Congress to decide soon on 2012 budget cuts for the State Department and the Agency for International Development

US President
Barack H. Obama

There are two distant positions in the Congress. The Republican Party with the majority in the House of Representatives proposes a 20 percent reduction for the budget while the Democratic Party, controlling the Senate recommends a 10 percent cut from last year's total budget keeping the overall sum unvaried.
While Congress hardly proposes to dent the components of US aid that are tied to military programs, hardest hit will be food aid, global health programs, the United States Agency for International Development (USAID) and official development assistance (water filtration plants, etc).
When President Obama took office, the administration proposed a 10% increase in foreign aid for this budget cycle, up to $59bn – but still less than 2% of the total federal budget.A key part of the report on foreign aid the  First Quadrennial Diplomacy and Development Review focuses on pursuing a long-term strategy rather than going with the latest development fad and constantly switching gears.
In an interview with The Associated Press, as reported by the Huffington Post, the Secretary State Hillary Clinton challenged the deficit-cutting reductions in foreign aid. The Secretary is waging a campaign to educate many in Congress about the work of the State Department and the U.S. Agency for International Development. She highlighted the department's significance in an economy hard hit by recession and she also drown attention to the common misperception that foreign aid accounts for 20 percent of the government budget. while in reality it accounts only for less than the 2 percent of federal spending.
Lawmakers say that in a time of increasing deficits and fiscal austerity, all federal spending faces the budget knife. Rep. Kay Granger, R-Texas, who heads the House Appropriations subcommittee that oversees the State Department's budget and foreign aid, said she understood Clinton's frustration, but all departments and government agencies are facing cuts.

Secretary of State Hillary Clinton (left)
meeting with  Republican congresswoman Kay Granger last March 2011

Slashing aid may seem like a no-brainer for congressional budget-cutters, but aid isn't charity; it's business. Ask China. It's not every day that foreign aid is front page news in the United States, but it is because slashing foreign aid has become one of the few areas of bipartisanship in the US Congress. Such an act of retreat is short-sighted. Given that China and other emerging markets are ramping up their overseas development assistance, the US should be revamping and increasing aid, not cutting. US Congress, according to various opinion makers would show more strength if they trimmed the defence budget and passed the millionaire tax proposal.
While the United States is in the midst of reducing its foreign aid, China has been increasing its contributions. The Chinese Government has just released last April its much-awaited White Paper on foreign aid, marking the most comprehensive (official English) collation of information and an important step in China’s efforts towards greater transparency in its aid policy. China has lent at least $110bn between 2009 and 2010 – more aid than all World Bank loans combined during that period. Furthermore, China is implementing that longer-term strategy that Obama said the US needs.
Meanwhile, China has been building export-processing zones, ports, railways and other more growth- and job-friendly projects. What is more, China's aid has far fewer strings attached than the US's does, and is increasingly favoured abroad as a result. That is, in part, a pity, because according to a new report by US-China Economic and Security Review Commission, China's aid to the developing world does not adhere to international standards such as governmental reform and human rights protection; this undermines efforts by the United States to initiate such reforms in Burma, Venezuela and Sudan.

More reading at
The Self-Inflicted Wound of US Foreign Aid Cuts
Financial Resources for Foreign Aid - China State Council Information Office
The real question about overseas aid - New Statesman
Foreign aid with Chinese characteristics: China releases first White Paper on aid
Hillary Clinton Challenges Foreign Aid Cuts - Huffington Post
Overseas contingency operations - White House website