MILLENNIUM CHALLENGE ACCOUNT
Available at www.cgdev.org
Round Two of the MCA: Which Countries Are Most Likely to Qualify
Steve Radelet and Rikhil Bhavnani, October 2004
2004 MCA Threshold Program: A Comment On Country Selection
Steve Radelet, Sarah Lucas and Rikhil Bhavnani, October 2004
A Note On The MCC Selection Process For 2005
Steve Radelet, September, 2004
Whither Development Assistance? An Analysis of the President's 2005 Budget Request
Rikhil Bhavnani, Nancy Birdsall, and Isaac Shapiro, July 2004
An MCA Scorecard: Who Qualified, Who Did Not, and the MCC Board’s Use of Discretion
Sarah Lucas and Steve Radelet, May 2004
Qualifying for the MCA: An Update
Steve Radelet, April 2004
A Comment on the Millennium Challenge Account Selection Process
Steve Radelet, Sarah Lucas, and Rikhil Bhavnani, March 2004
Hard Currency: Unilateralism Doesn't Work for Foreign Aid Either
Nancy Birdsall and Brian Deese, March 2004
The Surprise Party: An Analysis of US ODA Flows to Africa
Markus P. Goldstein, Todd J. Moss, July 2003
November 9, 2004
THE MILLENNIUM CHALLENGE ACCOUNT
President Bush Must Insist on Full Funding For His Initiative to Reduce Global Poverty
WASHINGTON, DC – In light of the actions of the House and Senate, President Bush will have to insist on full funding for the Millennium Challenge Account, his initiative to reduce global poverty. The House, which passed its FY 2005 Foreign Operations Appropriations bill in July, slashed in half the president’s $2.5 billion request for the Millennium Challenge Account (MCA). The Senate bill, passed on September 23rd, provided only $1.12 billion for the MCA. President Bush and Congress will now negotiate the final version of the spending bill when Congress returns on November 16th.
“Fully funding the MCA is important for many of the world’s poorest people and to President Bush’s national security program,” said Rev. David Beckmann, president of Bread for the World. “This is a moral values issue that both Republicans and Democrats can agree.”
Bread for the World supports a FY 2005 appropriation of $2.5 billion for the MCA to meet the president’s promises and the demands of the program.
Bread for the World’s 50,000 members across the country are organizing letter writing campaigns in their churches, civic organizations and campus groups to ensure that the MCA is fully funded, without making cuts to on-going development and humanitarian programs. Already this year our members have generated more than 150,000 letters supporting full funding for the MCA.
President Bush on The Millennium Challenge Account:
“We have an obligation in this country to -- to continue to work with nations to help alleve poverty and disease. We will -- we will continue to push forward on the HIV/AIDS initiative, the Millennium Challenge Account. We will continue to do our duty to help feed the hungry. And I'm looking forward to it, I really am.”
~ President Bush, at the November 4th press conference.
On March 14, 2002, President Bush announced the MCA. He said the United States would increase its core assistance to developing countries by 50 percent over the next three years (FY 2004-2006), resulting in a $5 billion annual increase over current levels by FY 2006. He said this would be ”new money above and beyond existing aid requests.”
The MCA was authorized by Congress with broad bipartisan support and signed into law by President Bush in January 2004. Bread for the World members played a role in shaping the MCA and its first year funding of $1 billion through our 2003 legislative campaign that focused the MCA on poverty reduction in the world’s poorest nations.
In May 2004, 16 of the world’s poorest countries, including eight in Africa, were designated as eligible for the MCA. The countries now eligible to submit funding proposals are Armenia, Benin, Bolivia, Cape Verde, Georgia, Ghana, Honduras, Lesotho, Madagascar, Mali, Mongolia, Mozambique, Nicaragua, Senegal, Sri Lanka and Vanuatu.
In his budget request for FY 2005, the president proposed $2.5 billion for the MCA. In July 2004, the House voted to slash the president’s request to $1.25 billion, and then the Senate approved only $1.12 billion.
Previous White House Support for MCA
President Bush worked effectively with Congress to find full funding for the MCA for FY 2004. Once again the administration appears to support full funding for FY 2005. On September 16th, the Senate Appropriations Committee passed on $1.12 billion for the MCA. The next day the president released the following statement:
“The Millennium Challenge Account (MCA) is a groundbreaking initiative that encourages all nations to embrace political and economic reform, and has enjoyed bipartisan support since I announced it two years ago. The powerful combination of trade, open markets, and good government is history's proven method to defeat poverty on a large scale, to vastly improve health and education, to build a modern infrastructure while safeguarding the environment, and to spread liberty and enterprise.
Already, the MCA has encouraged countries to govern justly, invest in their people, and promote economic freedom. The MCA will support these efforts, helping the poorest countries seize the opportunities of the global economy and meet the needs of their people for better health and education, cleaner water, and a brighter future. I urge Congress to ensure that the MCA can fulfill its promise as a bold new vision for international development and a powerful expression of the generous spirit of the American people.”
The MCA has moved forward quickly and effectively. The MCA has selected well-governed poor countries, and these countries have developed projects that promote growth and reduce poverty. A shortfall in funding would undercut the MCA’s strategy of reducing poverty by rewarding countries that succeed in fighting corruption and establishing good policies.
Global Hunger, Poverty and Disease Information:
- According to the Food and Agriculture Organization (FAO), there are 842 million chronically hungry people in the world, with 798 million of those living in the developing world.
- UNICEF reports that10 million children die every year in the developing world, half from hunger-related causes.
- According to The World Bank, 1.2 billion in the world live on less than $1 a day.
- Seven thousand people a day die from AIDS. Nearly 6,800 of those people live in sub-Saharan Africa. (UNAIDS)
- More than 13 million children have been orphaned by AIDS in Africa. (UNICEF)
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Bread for the World is a 50,000-member Christian citizens' movement against hunger. For 30 years, Bread for the World's members have lobbied Congress and the administration to bring about public policy changes that address the root causes of hunger and poverty in the United States and overseas. Bread for the World is a nonpartisan organization supported by 45 denominations and many theological perspectives. Please visit our Web site at http://www.bread.org.
Biographical Information for Speakers:
Nancy Birdsall is the founding President of the Center for Global Development. Prior to launching the center, Birdsall served for three years as Senior Associate and Director of the Economic Reform Project at the Carnegie Endowment for International Peace. Her work at Carnegie focused on issues of globalization and inequality, as well as on the reform of the international financial institutions. From 1993 to 1998, Birdsall was Executive Vice-President of the Inter-American Development Bank before which she spent 14 years in research, policy, and management positions at the World Bank, most recently as Director of the Policy Research Department.
Rev. David Beckmann served for several years on the board of Bread for the World before becoming president of the organization in 1991. Prior to this, he spent 15 years as a World Bank economist. In this capacity, he played a prominent role in the Bank's heightened focus on poverty reduction, and fostered greater collaboration between the Bank and private voluntary organizations serving poor people.
The Center's founder and Executive Director, Robert Greenstein is considered an expert on the federal budget and in particular, the impact of tax and budget proposals on low-income people. Greenstein has written numerous reports, analyses, op-ed pieces, and magazine articles on poverty-related issues. He appears on national television news and public affairs programs and is frequently asked to testify on Capitol Hill. In 1996, Greenstein was awarded a MacArthur Fellowship.