62. Memorandum From the Under Secretary of State (Irwin) to the Deputy Director of the Office of Management and Budget (Weinberger)1
- Reductions in Foreign Aid
The Department and A.I.D. are deeply concerned that there is not yet a decision on the details of the foreign assistance expenditure cut announced by the President one month ago on August 15.2 We are in an increasingly difficult position with the Congress and beginning to be in an embarrassing position with foreign governments.
Recently the Secretary of State and the A.I.D. Administrator each had to testify before the Congress that details of the cut were not yet available. We continue to make a similar response to the many requests for information that we receive from foreign governments. The recent announcement that the cut will not apply to Latin America,3 while helpful to us in Latin America, increases our problems with governments in other parts of the world and complicated further our position with the Congress.
The problem, we believe, can be made simple. The published estimated outlays for FY 1972 for bilateral economic assistance are $1,842 million; a 10 percent reduction amounts to $184 million. If Supporting Assistance is excluded, as we believe it was intended to be and should be, the reduction is $118 million. If it is not excluded, we will have [Page 149]severe additional difficulty in Southeast Asia (not to mention elsewhere), added to an already difficult economic and financial situation. What is needed is an OMB decision establishing a new expenditure ceiling, so that we can advise the Congress. There seems no reason why the affected agencies should not be relied upon to manage their resources within the new outlay ceiling, as they were expected to do under the published ceiling. The longer we delay the decision, the more difficult the cutting job becomes.
I stress that while we can absorb the required expenditure cuts with difficulty, any reduction in the foreign assistance appropriations request now before the Congress would be disastrous. This is true for all accounts but particularly for Supporting Assistance. You are fully familiar with the current negative attitudes of the Congress toward foreign assistance—particularly the attitude of the Senate toward Supporting Assistance which is a key element in support of the Nixon Doctrine. If the Administration proposes reductions in its FY 1972 appropriations request—which are only slightly above the FY 71 request which was the lowest since 1958—the Congress will simply begin from a lower base its normal practice of making deep cuts in the President’s request. The Congress will not stand idly by and allow the President to make the cuts instead. It is essential, therefore, that we be allowed to effect the 10 percent foreign assistance expenditure cut through administrative measures rather than linking them to reductions in requested budget authority.
In the unlikely event the Congress does not cut appropriations in its usual way, we would of course be prepared to take further administrative actions to insure that expenditure savings in FY 1972 did not result in increased expenditure pressure in FY 1973.
In summary, we believe it imperative to reach a decision quickly and that the decision be directed to 1972 expenditures, not appropriations, and exclude Supporting Assistance. I will be happy to discuss this with you if you wish
- Source: National Archives, RG 59, Central Files 1970-73, AID (US). Limited Official Use. A copy was sent to Kissinger. Beginning with an August 16 memorandum from Acting AID Administrator Roderic O’Connor to Under Secretary Johnson, AID persistently called attention to the need for decisions on how the foreign assistance reduction was to be handled. Was the reduction to be in outlays, new obligations, or budget authority? Were supporting assistance and programs dealing with refugee assistance in India and Pakistan exempt as they were not “foreign economic aid in the regular sense”? O’Connor’s August 16 memorandum and a number of others on the same subject are in the Washington National Records Center, Agency for International Development, AID Administrator Files: FRC 286 75 A 13, Chron Files for August and September, 1971.↩
- The New Economic Policy announced on August 15 called, inter alia, for a reduction of 10 percent in foreign assistance expenditures. See Public Papers of the Presidents of the United States: Richard Nixon, 1971, p. 887.↩
- Kissinger informed Rogers, Connally, Shultz, and Hannah in a September 10 memorandum that “in view of our special interest in assisting Latin American economic and social development” the President had decided to exempt the Latin American aid program from the 10 percent reduction in foreign aid that was part of the New Economic Policy. (Washington National Records Center, Department of the Treasury, Files of Under Secretary Volcker: FRC 56 79 A 15, Latin America)↩