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U.S. spending to prevent new 'fiscal cliff'
Posted By Steve Peacock On 01/08/2013 @ 9:54 pm In Front Page,Money,Politics,U.S.,World | No Comments
Congress and the Obama administration have averted, for now, plunging the nation over the so-called “fiscal cliff” by postponing spending cuts and raising taxes on American families by $620 billion and confirming plans to try to bill taxpayers for another $1 trillion.
Now the White House is spending millions collected from those same taxpayers to avoid another “fiscal cliff” – this time in the Hashemite Kingdom of Jordan.
The payments are going to contractors who are tasked with keeping Jordan and other similarly situated nations from falling off those financial precipices.
Part of the solution rests in more privatization of government services as well as in the creation of Public-Private-Partnerships, according to the U.S. Agency for International Development.
In Jordan, for example, citizen uprisings have led the government to run a budget deficit of nearly $1.5 billion, equivalent to about 12 percent of its GDP, the agency says.
The U.S. has proposed that Jordan “merge, eliminate, or reclassify 22 autonomous public institutions” as a cost-saving measure.
The Obama administration sees itself having a stake in this reform because, as the Congressional Research Service describes that relationship, Jordan is a critical ally in light of its role in the Arab-Israeli peace process.
Additionally, its geographic position, “wedged between Israel, Syria, Iraq, and Saudi Arabia, has made it vulnerable to the strategic designs of its more powerful neighbors,” CRS says in a 2012 report made public by the Federation of American Scientists, “but has also given Jordan an important role as a buffer between these potential adversaries.”
Maintaining the stability of Jordan’s monarchy, CRS says, “is a key [U.S.] policy priority, particularly as political change makes the region less predictable.”
The issuance of government debt, combined with financial help from Persian Gulf and international allies, has helped to finance the Jordanian deficit. But given the state of the global economy – compounded by rising Jordanian government borrowing costs and higher interest rates – USAID says, “there is no guarantee that additional resources will continue to flow from donors.”
There is no guarantee, that is, except from the U.S., which recently extended for another year the contract for the Jordan Fiscal Reform Project II. USAID sees FRP II as “a key part of Jordan’s economic reform efforts to address the negative impacts of the Arab Spring.”
USAID exercised the final one-year option through October 2014 with vendor DAI/Nathan Group, enabling the company to continue advising the government of Jordan. The firm in 2009 secured a five-year $38.5 million contract to implement the Government Financial Management Information System, or GFMIS, for Jordan.
USAID on Jan. 6 said, however, that the new contract extension – which raises the ceiling to $43 million – is necessary as it also expands the project’s scope of work, according to a Justification for Other Than Full and Open Competition, or JOFOC, document that WND discovered via routine database research.
The extension comes within months of a U.S. agreement to provide an additional $360 million in assistance to Jordan. That federal infusion includes $184 million in cash devoted to relieving Jordan’s “fiscal pressures” and another $29 million “to support King Abdullah’s vision for political development,” according to an agency announcement.
The U.S. overall has reduced aid to Jordan under Obama, diving from $938 million in base and supplemental appropriations in FY 2008 and decreasing each subsequent year. This reduction likewise applies to White House’s $670 million request for FY 2013.
Expanding the scope of FRP II allows DAI/Nathan Group to shift its focus to the creation of a more ideal regulatory environment for PPPs and privatization.
Such an environment, the agency anticipates, will reduce Jordanian government expenditures while improving the quality of governmental services. These developments subsequently will spark economic growth.
Ending FRP II prematurely, USAID maintains, could reduce confidence between the two governments as well as with international financial entities such as the IMF and the World Bank.
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