Mutual Consent: Not Mutual And Not Consent
Reports emerged in early April that President Trump’s new Department of Government Efficiency (DOGE) might propose selective suspension of some federal program and services funding under free association treaties with the Marshall Islands, Micronesia and Palau.
Those reports indicated that Elon Musk’s DOGE team decided some federal programs and services funding “mutually agreed” in the “Compact of Free Association” (COFA) may be “clawed back” to reduce excessive discretionary spending and overall budget burden on U.S. taxpayers. It would not be illogical for the DOGE team looking for waste, fraud and abuse to ask questions about domestic forms of COFA assistance to the three Free Associated States (FAS).
Free Associated states are foreign nations
After all, the FAS are foreign nations and Member States in the United Nations. Of course, the counter-argument is that COFA domestic programs directly support U.S. strategic interests in countering China’s efforts to undermine America’s strategic alliance with the COFA nations.
COFA funding is approved by Congress and expended under policy direction of the U.S. State Department, but is subject to budget administration authority of the Department of the Interior. Although any cut-off of COFA federal funding at least for now has been held in abeyance, proposed cuts to some categories of COFA assistance are not precluded legally or as a matter of policy under COFA.
Indeed, any DOGE initiative will confirm that “mutual consent” to some federal programs and services under free association agreements does not and cannot guarantee funding for all COFA federal programs and services. Some COFA economic assistance grants to governments of the three FAS under COFA are “mandatory” spending during the 20 year term of the treaties, pursuant to binding bilateral agreements under international law. In contrast, terms of agreement under COFA on FAS eligibility for some domestic U.S. federal programs and services are “discretionary” and “subject to annual appropriation” by Congress.
That includes critical federal government programs like, for example, the Federal Aviation Administration programs enabling commercial aviation, National Weather Service, FDIC bank deposit insurance and federal education grant assistance to students and schools, as well as other federal benefits. These programs and services are “discretionary” and cannot be guaranteed. Even funding for the U.S. Postal Service was discretionary until made “mandatory” in 2024.
How can agreed-upon funding for free associated states be optional?
To understand why and how it is that some agreed funding is discretionary, it is important to note that constitutionally funding for domestic spending on federal programs services is intended to be equally allocated to Americans in the states. In contrast, Congress and the U.S. Supreme Court have determined that discretionary spending for federal program levels can be different in each territory as determined by Congress. The same is true for the FAS under COFA, because the FAS are not states or territories, but foreign nations that can be treated the same or differently than the states or territories as agreed under COFA.
Under constitutional principles and the COFA treaty, the territories and FAS are not entitled to equal treatment with states. Instead the territories and FAS receive what is available, or, “left over,” after appropriated funds are allocated to the states. That is why, for example, as a territory Puerto Rico gets lower Social Security benefits than the Northern Mariana Islands. In the case of the FAS, that is why the U.S. could end federal programs and services without being in breach of COFA.
Indeed, even as to “mandatory” federal budget spending under any free association agreement based on sovereignty of the FAS, the U.S. could fail to provide assistance that is a promise, commitment and obligation of the U.S. under COFA, and the only remedy for the FAS government would be to terminate COFA! That would trigger a phased transition to full independence with phased reduction of U.S. economic and financial assistance.
The original COFA as proposed by President Reagan in 1984 and approved by Congress in 1986 included a pledge of the “full faith and credit” of the United States for more economic assistance sector grants and commitments under COFA classified as “permanent indefinite appropriations.” That feature was eliminated by State Department in 2003 COFA negotiations, and restoration would be contrary to that legal precedent.
Lessons for Puerto Rico
As former “commonwealth” supporters increasingly consider free association as something close to the “enhanced commonwealth” which the federal government has repeatedly spurned, it’s important to recognize that compacts of free association are treaties between two independent nations. Either side can change or end the relationship at will. That’s the “free” part of “free association.
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