Congress and the Administration have increased their interest in foreign assistance programs in the post-9/11 environment, prompting a re-examination of the purposes of assistance, and how best to achieve those objectives. The renewed interest occurs as the Administration has initiated many new programs that introduced performance-based assistance in the form of the Millennium Challenge Account, and sector-specific assistance, largely directed at health programs in Africa. The Administration also unveiled in early 2006 a restructuring of foreign aid programs administered by the Department of State and the U.S. Agency for International Development (USAID). The restructuring is meant to link aid programs with strategic objectives and to provide more coordination and coherence. In addition, a number of recent studies have made specific recommendations for both policy and organizational reforms. Congress has been considering these reforms as part of the annual appropriations process. The 111 th Congress may consider some far-reaching reforms in authorizing legislation in 2009 at a time when the Obama Administration has expressed interest in aid reform. The current structure of U.S. foreign aid entities and the conduct and effectiveness of aid programs have come under increasing scrutiny on a number of fronts. Programs have been described as fragmented and cumbersome, and lacking in flexibility, responsiveness, and transparency. Aid policy is considered lacking in focus and coherence. There is ambiguity with regard to who develops aid policy, not just between the State Department and USAID, but among the 26 other government departments, agencies, and offices that provide some type of foreign aid. In general, some disillusionment with foreign aid results from a perceived lack of progress in some countries that have been aid recipients for decades. Other criticism results from an outdated aid apparatus developed during the Cold War that has been reformed in a piecemeal fashion, often adding conflicting and competing priorities, and that has not been updated to reflect current world conditions and challenges. Specific points of contention include: the level of U.S. assistance, usually in relation to other international donors, and the composition of aid, generally the ratio of humanitarian and development aid to security assistance, by region; the coordination of aid among programs in USAID, the State Department, and independent agencies, such as the Millennium Challenge Corporation, the Trade and Development Agency, the Overseas Private Investment Corporation, and several regionally focused funds, such as the Inter-American Foundation, and the African Development Foundation; the coordination of aid among numerous domestic agencies, such as the Department of Health and Human Services (HHS) and the Center for Disease Control (CDC), that administer some type of foreign assistance program; the coordination of bilateral and multilateral assistance; the coordination of aid with other international donors; the involvement of the Department of Defense in aid programs that some observers believe should be carried out by civilian agencies; the perceived ambiguity with regard to who sets foreign aid policy among the State Department and USAID; the effectiveness of aid programs, especially in light of a steady diminution of technical expertise at USAID, and the increasing reliance on contractors both in Washington and in the field to carry out aid programs; and the lack of a foreign assistance strategy to guide and justify the provision of aid generally, and one that deals with programs, specifically, that responds simultaneously to recipient country needs and U.S. priorities. Some of these issues are longstanding; others are responses to more recent changes, such as new aid initiatives, new offices administering assistance, and a general increase in the foreign aid budget. The State Department and USAID are the lead agencies that provide foreign assistance. Both are funded in the annual State Department and Foreign Operations appropriations bills. In FY2007, the State Department controlled about 64% of bilateral and multilateral assistance, while USAID accounted for approximately 20%. The remainder is managed by other independent agencies such as the Millennium Challenge Corporation, the Trade and Development Agency, and the Peace Corps. Some funds are co-managed by the State Department and USAID, such as the Economic Support Fund, although major policy decisions are often retained by State. Some observers maintain that restructuring initiatives beginning in 2006 have further removed USAID from policy decisions. The accounts managed by USAID largely pertain to long-term development, health programs, and disaster relief, although the Office of the Global AIDS Coordinator, which administers the largest U.S. initiative on human immunodeficiency virus and acquired immunodeficiency syndrome (HIV/AIDS), is located in the State Department. The State Department aid portfolio, in addition to HIV/AIDS funds, comprises accounts related to military assistance (implemented by the Department of Defense), narcotics and law enforcement, migration and refugees, anti-terrorism, peacekeeping operations, and accounts focusing on democratic transitions in states of the former Soviet Union, and eastern Europe and the Baltics. Prior to 2006 reforms (see section below on recent reforms), there was little coordination at the budget and policy development level between State and USAID. There are, however, a number of independent agencies administering foreign assistance that remain outside of State and USAID, and that are also funded in the annual foreign operations appropriations bills. These include the Millennium Challenge Corporation, the Trade and Development Agency, the Peace Corps, the Overseas Private Investment Corporation, and the Export-Import Bank. These agencies develop their own budgets, and critics argue that their activities are not well coordinated with those of State and USAID. In addition to these entities, there are aid programs administered by approximately 14 different departments and agencies. The largest portfolio belongs to the Department of Defense, which manages programs providing humanitarian assistance, civic action activities, training and equipping of foreign militaries, and even some health-related assistance. (See page 27 for a complete list of agencies reporting assistance in calendar year 2006.) These organizations have provided as much as 40% in official development assistance in recent years. Each of these agencies develops its own budget and those funds are appropriated in domestic funding bills. These programs remain outside of the jurisdiction of foreign operations appropriations subcommittees and foreign affairs authorizing committees that have oversight of foreign assistance. In addition, there is no central reporting mechanism for these programs, making it difficult to ascertain the full amount that the United States is providing in foreign assistance in any given year. Proponents of aid reform point to this situation as one of the main symptoms of a fragmented aid structure that impedes coherent, government-wide foreign assistance policy and implementation. Since the events of 9/11, amounts requested and approved by Congress for foreign assistance generally have trended upward. The foreign operations FY2009 budget request is $26.1 billion, or an increase of 8.8% over the $24 billion estimate (including supplements only within P.L. 110-161 ) in foreign assistance programs for FY2008. The actual FY2007 funding level for FY2007, including supplemental funds, totals $26.4 billion. The estimated level for FY2008, approved in the FY2008 Consolidated Appropriations Act, Division J ( H.R. 2764 , P.L. 110-161 ), represents 1.2% of the total U.S. budget. Part of the trend in increases is due to the greater use of supplemental appropriations measures to fund international affairs spending, including foreign assistance. Table 1 provides funding levels for foreign operations since FY1999 in both current and constant dollars, and includes both regular and supplemental funds. (It is difficult to ascertain with much precision the appropriated levels for programs located in domestic agencies' budgets. See Figure 6 for an indication of these funding channels.) The main statutory basis of foreign aid programs is the Foreign Assistance Authorization Act of 1961 (FAA), as amended (P.L. 87-195; 22 U.S.C. 2151). The FAA has been amended numerous times since its initial enactment, but it has not been comprehensively reauthorized since 1985. Instead, Congress has enacted a series of statutes to authorize specific aid programs. These include the FREEDOM Support Act ( P.L. 102-511 ); the Support for East European Democracy (SEED) Act ( P.L. 109-102 ); the Afghanistan Freedom Support Act of 2002 P.L. 107-327 ; the U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003 ( P.L. 108-25 ); the Millennium Challenge Act of 2003 ( P.L. 108-199 ), and various Security Assistance Acts since 1999. Over the years, most aid reform studies have recommended that the FAA and related statutes be replaced with new legislation that would update the statutory basis to eliminate the emphasis on the Cold War and communism and reflect current international conditions, thereby bringing coherence to numerous aid programs. Since the start of U.S. foreign aid programs, the rationale for such assistance has been posited in terms of national security, humanitarianism, and commercial interest. From a beginning in rebuilding Europe after World War II and assisting newly independent states in Africa, aid programs reflected Cold War tensions that continued through the 1980s. U.S. assistance programs were viewed in a national security context, as a way to prevent the incursion of Soviet influence in Latin America, Southeast Asia, and Africa. In the immediate aftermath of the dissolution of the Soviet Union, aid programs lost their Cold War underpinnings. With the end of the Cold War, foreign aid programs reflected less of a strategic focus on a global scale, and instead responded to regional issues such as Middle East peace initiatives, supporting the transition to democracy of eastern Europe and republics of the former Soviet Union, addressing international drug production and trafficking in the Andes, and stemming illegal immigration. Foreign aid lost its anti-Communism rationale, and decreasing foreign aid budgets in the 1990s reflected the lack of an overarching theme. Even during periods when aid programs were justified in the context of the Cold War, and more recently in the context of anti-terrorism, foreign aid programs also were justified for commercial and humanitarian reasons.