BACKGROUND: The Senate is considering HR 2076, the Departments of Commerce, Justice and State, the Judiciary, and Related Agencies Appropriations Act of 1996; a bill that would cut the State Department's budget, reducing spending for diplomatic and United Nations activities by nearly a quarter. Another measure, the 1996 Foreign Operations appropriations bill, HR 1868, would reduce American foreign aid by nearly one-fifth, and could abolish three international affairs agencies -- the U.S. Information Agency, the Arms Control and Disarmament Agency and the Agency for International Development -- by folding their functions into the State Department.

STATUS: The House passed HR 2076 on July 26 by a vote of 272-151, and referred it to the Senate, where the Senate Appropriations Committee is now considering it. The Senate is also considering HR 1868.

KEY PLAYERS: Senate Appropriations Committee Chairman Mark Hatfield (R-OR), has expressed reservations about the bill, which needs his blessing. Senate Foreign Relations Committee Chairman Jesse Helms (R-NC) is the architect of the plan to reorganize the the international affairs agencies. Secretary of State, Warren Christopher has said the present cuts proposed in the State Department budget would compel him to advise the President to veto the final bill.

PRO: With a massive budget defecit hindering the economy at home, why does America spend so much -- often wastefully -- on other countries? The foreign policy bureaucracy is redundant and inefficient, and many of its functions, as well as the need for costly foreign aid, have been rendered obsolete by the end of the Cold War.

"I thought the American people were more interested in law enforcement and fighting drugs than in building marble palaces and renting long-coats and hats." Sen. Phil Gramm (R-TX)

CON: Rather than obsoleting the need for foreign policy spending, the end of the Cold War makes it as necessary as ever. In a highly unstable world, diplomacy and aid abroad can help to prevent foreign crises before they begin. Nor is it clear how the Republicans are able to defend an increase in the Pentagon's budget -- for war-making -- when they are cutting diplomatic coffers -- peace-making.

"No president could conduct effectively America's foreign policy at these levels." -- Secretary of State Warren Christopher

WHAT'S NEXT: The Senate must pass its versions of the bills, which move to conference with the House. The President has said he will veto a foreign aid bill that includes the reorganization of USIA, ACDA and AID.

INSIDE SCOOP: Many Republicans find foreign operations budgets an attractive target of Republican budget-slashing in part because of a growing isolationist strain within the party. Pointing to foreign-policy mishaps like the intervention in Somalia and potential quagmires like Bosnia, some Republicans argue for less exposure to risk of American troops, and a greater expenditure on problems at home like the federal budget defecit. However, Republicans added to the defense spending request submitted by the President.