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Magic 8 Ball on MCC’s Budget: Outlook Not So Good

The Millennium Challenge Corporation (MCC) shook the budget Magic 8 Ball and got a new response this year: outlook not so good. The administration requested $898.2 million for the MCC in FY2013, a decent number given today’s budget pressures and the same level appropriated in the FY2011 omnibus and FY2012 megabus. Despite this, I’m concerned Congress will make further cuts and puzzled that, while the MCC leads U.S. development rhetoric, it continues to get short shrift in the budget.Here’s my concern: MCC has a number of compacts in the pipeline, and this $898 million is only the request. Since its inception, the final MCC appropriation has been lower than the request, in some cases by as much as $1.3 billion. (And it’s worth bearing in mind that the MCC was originally envisioned as a $5 billion per year program.) But assuming the request is fully funded, what does $898 million get the MCC in FY2013? And what’s at stake should the level shrink further? The request should fund second compacts in Ghana, Benin, and El Salvador in addition to programs under the revamped threshold program in Honduras and Nepal. Both Ghana and El Salvador are Partnership for Growth countries, and the MCC has been leading efforts to determine constraints-to-growth in these countries—analyses that will underpin the overall programs. Here’s a quick look at how the MCC plans on funding upcoming compacts. Beyond the compact pipeline, a reduction of the $898 million request could have serious consequences for an MCC model predicated on selectivity, transparency, and evaluation – all key components that cost money to execute effectively.And here’s what puzzles me: the MCC’s model puts it at the vanguard of U.S. development practice, testing innovative aid models and methods that have since been adopted among other U.S. development agencies. Yet it keeps getting the short shrift. The constraints-to-growth analyses we see in Partnership for Growth, the independent, soon-to-be-publically-available impact evaluations at USAID, heck even the new Global Development Council established by President Obama, all have seeds in the MCC’s work. Considering that massive development contribution for such a relatively tiny budget, I’m hoping when Congress shakes the MCC Magic 8 Ball during their upcoming deliberations it will come back: Without a doubt.

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