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[Congressional Record Volume 154, Number 176 (Wednesday, November 19, 2008)]
[Senate]
[Pages S10634-S10635]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                    MILLENNIUM CHALLENGE CORPORATION

  Mr. LEAHY. Mr. President, as Chairman of the State and Foreign 
Operations Subcommittee, I want to take a moment to speak about the 
budget of the Millennium Challenge Corporation, MCC.
  The fiscal year 2009 State and Foreign Operations bill, reported by 
the Appropriations Committee on July 18, 2008, recommends $254 million 
for the MCC. Since this is substantially less than the $2 billion 
requested by the President, it was predictable that the Senate 
committee's action would cause concerns among the MCC and many of its 
supporters, as well as governments that seek MCC funding. Those 
concerns have been expressed and I want to address them briefly today. 
While differences are inevitable in the legislative process, it is 
important that such differences not be based on a misunderstanding or 
confusion about the facts.
  During the past several months, I have heard that some of those who 
have complained about the Senate committee's action have suggested that 
it was motivated by an antipathy towards the MCC and a desire to close 
it down or dramatically curtail its functions. That is incorrect.
  To begin with, we have commended the MCC for what it has accomplished 
since its inception 4 years ago. Several compacts are beginning to show 
tangible results, including the implementation of agriculture, 
infrastructure and other projects. Ambassador John Danilovich, the 
MCC's CEO, has been a strong leader at a critical time, and I commend 
him as well as deputy CEO Rodney Bent. They have both done a fine job 
of representing the MCC, both here and abroad.
  Earlier this year, when the subcommittee was dividing up funds 
allocated to State and Foreign Operations, we faced many difficult 
choices. Our fiscal year 2009 allocation was $2 billion below the 
President's budget request, and the President underfunded or failed to 
fund many critical programs of interest to both Democrats and 
Republicans. For example, he cut funding for family planning/
reproductive health by over $100 million below the fiscal year 2008 
level. He cut the U.S. contribution to the global fund to fight AIDS, 
TB and malaria by $350 million. He shortchanged humanitarian relief 
programs, peacekeeping, democracy programs, environment and energy 
programs. There are many other examples.
  We also considered the fact that Congress had appropriated $7.5 
billion for the MCC, and by July 18 only $235 million had been 
disbursed of which a significant portion was for administrative 
expenses. While we made clear that we were not advocating faster 
disbursements, we do not support additional compacts until more of the 
funds we have already appropriated produce sustainable results.
  Many compacts were slow getting off of the ground, in some cases 
because the MCC rightly insisted that governments make further 
refinements, or because the contracting process took longer than 
expected. These kinds of delays are predictable and do not reflect 
poorly on the MCC. Unfortunately, I have heard that some MCC personnel 
in country are being urged to disburse funds more quickly. As we have 
said before, this is not our intent, particularly if it risks short-
cutting procurement guidelines or other safeguards, or otherwise 
negatively affects the quality of implementation of compacts.
  I do not know what the optimal rate of disbursement is for the MCC. 
It may be disbursing funds at the right rate.

[[Page S10635]]

By pointing out the rate of disbursement the committee has simply 
sought to explain why, in part, we are unable to support hundreds of 
millions of dollars for new compacts when compacts that are several 
years old have only disbursed a fraction of their funds. More time is 
required to review the effectiveness of the 18 compacts that already 
exist. I am told that the MCC's board of directors will meet in 
December to discuss which additional countries will be eligible to 
apply for compact funding in fiscal year 2009. Since we will not have a 
final fiscal year 2009 funding level for the MCC until late January at 
the earliest, I urge board members to act judiciously and to keep in 
mind that eligibility does not assure that a compact will be funded.
  The many competing demands placed on the State and Foreign Operations 
Appropriations bill will only increase over the next few years, given 
the global financial crisis, which will have direct and indirect 
consequences for the world's poorest countries. We also expect to be 
asked to increase funding for international HIV/AIDS programs due to 
the recent PEPFAR reauthorization.
  The MCC is a new and innovative form of assistance, and we want it to 
succeed. I was involved in drafting the authorizing legislation that 
established the MCC, and I have said many times that I strongly support 
the concept of providing governments with incentives to combat 
corruption, improve governance, and address the basic needs of their 
people. If the MCC shows that it can achieve the results we all want, 
it could become a model for other forms of foreign assistance.
  But we cannot ignore other pressing short-term and long-term needs. 
Some have claimed that not providing another billion dollars for the 
MCC in fiscal year 2009 will delay progress toward long-term 
development goals. I would argue that funding to address the acute 
personnel shortages at the Department of State and USAID, which the 
President's budget largely ignores, is a priority for effective U.S. 
diplomacy and development assistance programs now and in the future.
  It is also notable that a number of governments that were awarded 
compacts are not performing as expected. According to the 2009 Country 
Scorecard Index, 5 of the 8 MCC lower middle income countries that have 
compacts have failed 8 of 17 indicators. Similarly, with the reports of 
systemic voter fraud in the recent Nicaraguan elections, I am concerned 
that President Ortega's government may have jeopardized the MCC compact 
in that country.
  The future of the MCC is now up to the Obama administration, and I 
expect President-elect Obama will explore all options for how the MCC 
should by managed and implemented, as he will for other Federal 
programs. However, before major adjustments, if any, take place, 
Congress has to finish the remaining fiscal year 2009 spending bills.
  Senator Gregg and I will be working with our colleagues in the House. 
There are several areas in the State and Foreign Operations bill where 
the Senate and House positions differ, and the MCC is one obvious 
example. Until then, I would encourage those who care about the MCC, as 
many of us do, to focus on ensuring that funds already appropriated are 
used effectively.

                          ____________________
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