Most Recent Developments

On June 30, 2008, President Bush signed H.R. 2642 ( P.L. 110-252 ), a bill which makes supplemental appropriations for FY2008 and FY2009 for military operations in Iraq and Afghanistan and for other purposes. The bill also extends unemployment payments, and expands veterans' educational benefits. The House had passed the bill on June 19, and the Senate approved it June 26 by a vote of 92-6.
In floor action on the bill on June 19, the House adopted two amendments to a version of the bill previously approved by the Senate. Amendment #1, agreed to by a vote of 268-155, included $162.4 billion for military operations, the same amount as in the same title of the Senate-passed bill. Amendment #2, agreed to by a vote of 416-12, reduced the defense total by $3.6 billion and incorporated all of the other key measures to be included in the final bill.
Because the House agreed on June 19 to the defense total in the version of the bill previously approved by the Senate, the issue before the Senate on June 26 was concurrence in the House-passed Amendment #2. Before clearing the bill for the President, the Senate voted 77-21 to waive the Budget Act concerning the bill, thus disposing of a point of order against the bill raised by Senator Coburn, who contended that the bill improperly designated as "emergency" spending—thus exempt from spending ceilings set by the Congressional Budget Resolution—$210 million for the Census Bureau.
As enacted, the bill would cost an estimated $202 billion in FY2008 and FY2009 and almost $60 billion more through FY2018, of which
$183.5 billion is supplemental appropriations for defense, international affairs, disaster relief, and some other domestic programs, including $2.65 billion of newly added funds to respond to Midwest flooding earlier in the month; $14 billion in FY2008 and FY2009 is for extended unemployment benefits, with a net cost, following savings in future years, of $10 billion over eleven years through FY2018; $796 million in FY2008 and FY2009 and $63 billion through FY2018 is for expanded veterans educational benefits; and $1.2 billion in FY2008 and FY2009 is due to Medicaid rules changes.
The final bill reflects compromises with the White House on several issues. On major issues the bill extends unemployment benefits for 13 weeks but not for 26 weeks; expands veterans' educational benefits as in earlier House and Senate bills and adds a provision allowing benefits to be transferred to spouses and dependents, as the White House had proposed; does not include a surcharge on high income taxpayers to offset costs of expanded educational benefits as in the earlier House-passed bill; delays six, rather than seven, new Medicaid rules; does not approve the bulk of unrequested funds for domestic programs included in the Senate-passed bill; and adds $2.65 billion in new funds, partly at the request of the President, to replenish emergency accounts expected to be used to respond to recent Midwest floods. The final bill also drops most Iraq-related policy provisions that were in the original House-passed bill, except for provisions requiring Iraq to match U.S. economic assistance, prohibiting permanent bases in Iraq, and applying mandatory fraud reporting requirements to contractors working abroad.

	Earlier Congressional Action

In earlier action, on May 15, 2008, the House approved an initial version of the bill that provided $21 billion for military construction, international affairs, and domestic programs, but did not include $162.5 billion that the House leadership had proposed for operations in Iraq and Afghanistan. The House bill also approved extended unemployment compensation payments, expanded veterans educational benefits, and Medicaid rules changes. Procedurally, as a vehicle for considering supplemental appropriations without a committee markup, the House brought to the floor the Senate-passed version of H.R. 2642 , the FY2008 military construction/veterans' affairs appropriations bill that had been incorporated into the FY2008 consolidated appropriations act. The House then considered three amendments as substitutes for the text of the bill.
By a vote of 141-149 with 132 voting present, the House rejected the first amendment to provide $96.6 billion in FY2008 and $65.9 billion in FY2009 funding for military operations. By a vote of 227-196, the House approved a second amendment to require the withdrawal of combat forces from Iraq within 18 months; establish readiness requirements for the deployment of U.S. troops; require that any agreement on the status of U.S. forces in Iraq be authorized by Congress; mandate that Iraq match U.S. reconstruction aid dollar-for-dollar and agree to subsidize fuel costs for U.S. forces; make contractors in war zones subject to prosecution for offenses that would violate U.S. law; prohibit the establishment of permanent bases in Iraq; and prohibit interrogation techniques not authorized in the Army Field Manual. And, by a vote of 256-166, the House approved a third amendment providing $21 billion in FY2008 and FY2009 for military construction, domestic, and international affairs programs. The amendment also included expanded veterans educational benefits at an estimated cost of $52 billion over ten years, with an offsetting increase in taxes on those with incomes above $500,000 for an individual or $1,000,000 for a couple. And the amendment included an extension of unemployment benefits and Medicaid rules changes.
A week later, on May 22, 2008, the Senate approved an amended version of H.R. 2642 , providing $194 billion in supplemental appropriations for FY2008 and FY2009, and also approving extended unemployment payments, expanded veterans' educational benefits, Medicaid rules changes, and adding a limit on Medicare payments to new specialty hospitals. On key roll call votes, all of which required 60 votes for approval, the Senate
rejected by a vote of 34-63 an amendment to the House bill to provide funding for defense programs and to establish various Iraq policy provisions; approved by a vote of 75-22 an amendment providing defense funding without policy restrictions; and approved by a vote of 70-26 an amendment providing funding for domestic programs, international affairs, and military construction.
Earlier, on May 2, the White House sent Congress an amendment to its FY2009 budget formally requesting $70 billion in emergency FY2009 funding, including $66 billion for the Department of Defense and $4 billion for international affairs programs. The $66 billion request for the Defense Department constituted a "bridge fund" sufficient to allow the services to carry on both day-to-day peacetime activities and military operations overseas until the middle of 2009. Approval of a bridge fund—which the appropriations committees had planned to provide before the White House made its formal request—would allow Congress to avoid a debate over war funding during the fall election period, and also provide the 111 th Congress time to act on a full-year war supplemental after the next President takes office.
The $4 billion FY2009 emergency international affairs request included $770 million in emergency food-related assistance announced on May 1 (though FY2009 funding would not be available until October 1, 2008), $1.4 billion for aid to Iraq, $1.1 billion for aid to Afghanistan, $350 million for the Middle East, $193 million for Pakistan, $123 million for stabilization operations in Africa, $36 million for security for diplomats in the Middle East, Sudan, and Somalia, and $15 million for the six party agreement on North Korean nuclear programs.
On May 1, the President announced a new request for $770 million in FY2009 emergency supplemental appropriations for international food aid. The Administration had requested $350 million for P.L. 480 international food assistance in its October, 2007, budget amendment to the FY2008 supplemental request. Senators Durbin and Casey had proposed adding $200 million in food aid to the supplemental.

	Highlights of H.R. 2642 (P.L. 110-252) as Signed by the President June 30, 2008

The enacted version of H.R. 2642 provides $96.1 billion for military operations in Iraq, Afghanistan, and elsewhere in FY2008 and $65.9 billion in FY2009; $4.2 billion for military construction programs in the United States and abroad; $10.1 billion for international affairs programs; and $10.3 billion for domestic programs, including $2.65 billion, added after the House, on May 15, and the Senate, on May 22, passed earlier versions of the bill, to respond to Midwest floods. On key issues, the final bill
expands GI bill veterans' education benefits to provide a full four years of college education for service members who serve 36 or more months abroad, as provided in the House and Senate bills, and also permits benefits to be transferred to spouses and dependents, as the Administration requested, which increases the estimated ten-year cost from $52 billion to $62.8 billion; does not include a House-passed 0.5% income tax surcharge on incomes of $500,000 or more for individuals and $1,000,000 or more for couples—the surcharge was intended to offset the cost of the GI bill provisions; provides 13 weeks of extended unemployment compensation in all states, but not 26 weeks in some states as in the House and Senate bills, reducing the estimated ten-year cost from $11 billion to $8.2 billion. adds $2.65 billion to replenish accounts expected to be used for Midwest flood relief—the White House had reportedly requested $1.8 billion; delays implementation of six of seven Administration changes in Medicaid regulations that would reduce Federal payments to the states, rather than of all seven as in the House and Senate bills; drops most Iraq-related policy provisions that were in the House-passed version of the bill, including a provision requiring withdrawal of combat troops within 18 months and others requiring that troops meet targets for readiness and for dwell time at home between deployments—the bill includes measures requiring the Iraqi government to match amounts of some reconstruction assistance and prohibiting the use of funds to establish permanent bases in Iraq, and it extends mandatory fraud reporting requirements to contractors working abroad; provides $5.8 billion for Gulf Coast hurricane protection levees, as the Administration requested, and deletes $4.6 billion in additional flood-relief funding in the Senate bill, though the final bill also adds $73 million for housing vouchers; provides $4.2 billion for military construction, which is $2.2 billion above the Administration request, $1.2 billion above the Senate level, and $0.4 billion below the House May 15-passed bill; provides $400 million in unrequested funds for science programs rather than $1.2 billion as in the Senate bill; provides $150 million to bolster Food and Drug Administration safety programs, compared to $275 million in the Senate bill; and provides $178 million for the Bureau of Prisons and $210 million for the Bureau of the Census, as requested by the agencies, though not formally included in the Administration's May 2, 2008, supplemental request, and as included in both the House and Senate bills.

	How Long FY2008 Funding Would Have Lasted

In advance of additional FY2008 supplemental funding, the Defense Department had available funds provided (1) in the regular FY2008 defense appropriations act ( P.L. 110-116 ) and (2) in the FY2008 consolidated appropriations action ( P.L. 110-161 ). Defense officials had calculated that funding for the Army appropriated in those two bills would begin to run out some time in June—by about the middle of June for Army military personnel accounts and by the end of June for Army operation and maintenance. On May 27, however, the Defense Department requested congressional approval to transfer $9.7 billion of funds to the Army, sufficient, officials said, to extend operations through the end of July. DOD requested that Congress include in a supplemental bill authority to replenish the accounts from which the transfers of funds were to be made. Section 9103 of the final supplemental bill provides DOD authority to transfer up to $2.5 billion of FY2008 funds in the bill between accounts and Section 9203 provides authority to transfer up to $4 billion of FY2009 funds.
In addition to, or instead of, transferring funds from other accounts, the Defense Department could have extended Army operations beyond June by invoking the Feed and Forage Act, which allows the Defense Department to obligate funds in advance of appropriations for transportation, housing, subsistence and other purposes. The Defense Department might also have extended operations by using other standing authorities to shift funding between the services.
On June 26, hours before the Senate passed the amended bill, Defense Secretary Robert M. Gates said during a press conference that, until the bill was enacted, DOD would continue planning for a possible shutdown of all nonessential operations in July.

	Key Issues in the Bill

		Expanded GI Bill Veterans' Education Benefits

The initial House- and the Senate-passed versions of the FY2008 supplemental appropriations bill, H.R. 2642 , included a measure to provide substantially increased educational benefits for military personnel who serve abroad for thirty-six months or more (see below for a more detailed review of the main provisions). A key issue in congressional action on the bill was whether to offset the long-term costs of expanded benefits, which CBO estimated would amount to $52 billion through FY2018. In May, under pressure from "Blue Dog" Democrats, the House leadership agreed to add to the bill a 0.5% surcharge on high income taxpayers as a means of offsetting the cost of the program. The Senate, however, did not agree to the tax offset, and it was not included in the May 22 Senate-passed bill.
Subsequently, as the House leadership considered how to proceed, "Blue Dog" Democrats in the House continued to warn that they would vote against the final bill if it did not offset the costs. Meanwhile, the White House warned that the President would veto the bill if it included a tax increase. In the end, the House leadership did not include the offset in the final version of the bill. On June 19, the House approved expanded veterans educational benefits as part of Amendment #2 with only 12 votes against it.
Aside from the debate about offsetting costs, there were some objections to specific aspects of the main GI bill proposal being considered in the House and Senate. Senior officials in the Defense Department opposed key elements of the measure, and Senate Republicans, with White House support, proposed an alternative that would require longer service before personnel could qualify for full benefits. At a May 8 press conference, Secretary of Defense Robert Gates and Joint Chiefs Chairman Admiral Michael Mullen complained that the measure being proposed in the House and Senate bills would undermine retention of personnel because it would make full educational benefits available for service members who have not reenlisted for a second term. On May 6, at an event to honor military spouses, the President said that he was sending to Congress legislation that would improve benefits for military families, including a measure that would allow educational benefits to be transferred to children or spouses.
On May 14, Senate Republicans brought up an alternative GI bill expansion proposal sponsored by Senator Graham as an amendment to pending collective bargaining legislation. That amendment was based on S. 2938 , a measure to increase veterans education benefits that Senator Graham proposed on April 29 with a number of co-sponsors, including Senator McCain. The Graham bill would provide larger benefits for military personnel who serve for at least 12 years and permit benefits to be transferred to other family members. The education benefit measure included in the House and Senate supplemental bills, in contrast, was based on a bill, S. 22 / H.R. 5740 , sponsored by Senator Webb and Representative Mitchell, that provides maximum benefits after as little as thirty-six months of service.
In the end, the enacted version of the supplemental adheres to the Webb/Mitchell bill. It provides maximum benefits to personnel with as little as 36 months of service. The final bill, however, also includes a provision allowing service members to transfer benefits to spouses and other dependents. The transfer provision adds $10.8 billion to the ten-year projected cost of the bill.

		House and Senate Differences Over Other Domestic Spending

Apart from the fact that the House rejected funding for military operations (except for military construction funds that were grouped together with funding for domestic programs), the main differences between the initial House and Senate bills had to do with amounts for domestic spending. Both the House and the Senate bills provided $9.9 billion for international affairs programs, though the bills allocated the funds somewhat differently. Both bills also included expanded GI bill educational benefits, with $716 million required in FY2008 and FY2009, and extended unemployment benefits costing $15.6 billion in the first two years.
Beyond that, the House bill provided $5.8 billion in FY2009 emergency funds for Gulf Coast levee construction; $210 million for the Bureau of the Census; and $178 million for shortfalls in the federal prison system budget. Representative Obey, the chairman of the House Appropriations Committee, repeatedly noted that all of these funds were requested in some form by the Administration.
The Senate-passed bill provided $8.5 billion more than the House bill for domestic programs. Of the additional funds $4.6 billion was for hurricane-related relief and reconstruction and other disaster assistance (for a total in the Senate bill of $10.4 billion), and $1 billion was provided for low-income energy assistance, $590 million for state and local law enforcement assistance, $400 million for secure local schools, $437 million for veterans' administration polytrauma facilities, $275 million for Food and Drug Administration safety programs, and $1.2 billion for a "science initiative" with funds allocated to NASA, the Department of Energy, and the National Institutes of Health.
The additional funds in the Senate bill for domestic programs were a matter of considerable debate among House and Senate Democratic leaders. Not wanting to invite a presidential veto, the House leadership resisted adding funds for domestic programs. Except for veterans education benefits, unemployment compensation, and the cost of delaying new Medicaid rules, the House stayed within limits on spending that the White House insisted on. The Senate, however, approved a substantial amount of additional domestic spending as part of an amendment that passed by a vote of 70-26, with more than enough support to override a veto.
When the House subsequently took up the Senate-passed version of the bill in June, the House leadership decided to negotiate with the White House in an effort to agree on a bill that would not be vetoed. The final bill included relatively little unrequested domestic funding. That version of the bill, passed by the House June 19 and by the Senate June 26, was signed by the President on June 30.
 Table 1 provides an overview of House, Senate, and enacted funding compared to the request. It shows funding by title within the bills and it provides a breakdown of defense, international affairs, and domestic spending. Table 2 provides a comparison of House, Senate, and requested funding for selected programs. It is intended mainly to highlight key differences between the House and the Senate. A detailed breakdown of funding by account is provided in Tables B - 1 and B - 2 in Appendix B at end of this report.

		Iraq Policy

			House-Passed and Senate Committee Bills

The May 15 House-passed version of H.R. 2642 included a package of Iraq-related policy provisions requiring
that a redeployment U.S. forces out of Iraq begin within 30 days of enactment of the legislation with a goal of completing withdrawal of combat troops by December, 2009; that any agreement on the status of U.S. forces in Iraq be authorized by Congress; that Iraq match U.S. reconstruction aid dollar-for-dollar; that Iraq agree to subsidize fuel costs for U.S. forces; and that U.S. troops meet guidelines for readiness before being deployed, including guidelines for time at home between rotations.
The House-passed Iraq policy amendment also made contractors in war zones subject to prosecution for offenses that would violate U.S. law, prohibited the establishment of permanent bases in Iraq, and prohibited interrogation techniques not authorized in the Army Field Manual.
The Senate, however, rejected by a vote of 34-63 a package of Iraq policy provisions that were approved by the appropriations committee. The vote did not necessarily reflect the sentiment of the Senate on policy matters, however—several anti-war Senators said they opposed the measure because they did not want to vote for the $163 billion in funding to which the policy package was attached.
The Senate committee measure did not establish a timetable for withdrawal, as in the House bill. The rejected Senate policy provisions would
state that the mission of U.S. forces in Iraq should shift to counter-terrorism, training, and force protection; require that units be fully mission capable before being deployed, with a Presidential waiver; set limits on the time units may be deployed of one year in the Army and seven months in the Marine Corps, also with a waiver; require that units be based at home for the same periods between rotations, with a waiver; prohibit permanent bases in Iraq; require congressional approval of any security agreements with Iraq; prohibit an agreement that would place U.S. forces under Iraqi criminal jurisdiction; require a report on Iraq's budget; require Iraq to reimburse U.S. forces for fuel costs; establish criminal statutes against profiteering and other fraud and abuse; prohibit U.S. funding of large-scale infrastructure projects in Iraq; require an agreement with Iraq to share costs of military operations; and require that the International Red Cross be informed of and have access to any detainees.
The committee proposal also included expanded oversight of contractors and an extension of laws governing extraterritorial jurisdiction over contractor personnel.
The June 19 House-passed bill, which the Senate agreed to June 26, and which the President signed on June 30, drops most of the policy language in the initial House measure. It includes only provisions that would
require that Iraq match U.S. State Department and USAID (though not Defense Department) reconstruction funding; prohibit permanent U.S. bases in Iraq; and extend mandatory fraud reporting requirements to contractors working abroad.

		Defense Funding Issues

Between February and October 2007, the Administration requested a total of $189.3 billion in emergency FY2008 supplemental appropriations for the Department of Defense. Through December 2007, Congress had approved $86.8 billion, which left $102.5 billion still pending when the 110 th Congress reconvened in January. In March, 2008, the Defense Department provided the congressional defense committees with a revised allocation of the remaining funds. The main changes were to reduce remaining requested funding for "Other Procurement Army" and to add money for Navy, Army National Guard, and Air Force operation and maintenance accounts. The revision also added about $1 billion in military construction funds to cover escalating base realignment and closure costs.
In considering the remaining FY2008 defense request, House and Senate appropriators announced plans to add a "bridge fund" for FY2009 of $65-70 billion, providing funds mainly for personnel and operating accounts sufficient to allow the military services to continue operations into about the middle of calendar year 2008. This would avoid another contentious debate over Iraq policy during the fall election season, accompanied by DOD complaints that it would have to shut down Army and Marine Corps operations early in the following year. It would also leave time for the next Administration to formulate its own full-year war supplemental funding proposal based on any proposed changes in strategy and troop levels.
Subsequently, on May 2, 2008, the White House sent Congress a formal request for $70 billion in emergency war-related FY2009 supplemental funding, of which $66 billion was for the Department of Defense and $4 billion for international affairs programs.
 Table 2 and, with somewhat more detail, Tables B - 1 and B - 2 in Appendix B show House and Senate action on defense funding compared to the unadjusted Administration FY2008 supplemental request and the new FY2009 request. In general, the House leadership bill, like the Senate-passed bill, agreed to the Defense Department's proposed shifts of FY2008 funds—both bills added funding for base realignment and closure costs and for service operation and maintenance accounts and reduced funding for "other procurement Army," an account that has grown dramatically in recent supplementals to cover purchase of force protection equipment, trucks, and communications equipment. The Army has been adjusting its projected requirements in all of these areas.
The main congressional initiatives in the FY2008 and FY2009 defense supplemental bills were to add funding for a number of major weapons programs. Both the Senate-passed bill and the House-leadership bill included $3.6 billion in FY2008 to procure 15 C-17 cargo aircraft, which the Administration is officially proposing to terminate, but for which the Air Force requested funds in its FY2008 and FY2009 unfunded priorities lists. Both bills also added $2.5 billion for 34 C-130J cargo aircraft, including a tanker variant for the Marine Corps and a variant for Special Operations Forces. The FY2009 bridge fund request included only a limited amount for procurement, $4.4 billion all, since most of the money in the bridge fund was intended to sustain operations into next year. Neither bill provided funding for F-22 procurement, leaving the issue to be resolved the regular FY2009 defense appropriations bill.
The enacted version of the bill, passed by the House June 19 and by the Senate on June 26, includes the earlier Senate amounts for defense, but with an across-the-board cut of $3.6 billion from FY2008 procurement, R&D, and revolving fund accounts, to be applied proportionately to each line item.

		International Affairs Remaining FY2008 and Additional FY2009 Supplemental Appropriations6

In its initial February 2007 budget for FY2008 and in the October 2007 budget amendment, the Administration requested a total of $6.9 billion in emergency FY2008 appropriations for international affairs programs. Most of the request was for embassy security and reconstruction assistance in Iraq and Afghanistan. Congress did not address these funding requests until it took up the FY2008 Department of State/Foreign Operations appropriations bill, H.R. 2764 , which ultimately became the vehicle for consolidated FY2008 appropriations. Division J of the consolidated appropriations bill comprises a conference agreement on the State/Foreign Operations appropriations bill. It includes, in addition to regular FY2008 appropriations, $2.4 billion of emergency FY2008 funding.
Not all of that $2.4 billion was for programs that were part of the Administration's $6.9 billion emergency funding request. Furthermore, some supplemental funds were allocated to the base international affairs budget when Congress appropriated less than requested in regular funding. According to the State Department, only about $1.5 billion of the new emergency funding was for programs as requested, leaving $5.4 billion of the request still to be addressed, of which $2.3 billion is for State Department and related activities and $3.1 billion is for foreign operations.
In addition to the remaining FY2008 supplemental request, on May 2, 2008, the Administration amended its regular FY2009 State-Foreign operations request by adding a supplemental request of $2.24 billion to the Department of State FY2009 regular request and nearly $2.88 billion in foreign assistance funding, including $770 million for food security and food aid. Table 3 shows the remaining FY2008 supplemental request and the FY2009 supplemental request for the State Department and international broadcasting. Table 4 shows the remaining FY2008 supplemental request and the FY2009 supplemental request for foreign operations. Table 5 shows rescissions in the House and Senate bills.

		Congressional Action

The enacted version of H.R. 2642 , passed by the House June 19 and by the Senate June 26, provides a total of $6.15 billion in FY2008 supplementals and $3.94 in FY2009 supplementals for the Department of State, Foreign Operations, and Related Programs. It funds about $1.99 billion for the Department of State and adds $2 million for International Broadcasting in FY2008 supplemental spending. About $1.15 billion is provided for Iraq operations in the Diplomatic and Consular Programs (D&CP) account. Compared to the May 15 House-passed bill, the enacted version raises funding for the Inspector General, U.S. Contributions to International Organizations, and U.S. Contributions to International Peacekeeping. The International Broadcasting funds are for increased broadcasting to Tibet. (See Table 3 ) For Foreign Operations, the enacted House bill provides about $4.16 billion in FY2008 funding to various countries and for international food aid. (See Table 4 )
For the FY2009 supplemental, the enacted version of the bill provides a total of $1.07 billion for State Department accounts, including up to $550.5 million for operations in Iraq. In addition, $6 million is provided for international broadcasting. The bill also provides about $2.86 billion for country foreign aid allocations and for international food aid.
The enacted legislation made some changes to earlier House and Senate versions. It reduced slightly the amount for the Department of State in FY2008, but increased the amount for State in the FY2009 supplemental. The final bill added funds for international broadcasting—$2 million for FY2008 and $6 million for FY2009—that were not in earlier versions of the legislation. For foreign assistance, the enacted bill reduced somewhat from earlier versions the amount for Iraq and Afghanistan, Jordan, the Democratic Republic of the Congo. It also eliminated funds for Vietnam and Pakistan in FY2008 that had been in earlier versions. The enacted legislation increased funds for Mexico in FY2008 and for Sudan in both supplemental years. (See Table 3 )
While both bills contained some rescissions, most noteworthy were Senate rescissions totaling $525 million from the Millennium Challenge Corporation (MCC). The MCC rescissions were used as offsets to provide $300 million for Jordan, a country expected to sign a compact with MCC next year, and $225 million for International Disaster Assistance. The enacted legislation did not include the $225 million in rescissions from MCC for International Disaster Assistance (IDA), however. (See Table 5 )

		Iraq Reconstruction Assistance8

A major issue in congressional action on supplemental funding for international affairs was how much to provide for Iraq reconstruction and how to increase the role of the Iraqi government. With the passage of the Consolidated FY2008 Appropriations Act, nearly half of the Administration's $4.9 billion FY2008 supplemental request for Iraq reconstruction was approved. However, of the roughly $2.1 billion appropriated in this category of assistance, only about $230 million was for economic aid under the foreign operations portion of the bill, the bulk of enacted reconstruction assistance being in the form of DOD appropriations. Remaining outstanding from the FY2008 request and under consideration in the Second FY2008 supplemental was roughly $2.9 billion, of which $986 million was for foreign operations economic assistance.
The outstanding FY2008 foreign operations request for Iraq was for three accounts—$797 million in the Economic Support Fund (ESF), $159 million in International Narcotics and Law Enforcement (INCLE), and $30 million in Migration and Refugee Assistance (MRA). However, the bulk of the 2 nd FY2008 supplemental request for assistance to Iraq was for DOD appropriations for the training and equipping of Iraqi security forces ($1.5 billion under the Iraq Security Forces Fund, ISFF), for development programs delivered under the Commander's Emergency Response Program (CERP) (Iraq could expect at least half of the $719 million still outstanding for both Iraq and Afghanistan), and for the Task Force to Improve Business and Stability Operations in Iraq ($100 million under the Iraq Freedom Fund account).
On May 2, 2008, the Administration issued a request for FY2009 emergency supplemental funding. The request included $398.8 million for foreign operations reconstruction—$212.8 million in ESF, $141 million in MRA, and $45 million in IDA accounts. The DOD appropriations reconstruction request included $2 billion for the ISFF, $1.7 billion for the CERP in Iraq and Afghanistan, of which at least half would go to Iraq, and $50 million for the Business Task Force. Both DOD and Foreign Operations portions of the FY2009 emergency request were considered by Congress at the same time as the FY2008 supplemental.
The accounts to be funded under both FY2008 and FY2009 supplemental requests for Iraq support a wide range of reconstruction programs. ESF is the primary source of funding for assistance disbursed by the Provincial Reconstruction Teams (PRTs), which have grown in number under the surge to 25, including 13 newly established ePRTs (embedded PRTs) embedded with U.S. combat battalions and concentrated mostly in Baghdad and Anbar province. The ePRTs are intended to help stabilize areas secured by U.S. and Iraqi forces by supporting local small-scale, employment-generating, economic projects, using ESF-funded community development grants, job training and micro-loan programs, among other activities. PRTs also utilize ESF to increase the capacities of local government officials to spend Iraqi-owned capital funds allocated by the Iraqi government for infrastructure programs. At the national level, ESF supports ministerial capacity development, agriculture and private sector reform, and the strengthening of democratization efforts.
Of the ESF request, $25 million, accompanied by proposed authorization language, would allow the Administration to establish a new Iraq enterprise fund based on the model created for east Europe and the former Soviet Union in the late 1980s and early 1990s. Enterprise funds are U.S. government-funded private sector-run bodies that primarily provide loans or equity investments to small and medium business. In the former communist countries, enterprise funds also encouraged growth of the private sector, including support for mortgage lending markets and establishment of private equity funds. The most successful example, the Polish Fund, made many profitable investments, helping companies grow that otherwise were unable to obtain financial support in the period just after the fall of communism. Some of the funds, however, have been much less successful, either because they took on poor investment risks, or because they were unable to locate promising businesses due to the poor business climate or competition from other private sector funding sources. Some observers question the usefulness of the funds because their ostensible development purpose seems often to conflict with pressures for economic profit.
The INCLE account largely would support rule of law and corrections programs. The Administration request was expected to fund prison construction, something that Congress has sometimes cut from previous requests. The request was also intended to extend judicial reform and anticorruption efforts to the provinces. The MRA request would address the continuing refugee crisis in the region; an estimated 2.0 million Iraqis have fled the country and another 2.2 million have been displaced due to sectarian violence and instability.
The CERP allows military commanders to support a wide variety of economic activities at the local level, from renovating health clinics to digging wells to painting schools, provided in the form of small grants. CERP also funds many infrastructure efforts no longer supported with other U.S. assistance, such as provision of electric generators and construction of sewer systems and roads. Commanders are able to identify needs and dispense aid with few bureaucratic encumbrances. More recently, the CERP has paid salaries to the so-called Sons of Iraq, mostly Sunnis who are joining with U.S. forces to provide security.
The DOD Business Task Force seeks to stimulate the economy and create employment for Iraqi citizens by rehabilitating some of the roughly 200 state-owned enterprises that comprised a large portion of the Iraqi economy prior to the U.S. occupation. News reports have suggested some difficulty with the program, resulting from the lack of electricity, the insecure environment, and a lack of enthusiasm from U.S. companies that had been expected to invest in the facilities, among other reasons. To date, about 29 factories have been assisted, responsible for about 10,000 jobs.
Outstanding FY2008 supplemental funds include operational costs (not counted in the reconstruction aid total or the table) for staffing and administering reconstruction programs: $679 million for PRTs. The new FY2009 supplemental request includes funding for PRT operations (an unspecified portion of a total $921 million Embassy/PRT request), $23.6 million for USAID operational expenses, and $15 million for the Special Inspector General for Iraq Reconstruction (SIGIR).

			May 15 House Action on Iraq Reconstruction

The combined funding amendments #1 and #3 to H.R. 2642 which the House considered on May 15 would have provided a total of $4.0 billion in additional economic and security reconstruction funding for Iraq, about two-thirds of the $6.2 billion Administration request for the two years of assistance. See Table 6 for details under each account. However, DOD reconstruction appropriations, contained in amendment #1, were rejected in a House vote on May 15. Of the total FY2008 and FY2009 DOD appropriations request of $4.9 billion, the failed amendment would have provided $3.1 billion, or 64%.
Only amendment #3 of the two funding amendments was approved. It contained the foreign operations portion of Iraq reconstruction assistance. Of the total FY2008 and FY2009 foreign operations request of $1.4 billion, the House bill provided $921 million, or 66%.
Judging by the allocations made by the Appropriations Committee for the $440 million in FY2008 ESF, the committee favors a significant shift in the direction of the economic aid program toward local-level assistance programs. Of the total amount, at least $355 million would be targeted to provincial and local community activities, rather than programs supporting the national government. PRT programs would get $140 million. Related community-based programs, the Community Stabilization Program (CSP) and the Community Action Program (CAP), would receive $100 million and $75 million respectively. Provincial economic growth, including microcredit and agriculture, would get $40 million. The only significant national-level effort, the National Capacity Development program, would receive $70 million, a cut of $178 million from the request. Another request for a nationally-based effort, $70 million for the provision of infrastructure security protection, was cut entirely. Democracy assistance, requested under ESF, is being provided under the Democracy Fund account at $75 million, and is expected to be implemented through the National Endowment for Democracy (NED) and other non-governmental organizations (NGOs).
Two other reconstruction provisions in the May 15 House bill are noteworthy. No funding was provided for the Iraqi Enterprise Fund, and such a fund was specifically prohibited. The FY2008 INCLE Iraq program funding, at $85 million, was cut substantially, by $74 million, from the request, and no prison construction funding was included.
Because operational funds for the PRTs are blended with those of the Embassy and USAID operating expenses are provided for both Iraq and Afghanistan, it is not possible to say with certainty whether the full request was met by the House amendment. The amendment did provide the SIGIR with $2.5 million and $46.5 million for FY2008 and FY2009, respectively.

			May 22 Senate Action on Iraq Reconstruction

With regard to Iraq funding levels, the Senate bill, approved on May 22, differed from the May 15 House-passed bill in one large respect—it contained $2.8 billion in DOD reconstruction appropriations and the House bill had none. In other respects, the bills were similar. See Table 6 for account levels. In all, the Senate bill provides $4.2 billion for both DOD and foreign operations appropriations in FY2008 and FY2009, 67% of the Administration request.
Like the House, the Senate bill shifted funding strongly in the direction of local-level assistance programs. Of the $398 million in FY2008 ESF, at least $313 million would be targeted to provincial and local community activities, rather than programs supporting the national government. PRT programs would get $138 million. As in the House bill, the CSP and CAP would receive $100 million and $75 million respectively, and the National Capacity Development program would receive $70 million. Infrastructure security protection was cut out. Again, like the House, the Senate bill would provide democracy assistance under the Democracy Fund account at $75 million. The proposed enterprise fund would also not be funded in the Senate bill.
The May 22 Senate bill provided the SIGIR an operating expense level of $2.5 million in FY2008 and $36.5 million in FY2009. PRT and USAID operating expense levels are not specified.

			House and Senate Action on Iraqi Role in Reconstruction

Reflecting recent indications that Members of both parties desired to see the Iraqi government pay a greater share of the costs of reconstruction, under the approved House amendment #2, the May 15 House bill contained a measure that would require most reconstruction funds to be matched by Iraqi obligations on a dollar-for-dollar basis. The exceptions are for democracy and human rights programs, the USAID Community Action Program and other NGO-assisted programs, humanitarian demining, refugee and displaced persons assistance, intelligence activities, and CERP projects with a value less than $750,000. It is not clear from the language whether the match would have to be made project-by-project or whether total Iraqi funding for reconstruction in general would suffice to permit continued U.S. assistance at the same level. If the latter, the provision might not affect U.S. funding significantly as, in the past year, Iraqi obligations for security and economic reconstruction have approached the U.S. contribution and will likely surpass it in 2008.
The May 22 Senate bill contained the above matching fund language. The Senate bill also contained language requiring the Secretary of Defense to develop a process with Iraq to institute equal sharing of reconstruction costs for all DOD-funded projects costing over $750,000, beginning by October 1, 2008. The bill debated on the floor on May 22 would also have prohibited DOD funding of large-scale infrastructure projects costing over $2 million, but this section was rejected along with other so-called policy provisions. As the CERP was exempted from this restriction, the likely effect would have been only to ensure that Iraq funds construction of security-related facilities, such as military barracks and training centers.

			Enacted Version of FY2008/2009 Supplemental

The version of the FY2008 and FY2009 supplemental approved on June 19 by the House, approved by the Senate June 26, and signed by the President June 30 differs from its predecessor in a few important respects. First, it approves DOD appropriations for Iraq security, adopting the Senate's figures for the ISFF, the CERP, and the Business Task Force (see table below for details).
Second, where the two bodies differed in their respective first versions of the bill—i.e., in the foreign operations appropriations ESF account—the House compromised with the Senate figure. The enacted version of the bill provides $424 million in FY2008 ESF and $102.5 million in FY2009 ESF, for a total of $526.5 million, $483.3 million less than the combined ESF request. The supplemental provides a total for both years of $175 million for PRT programs; $132.5 million for the CSP; $107.5 million for the CAP; $10 million for infrastructure maintenance; $25 million for Provincial Economic Growth (agriculture and microcredit); $70 million for National Capacity Development; and $7.5 million for the Marla Ruzicka War Victims Fund.
A third significant difference between the first version of the House bill and the version enacted on June 30 is the range of conditions placed on economic aid. The bill maintains prohibitions on prison construction and an enterprise fund. It withholds funding on infrastructure maintenance ($10 million) until the Department of State certifies that Iraq has entered into and begun to implement an asset transfer agreement, including an Iraqi agreement to maintain U.S.-funded infrastructure. It releases no more than 40% of rule of law (INCLE) funding until the State Department reports that an anti-corruption strategy has been developed and is being implemented by the Iraq government. It withholds all PRT operating expenses and program funds until the State Department reports on a strategy for winding down and closing out the PRTs, on the costs of the PRT program, expenses, security, and any Iraq contribution, and on the future costs and placement of U.S. consulates in Iraq. The bill withholds half of the Community Stabilization Program (CSP) appropriation until the State Department certifies that USAID is implementing the Inspector General's recommendations regarding accountability.
Finally, the bill only releases its foreign operations appropriations for Iraq to the extent that U.S. funds are "matched" on a dollar-for-dollar basis by Iraq. Exceptions are made for democracy and human rights programs, the Community Action Program and other civil society efforts, demining, and assistance to refugees and displaced persons. The Secretary of State must submit a report by end of September 2008 with amounts obligated and expended by the Government of Iraq.

		Afghanistan Reconstruction Assistance11

			Background

Afghanistan's political transition was completed with the convening of a parliament in December 2005, but in 2006 insurgent threats to Afghanistan's government escalated to the point that some experts began questioning the success of U.S. stabilization efforts. In the political process, a new constitution was adopted in January 2004, successful presidential elections were held on October 9, 2004, and parliamentary elections took place on September 18, 2005. The parliament has become an arena for factions that have fought each other for nearly three decades to debate and peacefully resolve differences. Afghan citizens have started to enjoy new personal freedoms, particularly in the northern and western regions of the country, that were forbidden under the Taliban. Women are beginning to participate in economic and political life, including as ministers, provincial governors, and senior levels of the new parliament. The next elections are planned for 2009.
The insurgency, led by remnants of the former Taliban regime, escalated in 2006, after several years in which it appeared the Taliban was mostly defeated. U.S. and NATO military commanders have had recent successes in counter-insurgency operations, but the Taliban continues to present a considerable threat to peace and security in parts of Afghanistan. Some experts argue that slow reconstruction, corruption, and the failure to extend Afghan government authority into rural areas and provinces, particularly in the south and east, have contributed to the Taliban resurgence. Political leadership in the more stable northern part of the country have registered concerns about distribution of reconstruction funding. In addition, narcotics trafficking is resisting counter-measures, and independent militias remain throughout the country, although many have been disarmed. The Afghan government and U.S. officials have said that some Taliban commanders are operating across the border from Pakistan, putting them outside the reach of U.S./NATO forces in Afghanistan. In 2007, the Administration unveiled the Reconstruction Opportunity Zones (ROZ) in Afghanistan and the border regions with Pakistan, an initiative to stimulate economic activity in underdeveloped, isolated regions.
The United States and partner stabilization measures focus on strengthening the central government and its security forces and on promoting reconstruction while combating the renewed insurgent challenge. As part of this effort, the international community has been running PRTs to secure reconstruction. Despite these efforts, weak provincial governance is seen as a key obstacle to a democratic Afghanistan and continues to pose a threat to reconstruction and stabilization efforts.

			The FY2008 Original and Amended Emergency Supplemental Request

The Administration requested $339 million in ESF for Afghanistan reconstruction assistance in the FY2008 emergency supplemental in February 2007. Other parts of the supplement request for Afghanistan included increases in embassy operations and security. The Administration amended the FY2008 supplemental request in October 2007 for a total request of $839 million for reconstruction, which included several provisions intended to continue U.S. efforts to stabilize Afghanistan and continue economic reconstruction efforts. The amended supplemental included additional funding for democratic governance and reconstruction efforts to continue security and development strategy that would be allocated as follows:
$275 million to strengthen provincial governance and responsiveness to the Afghan people. Funding would support a wide range of programs, preparation activities for the 2009 election and ongoing programs, such as the National Solidarity Program ($40 million), the Afghanistan Reconstruction Fund ($25 million), and the Provincial Governance Fund ($50 million); $50 million as part of an effort to invest in basic social services, such as health and education, particularly in rural areas; and $170 million for economic growth and infrastructure, including the development of power sector projects ($115 million); road projects ($50 million) focused on those segments that are of strategic military importance and provide key connections between the central and provincial government capitals; and funding to support Reconstruction Opportunity Zones ($5 million) in designated economically isolated areas and to create employment alternatives.
In addition to ESF funding, the amended FY2008 request included
$5 million in Non-proliferation, Anti-terrorism, Demining and Related Programs (NADR) to support the Afghan leadership through the Presidential Protection Service.
The FY2008 consolidated appropriations act funded most government operations for which regular FY2008 appropriations bills—11 in all—had not been enacted. Although emergency funds for military operations in Afghanistan were appropriated as part of the bridge supplemental in the consolidated appropriations act (which included $1.35 billion in DOD funds for Afghan security forces), the FY2008 supplemental request of $839 for reconstruction was not approved.

			The FY2009 Regular and Supplemental Request

The regular FY2009 Administration request for Afghanistan totals $1.054 billion. On May 2, 2008, the Administration issued an amendment to the regular FY2009 budget request which would provide supplemental funding for Afghanistan totaling $924.9 million, including $749.9 million for ESF and $175 million for INCLE.

			Congressional Action

The version of the supplemental appropriations bill approved by the House on June 19, by the Senate June 26, and then signed by the President June 30 provides $859 million for Afghanistan in FY2008 supplemental appropriations for ESF, which is $25 million above the request of $834 million, with allocations as follows:
$360 million to strengthen governance, including preparation activities for the 2009 elections ($70 million), governance and capacity building ($165 million), support for the National Solidarity Program ($65 million), Civilian Assistance ($10 million), and PRTs ($50 million); $77 million for basic social services, such as health and education ($75 million) and NATO/ISAF Post-Operations Humanitarian Relief Fund ($2 million); and $422 million for economic growth and infrastructure, including power sector projects ($150 million), roads ($200 million), rural development ($65 million), and trade and investment ($7 million).
In addition to ESF funding, the final supplemental bill includes
$35 million for International Narcotics Control and Law Enforcement (INCLE) to support programs to strengthen narcotics eradication efforts in Afghanistan, including police training and development of the justice sector, with specific reporting requirements for the State Department to the Committees on Appropriations (not later than 180 days after the of this act) on levels of counternarcotics cooperation by the Government of Afghanistan; and $5 million in Non-proliferation, Anti-terrorism, Demining and Related Programs (NADR) to support the Afghan leadership through the Presidential Protection Service.
For FY2009 the House,. Senate, and enacted bills provide $455 million for ESF assistance for Afghanistan, $294.9 million lower than requested. The enacted version of the bill specifies allocations of
$20 million for the National Solidarity Program; not less than $35 million for the 2009 elections; and not less than $35 million for rural development and alternative livelihoods.
The final bill also provides that funding "shall be programmed in a manner consistent with the Afghan National Development Strategy. The final bill does not include $175 million for INCLE, which was in the Administration's original request.
In addition, the enacted version of the bill provides $76.7 million for Afghanistan in the Embassy, Construction, and Maintenance account, as in earlier versions passed by the House and Senate. In addition, the final bill provides up to $5 million to be transferred to the Special Inspector General for Afghanistan Reconstruction for reconstruction oversight, which earlier House and Senate versions also had approved. Like earlier House and Senate versions, the enacted version of the bill also provides an additional amount of $41.3 million for Embassy Security, Construction, and Maintenance to become available on October 1, 2008.

		Pakistan14

The Federally Administered Tribal Areas (FATA) of Pakistan are considered strategically important to combating terrorism, while continued terrorist and militant activities in the frontier region remain a threat to the United States and its interests in Afghanistan. The Government of Pakistan has developed a FATA Sustainable Development Plan to be implemented over 10 years. In support of this plan, the State Department and the U.S. Agency for International Development have put forward a five-year $750 million development assistance strategy for the frontier region (a pledge of $150 million per year) that complements the Government of Pakistan's plan. The U.S. objectives are to improve economic and social conditions in the FATA in order to address the region's use by terrorists and militants. Programs would include governance, health and education services, and economic development, such as agricultural productivity, infrastructure rehabilitation, credit, and vocational training.
On November 3, 2007, President Musharraf imposed emergency rule and suspended Pakistan's constitution. In light of these events, the Administration announced a review of U.S. assistance. However, no action was taken in 2007 and in February 2008, Pakistan held what was reported to be a reasonably credible national election that seated a new civilian government. On April 9, 2008, Secretary of State Condoleezza Rice determined that a democratically elected government had taken office in Pakistan on March 25, 2008, which permitted the removal of coup-related sanctions on Pakistan and the resumption of assistance.

			The FY2008 Original and Amended Supplemental Request

In the FY2008 regular budget, the President asked for $90 million for the frontier region development plan, which left a gap of $60 million in the overall U.S. pledge of $150 million. The Administration did not request funding for Pakistan in its original FY2008 emergency supplemental request in February 2007. The October 2007 FY2008 amended supplemental request included $60 million for ESF. This would address the funding gap and meet the full pledge as follows: Investment in governance and planning ($13 million); health and education programs ($15 million); and local economic development ($32 million). The $60 million emergency supplemental request is in addition to the regular appropriations from various accounts in the FY2008 budget.

			The FY2009 Regular and Supplemental Request

The Administration requested $826.3 million for Pakistan in its regular FY2009 budget request. On May 2, 2008, the Administration requested additional FY2009 supplemental funds for Pakistan totaling $170.0 million, of which $70 million was in the Economic Support Fund account for "district elections support, good governance programs, and rural health and basic education initiatives in conflict regions outside of the Federally Administered Tribal Areas" and $100 million was in the Foreign Military Financing account for assistance "to reduce terrorist and militant activity in the Afghanistan-Pakistan border region including efforts to train and equip Pakistan's Frontier Corps."

			Congressional Action

The House May 15-passed bill provided no FY2008 supplemental funding for Pakistan, while the Senate May 22-passed bill provided the requested amount of $60 million for ESF for that year. The final enacted bill provides no funds for Pakistan in the FY2008 supplemental. For the FY2009 supplemental, the House May 15-passed bill included $175 million in ESF funds for Pakistan, and the Senate May 22-passed bill provided $150 million. The final bill provides $150 million in ESF funds for Pakistan in the FY2009 supplemental.

		Sudan16

			FY2008 Supplemental Request

No funding was requested for Sudan in the original FY2008 emergency supplemental in February 2007. The Administration sought a total of $868.6 million for Sudan in the October 2007 emergency supplemental amendment, most of which was for humanitarian and peacekeeping support in the Darfur region. Major elements of the FY2008 amended emergency supplemental request included the following:
A $70 million request in ESF for Sudan to support upcoming national elections that are to take place before July 2009, as determined in the 2005 Comprehensive Peace Agreement between north and south Sudan. The assistance will focus on strengthening political parties, drafting the electoral law, supporting an electoral commission, promoting civic education, and supporting election-related institutions and processes. The United Nations estimates that the elections could cost nearly $400 million because of the logistical hurdles in conducting elections in a post-conflict environment. $70 million remains in the pending FY2008 emergency supplemental; and $723.6 million in support of the African Union/United Nations Hybrid Operation in Darfur (UNAMID) in the amended FY2008 supplemental. In the consolidated appropriations act, $468 million was appropriated; $333.6 remains in the pending FY2008 emergency supplemental.

			FY2009 Regular and Supplemental Request

It the FY2009 regular foreign operations request, the Administration included a total of $332.6 million for Sudan. The May 2008 FY2009 supplemental request included funds for diplomatic security and for USAID operations in Sudan. Of a total of $1.1 billion requested for the Department of State for Diplomatic and Consular programs, $36 million was requested "for security and operational support in Sudan and Somalia, and to support several diplomatic Middle East Peace Missions." And of $60 million requested for USAID operational expenses, $2.9 million was request for operations in Sudan.

			Congressional Action

In the FY2008 consolidated appropriations act, P.L. 110-161 , Sudan received $334.8 million in the regular FY2008 foreign operations budget and also $468 million for the African Union/United Nations Hybrid Operation in Darfur (UNAMID) peacekeeping mission. For FY2008 UNAMID operations, the House May 15, the Senate May 22, and the final enacted bills all provide $333.6 million in the State Department's U.S. Contributions to International Peacekeeping (CIPA) account. The final bill also provides $40.1 million "to meet unmet fiscal year 2008 assessed dues for the international peacekeeping missions to countries such as the Democratic Republic of the Congo, Cote d'Ivoire, Haiti, Liberia, and Sudan." The House, Senate, and final bills also provide $45 million for ESF assistance to Sudan for the FY2008 supplemental, less than the Administration's requested amount of $70 million. For the FY2009 supplemental, the Administration did not make a request for ESF funding for Sudan. Nevertheless, both House and Senate bills provided $25 million for ESF, and the final bill concurs. The enacted bill also provides $10 million in FY2008 and $10 million in FY2009, offset by equivalent rescissions, in the International Narcotics Control and Law Enforcement (INCLE) account to support police units in Sudan. And it includes $15 million in FY2009 funds for State Department Diplomatic and Consular Activities for personnel and security requirements in Sudan.
In addition, a general provision, Section 1411, in the final bill provides that money appropriated earlier in the FY2008 consolidated appropriations act, P.L. 110-161 or in previous appropriations bills, may be used to provide helicopters and related equipment to the African Union/United Nations peacekeeping operation in Darfur.

		Other Humanitarian Assistance18

Although proposed aid packages for specific countries anticipate and identify some humanitarian needs, the Administration also seeks funding for what it describes as unmet or unforeseen humanitarian needs.

			Migration and Refugee Assistance (MRA)

The Administration's FY2008 emergency supplemental request, as amended through October 2007, asked for $230 million for Migration and Refugee Assistance (MRA) for anticipated and unanticipated refugee and migration emergencies, of which $195 million was requested for humanitarian assistance to Iraqi refugees. In addition, $35 million was requested for the emergency needs of Palestinian refugees in Gaza and West Bank, and for Palestinian refugee camps in Lebanon. In the Consolidated Appropriations Act ( P.L. 110-161 ), $200 million was appropriated for MRA of which $195 was allocated for Iraqi refugees, leaving $30 million (of the original $230 million request) as part of the pending FY2008 supplemental request for assistance to Iraqi refugees. The Administration requested $191 million in the FY2009 supplemental request.
For the FY2008 supplemental, the June 30 enacted version of H.R. 2642 provides $315 million for MRA, which is $285 million above the request, to meet global refugee needs worldwide, including for Iraqi refugees in Jordan, Syria, Lebanon, Turkey, Egypt, and the region, and for Internally Displaced Persons (IDPs) in Iraq. These funds may also be used to support the admissions costs of Iraqi refugees and other requirements of the Iraqi refugee program. The amended bill raises concerns about the level of resources the Government of Iraq has so far dedicated to assisting Iraqi refugees and IDPs. The bill also refers to the welfare and security of the Lao Hmong in the Thai military camp in Petchaboon, northern Thailand.
The final June 30 version of the bill also provides $350 million for MRA in the FY2009 supplemental, nearly 50% more than requested, to respond to urgent humanitarian and refugee admissions requirements, including assistance for refugees from Iraq, Afghanistan, and Central Africa.

			Emergency Refugee and Migration Assistance Fund (ERMA)

The Administration did not request funding for ERMA in the FY2008 or FY2009 supplemental requests. For FY2008, the enacted legislation includes $31 million for ERMA, but it does not provide additional funds in FY2009.

			International Disaster Assistance (IDA)

The Administration's regular FY2008 budget request included $80 million for IDA. In the Consolidated Appropriations Act ( P.L. 110-161 ), $110 million was appropriated for emergency humanitarian assistance. The Administration's FY2008 supplemental request did not include funding for IDA. The Administration requested $45 million in its FY2009 supplemental request.
For FY2008, the June 30 enacted version of H.R. 2642 includes $220 million for IDA for urgent humanitarian crises worldwide, including in Burma, Bangladesh, the People's Republic of China, and other countries affected by the ongoing food crisis. For FY2009, the bill includes $200 million for IDA for ongoing humanitarian needs in Bangladesh, Burma, and the People's Republic of China. In addition, some of these funds may be allocated to assist IDPs in Iraq and Afghanistan and be used in response to the international food crisis.

		Food Security and Food Aid

The October 2007 amendment included $350 million in additional P.L. 480 - Title II assistance to meet emergency food needs in the Darfur region of Sudan and eastern Chad and elsewhere worldwide, including places such as southern Africa, and the Horn of Africa and Kenya.
In April 2008, Senators Durbin and Casey proposed adding $200 million in response to recent global increases in food prices. On May 1, the President announced a new request for $770 million in FY2009 emergency supplemental funding for food-related international aid, including
$395 million for P.L. 480 Title II emergency food assistance; $225 million for U.S. Agency for International Development (USAID) International Disaster Assistance (IDA), mainly for Africa, for local and regional procurement of food abroad and for other humanitarian needs created by high food prices; $150 million for the Development Assistance (DA) account for food security and improved production in insecure countries.
The enacted legislation provides for P.L. 480 more than double ($850 million) the amount requested ($350 million) by the Administration for the FY2008 supplemental. Also, for FY2008 is an additional $20 million for food security assistance within DA or IDA accounts. For the FY2009 supplemental, the final bill provides $395 million for P.L. 480 and another $200 for other food security assistance.

		Mérida Initiative

In its October 2007 supplemental budget amendment, the Administration included $550 million for the Mérida Initiative, a multi-year plan for U.S. counterdrug and anticrime assistance to Mexico and Central America. The initiative is aimed at helping the Mexican and Central American governments combat drug trafficking, gangs, and other criminal organizations. Of the $550 million in proposed supplemental assistance, Mexico would receive $500 million and Central America would receive $50 million.
On May 14, 2008, the House Committee on Foreign Affairs approved a bill, H.R. 6028 (Berman), which would authorize $1.6 billion over three years, FY2008-FY2010, for the Mexico-Central America Mérida Initiative. In legislative action on H.R. 2642 , the second FY2008 supplemental appropriations measure, the House May-15 passed version of the bill included $400 million for Mexico and $61.5 million for Central America, Haiti, and the Dominican Republic. The Senate version of H.R. 2642 , as amended on May 22, 2008, provided $350 million for Mexico and $100 million for Central America, Haiti, and the Dominican Republic. Both versions had human rights conditions, some of which the Mexican government has objected to on the grounds that they would violate Mexico's national sovereignty.
The final, June 30 enacted version of H.R. 2642 provides $465 million in FY2008 supplemental funding for the Mérida Initiative. Of that total, $400 million is for Mexico and $65 million (a slight increase from the earlier House bill) for Central America, Haiti, and the Dominican Republic. The compromise language in the House-amended bill reduces the amount of funding subject to human rights conditions, from 25% to 15%, and softens the language of those conditions.

	Domestic Programs

In addition to funding for defense and international affairs, the Administration's original FY2008 supplemental request included a limited amount of funding for domestic programs, including counter-terrorism-related programs of the Justice Department particularly the FBI. Along with its regular FY2009 budget, the Administration requested emergency FY2009 appropriations of $5.8 billion for Gulf Coast hurricane protection measures carried out by the Corps of Engineers. Individual agencies, including the Census Bureau, the Federal Prison System, and the U.S. Marshals office, also reported shortfalls in funds to the appropriations committees.
In action on the 2 nd FY2008 supplemental, H.R. 2642 , the House and Senate supplemental bills chambers provided requested funding for these programs. In addition, the Senate bill added $4.6 billion for hurricane and other disaster relief programs, $1.2 billion for a science R&D initiative across several agencies, $1 billion for low income energy assistance, $590 million for state and local law enforcement grants, and $400 million for Secure Rural Schools.
Also, most significantly, both the House and the Senate approved three major measures that the Administration did not request. The are
an expansion of veterans' educational benefits, initially estimated to cost $52 billion over the next ten years; extended unemployment benefits, initially estimated to cost a total of about $11 billion over ten years, net of reduced payments in future years; and a moratorium on new Medicaid rules that would reduce payments to the states, for which the House and Senate supplemental bills include $450 million in FY2008 and $1.15 billion in FY2009. The Senate bill also provides $80 million in FY2008 and $75 million in FY2009 for increases in the SCHIP children's health insurance program net of offsetting savings from limiting Medicare payments to new specialty hospitals.
The following sections provide background on some of the major congressional additions.

		Expansion of Montgomery GI Bill Education Benefits23

Both the House- and Senate-passed bills included provisions that would enhance veterans' educational benefits. The benefit enhancements were based on the Post-9/11 Veterans Educational Assistance Act of 2008 ( S. 22 ), sponsored by Senator Webb, which has broad bipartisan support, with 56 co-sponsors in the Senate; and the House companion bill, H.R. 5740 , sponsored by Representative Mitchell, which has 261 cosponsors.
S. 22 and H.R. 5740 would offer 36 months of tuition (limited to in-state tuition charged at the most expensive public institution in the state in which the veteran is enrolled), a monthly stipend to cover living expenses (based on average housing prices in the area in which the veteran is enrolled), and a $1,000 annual stipend for books and required educational expenses. Provisions for funds for tutorial assistance, licensing, and certification tests are also included. The bills would apply to active duty, Reserve, and National Guard members who serve some period of active duty beginning on or after September 11, 2001. Servicemembers and veterans who serve 36 months on active duty would be eligible for full benefits. Individuals who serve less than 36 months on active duty would be eligible for benefits calculated as a percentage of the total maximum benefits.
The bills also establish a new program under which the government would match dollar for dollar (up to 50% of the tuition difference) any voluntary additional contributions to veterans from institutions whose tuition is more expensive than the maximum educational assistance provided under the bills.
Differing views on the pros and cons of S. 22 were offered at a hearing before the Senate Committee on Veterans' Affairs on May 9, 2007. Senator Webb argued that S. 22 was comparable to the post-World War II GI bill, would lead to similar economic growth and expansion, and would also have a positive effect on military recruitment and on the readjustment experience of veterans. In the same hearing, Daniel Cooper, the Department of Veterans' Affairs (VA) Under Secretary for Benefits, stated the VA's opposition, criticizing the bill's complexity, cost, and administrative burden. He also argued that it might lead to lower rates of reenlistment in the military services.

			The Graham alternative

An alternative to S. 22 and H.R. 5740 was proposed by Senator Graham on April 29, 2008. S. 2938 , the Enhancement of Recruitment, Retention, and Readjustment Through Education Act of 2008, proposed somewhat more limited increases in GI Bill educational benefits for servicemembers and veterans. For individuals with 12 or more years of active duty service, the benefits would be $1,650 per month in FY2009, in addition to a $500 annual stipend for books and supplies (for those attending on at least a half-time basis). As under the current Montgomery GI Bill (MGIB), servicemembers would have accept a pay reduction of $100 per month for the first 12 months of pay, the benefits would be for 36 months and would have to be used within 10 years of discharge or release from active duty, and provisions for tutorial assistance and licensing and certification tests are included. In addition, active duty servicemembers would be able to use up to $6,000 per year of educational benefits to repay federal student loans, and eligibility would be extended to certain individuals not currently eligible for MGIB, including service academy graduates and Senior Reserve Officers' Training Corps officers (under some conditions and with some stipulations).
The bill also proposed a matching grants program, the 'College Patriots Grant Program,' in which up to an additional $3,000 per year could be paid by the Department of Veterans Affairs in return for schools, through the use of institutional or other non-federal aid, making a matching reduction in cost of attendance for a servicemember.
Additionally, S. 2938 included a transferability of benefits provision. Servicemembers would be allowed to transfer up to half of their education benefits to dependents after six years of service and to transfer all of their education benefits after 12 years of service. Under existing law, the different service branches were authorized to operate limited transferability programs, but only the Army offers one at this time. The Army's program allowed servicemembers in designated critical skills areas with at least six years of service who re-enlist for at least four years to transfer up to 18 months, or half, of their educational benefits to dependents. President Bush proposed expanding the transferability of veterans' educational benefits to dependents in his State of the Union address and repeated it in his May 8 address commemorating Military Spouse Day.

			PAYGO, Military Retention, and Transferability Issues

The GI bill enhancements became major issue in congressional consideration of the FY2008 supplemental, holding up action on the entire measure for some time. In the House, members of the Democratic "Blue Dog" caucus initially warned that they would not support a rule on the bill because the cost was not offset as the rules of the House required. At the beginning of the 110 th Congress, the new Democratic majority agreed to changes in House rules to require that increases in mandatory spending or cuts in revenues be paid for either by cuts in other mandatory programs or by increases in revenues. These requirements, which are based on provisions initially included in the Budget Enforcement Act of 1990, are known as "pay as you go" or PAYGO rules. The House leadership subsequently agreed to support an income tax surcharge as an offset to the costs of the bill. The Senate, however, did not concur.
In addition, the Defense Department was consistently critical of the Webb and Mitchell bill because of concern that it might weaken retention of military personnel. Because the bill would provide full benefits to servicemembers after as little as 36 months of service, DOD officials feared the program would encourage personnel to leave for college rather than to reenlist in the military. Secretary of Defense Gates raised these issues in an April 29 letter to Senator Levin and in a Pentagon press conference on May 8, at which Chairman of the Joint Chiefs, Admiral Michael Mullen, echoed his concerns.
In the May 8 press conference, Secretary Gates and Admiral Mullen both emphasized their preference, as well, for a bill that would permit servicemembers to transfer educational benefits to family members. On May 6, President Bush announced that he was sending legislation to Congress to permit benefit transfers as well.

			Congressional Action

The May 15 House-passed version of the FY2008/FY2009 supplemental included expanded GI bill benefits as in the original Webb/Mitchell proposals. The bill also included a measure that would raise an estimated $52.3 billion in revenues through FY2008 by imposing a surcharge on the tax bills of individuals earning over $500,000 a year and couples earning over $1 million. The Senate approved a similar expansion of benefits in its May 22-passed version of the bill, but did not agree to an offsetting increase in revenues.
Although House Blue Dog Democrats insisted on offsetting the cost of expanded GI Bill benefits it to the very end, the House leadership ultimately decided not to include offsets in the amendments brought to the floor on June 19—and only 12 Representatives voted against Amendment # 2 that included the GI Bill expansion. The final version of H.R. 2642 , as passed by the House on June 19 and the Senate on June 26, includes a version of the initial Webb/Mitchell expansion of veterans educational benefits, with a provision added to allow benefits to be transferred to spouses or other dependents, as the White House had urged. The inclusion of a transfer provision increased the estimated cost by $11.6 billion, to a total of $63.8 billion from FY2008 through FY2018.

		Hurricane Katrina Repairs and Coastal Louisiana Restoration

The Administration's FY2009 budget included a request for $5.761 billion in emergency supplemental funds for the Army Corps of Engineers for hurricane protection programs on the Gulf Coast. The Corps is responsible for much of the repair and fortification of the hurricane protection system of coastal Louisiana, particularly in the greater New Orleans area. Since Hurricane Katrina, most of the Corps' work on the region's hurricane protection system has been funded through emergency supplemental appropriations, not through the annual appropriations process. Congress has provided about $7 billion in emergency funding to date.
The Administration estimated that the $7 billion in previously appropriated funds were insufficient to complete required measures because of increased costs, improved data on costs, and other factors. The Corps anticipated that available funds would be used by the end of FY2008, but that much remaining work was required to reduce the hurricane flooding risk to the New Orleans area to a 100-year level of protection (i.e., 1% probability of flooding in any given year) and to restore and complete hurricane protection in surrounding areas to previously authorized levels of protection by 2011.

			Congressional Action

The House and Senate differed significantly on emergency funding for hurricane related programs. Both bills provided $5.761 billion in emergency FY2009 funding for the Corps of Engineers, as the Administration requested. The Senate-passed bill provided $4.6 billion in net additional funding for hurricane and other natural disaster-related programs. Senate additions included $3.0 billion more than requested for the Corps of Engineers, $500 million for wildland fire fighting, $451 million for the Emergency Highway Relief program, $350 million for emergency Medicare and Medicaid services, and $146 million, offset by rescissions, for housing programs and community development block grants.
After the Senate approved its version of the supplemental on May 22, large rain storms caused extensive flooding in many parts of the Midwest. In response, the White House informally urged Congress to add $1.8 billion or more to the supplemental to replenish emergency accounts expected to be depleted by flood-related federal relief and recovery expenditures. The House added about $2.7 billion for flood relief to the June 19-passed version of the bill, which the Senate approved on June 26 and the President signed on June 30. The final bill did not, however, included the $4.6 billion that the Senate had added. The final bill provides $8.4 billion for disaster relief, as opposed to $5.8 billion in the request and the initial House bill and $10.4 billion in the Senate May 22-passed bill.

		The Census and Other Domestic Issues

Several other, smaller domestic programs also received funding in the pending supplemental.

			Decennial Census

As a result of newly discovered difficulties with equipment planned to be used in various aspects of the 2010 Decennial Census, the Census Bureau faced substantial shortfalls in funding for FY2008. At hearings, the Secretary of Commerce stated that the shortfall for FY2008 would be between $160-$230 million, which the agency proposed to pay for through internal transfers within the Department of Commerce. Both the House- and Senate-passed supplemental bills provided $210 million in emergency FY2008 supplemental appropriations for the Bureau of the Census, and that amount is included in the final, enacted bill.

			Other additions

Other agencies also reported shortfalls of funds to the appropriations committees. The initial May 15 House-passed bill included $178 million to make up shortfalls in the federal prison system, and the May 22 Senate-passed bill included that amount and also added $50 million for the Federal Marshals Service and $275 million for Food and Drug Administration enforcement activities. The final, enacted bill includes $178 million for prisons and $150 million for the FDA.

		Other Senate Additions of Funding for Domestic Programs

In all, excluding FY2008 and FY2009 costs of extended unemployment compensation, enhanced GI Bill education benefits, and the delay of Medicaid rules, the May 15 House-passed bill included $6.6 billion for domestic programs, the May 22 Senate-passed bill $15.1 billion, and the final, enacted bill $10.3 billion. Of the Senate additions to the House bill, $4.6 billion was for disaster recovery programs. The remaining Senate additions included
a $1.2 billion science initiative that provides $200 million for the NASA return to flight program, $200 million for the National Science Foundation, $400 million for Department of Energy defense and non-defense cleanup and science programs, and $400 million for the National Institutes of Health, $1 billion for the Low-Income Heating Emergency Assistance Program (LIHEAP); $590 million for state and local law enforcement assistance grants; $400 million for the Secure Rural Schools homeland security program.
The final, enacted bill included $2.7 billion more than the initial request and the initial House bill for disaster recovery. That amount was for accounts expected to be used in response to Midwest floods. The final bill also added to the initial House bill $400 million for science programs, and, as noted earlier, $150 million for the Food and Drug Administration. In all, however, the final bill did not included nearly as much as the Senate bill for unrequested domestic programs.
Appendix A. Status of FY2008 Supplemental Funding Through December 2007
Status of FY2008 Supplemental Funding
During the first session of the 110 th Congress, which ended on December 31, 2007, the Administration requested $196.5 billion in emergency supplemental appropriations for Fiscal Year (FY) 2008, including $189.3 billion for military operations, $6.9 billion for international affairs, and $325 million for other purposes. Through the end of December, Congress had approved $86.8 billion of the total requested for defense and $2.4 billion for international affairs, of which the State Department calculated that $1.5 billion was for requested programs. Of the President's total emergency request, $102.5 billion for defense and $5.4 billion for international affairs remained outstanding.
For defense, much of the remaining requested funding was to repair, replace, and upgrade weapons and other equipment used in the war. For foreign operations, remaining funding included additional sums for reconstruction assistance to Iraq and Afghanistan and for a major new counter-narcotics initiative in Mexico and Central America. For State Department operations, outstanding requests included additional amounts for Diplomatic and Consular Program security upgrades and for Contributions to International Peacekeeping Activities in Darfur and elsewhere.
Congressional Action on FY2008 Supplemental Appropriations Through December 2007
Administration Requests
Between February and October of 2007, the Administration submitted requests for FY2008 emergency supplemental appropriations in three blocks.
Along with the regular FY2008 budget that the White House sent to Congress on February 5, 2007, the Administration requested $141.7 billion in emergency supplemental funding for the Defense Department, $3.3 billion for the State Department and international affairs, and $325 million for other agencies. By submitting the defense request along with the President's FY2008 budget, the Administration complied with Section 1008 of the FY2007 national defense authorization act ( P.L. 109-364 ), which required the President's budget to included a request for estimated full year costs of operations in Iraq and Afghanistan and a detailed justification of the funds. The request constituted a Defense Department estimate of the full year costs of continuing operations in Iraq and Afghanistan at about the same pace as in 2006. The Defense Department acknowledged, however, that the estimate was only a rough, straight-line projection of current costs. By the time the budget was submitted, the Administration was proposing a surge in troops to Iraq that was not reflected in the budget, and it was expected that the Administration would later provide revised cost projections. These were submitted in October. On July 31, 2007,the White House requested an additional $5.3 billion for the Department of Defense to procure, outfit, and deploy 1,520 Mine Resistant Ambush Protected (MRAP) vehicles for the Army and Marine Corps. On October 22, 2007, the President proposed an amendment to the FY2008 budget requesting an additional $45.9 billion in emergency funding for military operations, economic and reconstruction assistance, embassy security, and other activities mainly related to ongoing conflicts in Iraq, Afghanistan, and elsewhere. The request included $42.3 billion for the Department of Defense for military operations and $3.6 billion for international affairs programs.
In all, the Administration requested $195.6 billion in emergency supplemental appropriations for FY2008, mainly for military operations in Iraq, Afghanistan and elsewhere and for related foreign affairs programs.
Congressional Action
Congressional action on FY2008 emergency supplemental funding began in earnest in September 2007 and was not completed until shortly before Christmas.
At the end of September, Congress included $5.2 billion in emergency funding for Mine Resistant Ambush Protected (MRAP) vehicles ($5.3 billion was requested in July) in a provision attached to the first FY2008 continuing resolution, H.J.Res. 52 , that the President signed on September 29, P.L. 110-92 . On November 8, 2007, the House and Senate approved a conference agreement on the FY2008 defense appropriations bill, H.R. 3222 , and the President signed the bill into law, P.L. 110-116 , on November 13. The measure provided $460 billion for baseline Defense Department activities in FY2008, including $27.4 billion for Army and $4.8 billion for Marine Corps operation and maintenance, which may be used to finance both peacetime activities and military operations abroad. The bill also provided an additional $11.6 billion in emergency funding for MRAP vehicles. Except for the MRAP money, however, the bill did not include funding to cover additional costs associated with ongoing military operations in Iraq, Afghanistan, and elsewhere. On November 14, 2007, by a vote of 218-203, the House approved the "Orderly and Responsible Iraq Redeployment Appropriations Act, 2008," H.R. 4156 , providing $50 billion for U.S. military operations in Iraq, Afghanistan, and elsewhere. The bill included enough money in Army and Marine Corps operating accounts to sustain military operations in Iraq and elsewhere through about April 2008. It also (1) required the President to commence the withdrawal of U.S. forces from Iraq within 30 days of enactment of the legislation and to provide within 60 days a plan for withdrawing most troops from Iraq by December 15, 2008; (2) limited the mission of remaining U.S. forces in Iraq to force protection, training, and pursuit of international terrorists; (3) prohibited deployment of units that are not fully trained and equipped; and (4) extended prohibitions on torture to all U.S. government agencies. On November 16, 2007, by a vote of 53-45, with 60 votes required, the Senate refused to close debate on a motion to proceed to consideration of H.R. 4156 as passed by the House, effectively killing the measure. The Senate also rejected, by a vote of 45-53, a motion to proceed to consideration of H.R. 2340 , a substitute offered by Senator McConnell, to provide $70 billion for the Defense Department without requiring withdrawal from Iraq. (Ultimately, however, with some revisions in the allocation of funds, the McConnell amendment was approved as part of the final consolidated appropriations act—see below.) Meanwhile, in a November 15, 2007, Pentagon press conference, Secretary of Defense Robert Gates warned that the Army and Marine Corps would have to begin implementing steps to limit operations unless Congress approved additional funding very soon. Without additional money, he said, the Army would have to cease operations at all Army bases by mid-February 2008, which would require furloughs of about 100,000 government employees and a like number of contractor personnel. Plans would have to begin to be implemented in mid-December, he said. On November 20, the Defense Department announced that it was transferring $4.5 billion to the Army and to the Joint IED Defeat Organization to extend their operations. The Army, DOD said, would only be able to operate with available funds, including the transfer, until February 23, 2008. Senior defense officials continued to warn that the Army and Marine Corps would have to halt all but essential operations very soon unless Congress approved additional funding. On December 17, 2007, the House brought up the foreign operations appropriations bill, H.R. 2764 , that had earlier been passed by the House and then amended by the Senate, as a vehicle for FY2008 "omnibus" or "consolidated" appropriations. The House approved two amendments to the Senate-passed bill. The first amendment, approved by a vote of 253-154, struck the Senate foreign operations language and inserted the text of conference agreements on 11 of the 12 FY2008 appropriations bills. In all, it provided $485 billion in regular and emergency appropriations for programs covered by all of the regular, annual appropriations bills except for defense, for which appropriations had already been enacted. The second amendment, approved by a vote of 206-201, provided $31 billion in emergency defense appropriations, mostly restricted to Operation Enduring Freedom (OEF), which encompasses operations in Afghanistan and elsewhere, excluding Iraq. Funding for Army and Marine Corps operation and maintenance was made available only for OEF, except for amounts for force protection that could be allocated to any area. On December 18, 2007, the Senate took up the House-passed consolidated appropriations bill and, by a vote of 70-25, adopted an amendment by Senator McConnell to delete the House-passed $31 billion for OEF and to provide, instead, $70 billion in emergency supplemental appropriations for the Department of Defense for overseas operations, without limits on where the money could be used and without requiring a withdrawal of forces from Iraq. On December 19, 2007, the House considered H.R. 2764 as amended by the Senate. By a vote of 272-142, the House approved a motion to agree to the Senate amendment to the House-passed bill, thus clearing the measure for the President. The President signed the bill into law, P.L. 110-161 , on December 26.
Remaining FY2008 and Additional FY2009 Defense Request
The Administration requested a total of $189.3 billion in emergency FY2008 supplemental appropriations for the Department of Defense. Through December 2007, Congress had approved $86.8 billion, which leaves $102.5 billion still pending. Since December, the Defense Department has made some adjustments in its budget request. Table 1 shows by title and account (1) total FY2008 supplemental funding requested for DOD through the October 22, 2007, budget amendment; (2) the amount Congress has approved to date; (3) adjustments to the remaining amounts that the Defense Department proposed—though not with a formal budget amendment—as of the end of March, 2008, and (4) the remaining adjusted DOD budget request.
In preparing a bill to provide remaining FY2008 defense funds, the congressional appropriations committees decided to add a "bridge fund" for FY2009 that would provide enough money to sustain both day-to-day peacetime activities and war-related operations until well into calendar year 2009. This would leave it to the next Administration to decide what it will request in total supplemental funding to cover war costs based on any planned changes in strategy. The committees discussed with the Defense Department how to allocate funds among accounts so as to sustain critical operations through about June of 2009.
On May 2, the Office of Management and Budget formally sent Congress a request for $70 billion in FY2009 supplemental funding, of which $66 billion was for defense and intelligence and $4 billion was for international affairs. Along with the pending FY2008 supplemental request, Table A -1 shows the breakdown of the May 2 Administration request for a $66 billion defense bridge fund. CRS calculates that a bridge fund of about $57 billion, if allocated by account to maximize the amount of time critical operating accounts would last, could allow the services to operate through the end of July, 2009, at DOD's planned monthly rates of obligations.
Appendix B. Summary Funding Tables

Summary:
On June 30, 2008, President Bush signed into law a bill, H.R. 2642 (P.L. 110-252), that makes supplemental appropriations for FY2008 and FY2009, extends unemployment payments, and expands veterans' educational benefits. The House approved the measure on June 19 and the Senate on June 26. As enacted, the bill reflects compromises with the White House on several key issues. It extends unemployment benefits for 13 weeks but not 26, allows veterans' educational benefits to be transferred to dependents, does not include an offsetting tax increase, limits other domestic spending, and delays implementation of six, rather than seven, new Medicaid rules. The amended bill also drops most Iraq-related policy provisions that had been in earlier versions. In all, the bill provides $183.5 billion in supplemental appropriations, including $2.65 billion of newly added funds to respond to Midwest floods. Extended unemployment benefits are estimated to cost a net of $10 billion over ten years and enhanced veterans educational benefits $63 billion.
Earlier, the House approved an initial version of the bill on May 15, 2008. Procedurally, the House took up H.R. 2642, a bill on a different topic, and considered three amendments. By a vote of 141-149, with 132 Republicans voting "present," the House rejected an amendment providing $162.5 billion in FY2008 and FY2009 for military operations. It adopted a second amendment setting out Iraq-related policies, including a requirement that combat forces be withdrawn from Iraq within 18 months. And it approved a third amendment to expand veterans' educational benefits offset by a tax surcharge; extend unemployment compensation; delay new Medicaid regulations; and provide $21 billion in supplemental appropriations.
On May 22, 2008, the Senate approved an amended version of the bill providing $194 billion in supplemental funding. The Senate-passed bill included $162.5 billion for defense and about $8 billion more than the House bill for domestic programs. The bill expanded veterans' educational benefits without an offset and limited Medicare payments to new specialty hospitals. On key roll calls, the Senate rejected by 34-63 an amendment to provide defense funding and to establish Iraq-related policies; approved by 75-22 an amendment to provide defense funding without policy restrictions; and approved by 70-26 an amendment to fund domestic, international affairs, and military construction programs.
During its first session, the 110th Congress approved FY2008 emergency supplemental appropriations of $86.8 billion for the Department of Defense and $2.4 billion for international affairs. This left unresolved Administration requests for $102.5 billion for defense and $5.4 billion for international affairs. For congressional action on FY2008 supplemental funding through December 2007, see CRS Report RL34278, FY2008 Supplemental Appropriations for Global War on Terror Military Operations, International Affairs, and Other Purposes, which will not be updated further. This CRS report, RL34451, reviews congressional action on remaining FY2008 and additional FY2009 supplemental funding.