From the Congressional Research Services and the US Government Accountability Office (note: two hopes of mine are to get an accountability office & Freedom of Information Act in Egypt) an overview that should illustrate US views on AID to Egypt, how it differs between economic/military and the propensity to cut each type.  Keep in mind, this was during a time when Bush was actively looking to pursue his “freedom agenda” so, if there was any time that they would cut military aid, it would have been then – and you can read below how successful those attempts are.  (It is interesting that almost every proposal to cut USAID to Egypt came from Obey of Wisconsin – wonder why, can’t imagine a large Egyptian constituency there.)  Bottom line is that, if I were SCAF I wouldn't fear a cut to military AID based on current discourse from DoD and State Department, coupled with historical inability of congress to execute on threats!

Before going into the congressional views on USAID – I think this little footnote listed in one of the documents is particularly enlightening:

“According to U.S. defense officials, Egypt only allocates the minimum amount of FMF funds necessary for follow on maintenance, resulting in inadequate support for weapon system sustainment.”  Couple this with the repeated allegations in wikileaks that the Egyptian military was NOT preparing to face modern day challenges, their focus on private economic enterprises and the reports of Tantawi's inabilities - two conclusions arise:

1.       Our military is probably in disarray (most figures put USAID to military at ~1/3 of total budget – although budgetary figures range quite a bit so if we aren't maintaining those systems then not much of a chance that we are doing a good job with others).

2.       The above is not due to lack of resources or capabilities but rather that the generals in charge today enjoy the economic benefits from these types of deals with the last thing in their minds is fighting a war – let alone with the one country we are allegedly preparing for…

2006 Report:  As you can see from the below, the military aid is safe (one bill had less than 20% approval) whereas economic assistance is  far more likely to be axed – also, when money is needed elsewhere it comes out of Egypt’s economic package, not the military…

An amendment offered on July 15, 2004, to the House FY2005 foreign operations bill (H.R. 4818) would have reduced U.S. military aid to Egypt by $570 million and increased economic aid by the same amount, but the amendment failed by a vote of 131 to 287. An amendment offered on June 28, 2005, to the House FY2006 foreign operations bill (H.R. 3057) would have reduced U.S. military aid to Egypt by $750 million and would have transferred that amount to child survival and health programs managed by USAID. The amendment failed by a recorded vote of 87 to 326.

On May 25, 2006, the House Appropriations Committee in a voice vote rejected an amendment to cut $200 million in military aid to Egypt during markup of H.R. 5522, the FY2007 Foreign Operations Appropriations Bill.  In June 2006, the House narrowly defeated an amendment (198-225) to H.R. 5522 that would have reallocated $100 million in economic aid to Egypt and used it instead to fight AIDS worldwide and to assist the Darfur region of Sudan. Many supporters of the amendment were dismayed by the Egyptian government’s spring 2006 crackdown on pro-democracy activists in Cairo.  Representative David Obey of Wisconsin sponsored both amendments.

2007 Document: For years, Congress has specified in annual Foreign Operations appropriations legislation that ESF funds to Egypt are provided with the understanding that Egypt undertake certain economic reforms and liberalize its economy.  More recently, however, Congress has begun to attach conditions to Egyptian assistance intended to support the political reform process.  The FY2006 Foreign Operations

appropriations (P.L. 109-102), for example, designated $100 million in economic aid for education and democracy and governance programming.  The conference report on the FY2006 spending measure (H.Rept. 109-265) stated that “not less than 50 percent of the funds for democracy, governance and human rights be provided through non-governmental organizations for the purpose of strengthening Egyptian civil society organizations, enhancing their participation in the political process and their ability to promote and monitor human rights.”

Although the House Foreign Operations Subcommittee draft bill fully funds the Administration’s $1.76 billion Egyptian aid package for FY2007, Representative Obey, ranking Member of the Appropriations

Committee, offered an amendment at the full Committee markup to reduce military assistance to Egypt by $200 million.  Under the amendment, a certain portion of military aid would be limited until Egypt improves its record on human rights, detention of democracy activists, election procedures, and other matters.  A Kolbe amendment, that passed by voice vote, rescinded $200 million in previously

appropriated but unspent funds to Egypt until certain financial reform benchmarks were met.  Previously, the Senate voted on May 3 (H.R. 4939; FY2006 Emergency Supplemental Appropriations) to cut $47 million in appropriated economic assistance to Egypt as an offset for additional spending on humanitarian emergencies in Africa and Guatemala.

Also interestingly the 2007 paper covers a crackdown on IRI and NDI:

Many in the Egyptian government appear to feel threatened by the current thrust of U.S. policy and resist some U.S.-advocated changes that seek to empower opposition movements. In June 2006, the  Egyptian government ordered the International Republican Institute (IRI) and the National Democratic Institute (NDI), two U.S. democracy promotion organizations, to halt all activities in Egypt until they

formally registered with the government. According to the group’s officials, they have submitted papers for registration in early July and are waiting for an Egyptian government  response.  In the meantime, their offices are open, but all programmatic activity has come to a halt.  Egypt took this action after the government was reportedly angered by the comments of an IRI employee who gave an interview to a local paper in which she remarked that political reform in Egypt had not been achieved in the past 25 years and that the institute would work to speed up political reform in the country.

 

2011 Paper’s take on USAID views of Egypt’s generals
U.S. democracy assistance also faces competing pressures. On the one hand, some U.S. officials perceive a need for the United States to provide technical assistance to new political forces eager to compete in Egypt’s open political landscape. However, Egypt’s military leaders have vocally condemned long-standing U.S. democracy assistance programs and grants to Egyptian civil society organizations as unwanted meddling in Egyptian affairs. Some observers believe that the military has been deliberately attempting to discredit secular/liberal activists by portraying them as American agents for accepting U.S. technical assistance. Finally, now more than ever U.S. policymakers believe that U.S. military aid is needed to support continued Israeli-Egyptian peace given recent terrorist attacks inside Israel emanating from groups operating in the Sinai Peninsula.

Critics may suggest that the Egyptian military has no alternative to maintaining the peace treaty as it remains qualitatively outmatched by the Israel Defense Forces and Egypt’s fragile fiscal condition could not bear the international isolation that would likely accompany a return to a policy of confrontation with Israel.

Recent fears in 2011 – also, totally around government and not military:

“…would prohibit U.S. security aid to Egypt unless the President certifies that “the Government of Egypt is not directly or indirectly controlled by a foreign terrorist organization, its affiliates or supporters, the Government of Egypt is fully implementing the Israel-Egypt Peace Treaty, and the Government of Egypt is detecting and destroying the smuggling network and tunnels between Egypt and the Gaza Strip.” 

Sources

http://www.fas.org/sgp/crs/mideast/RL32260.pdf
http://fpc.state.gov/documents/organization/124082.pdf
http://www.au.af.mil/au/awc/awcgate/crs/rl33420.pdf
http://www.fas.org/sgp/crs/mideast/RL33003.pdf
http://fpc.state.gov/documents/organization/155979.pdf

 All these reports are by Jeremy M. Sharp – excellent coverage of Egyptian-US relations (with emphasis on financial assistance packages and considerations)

 

 
 
In Egypt, governing authority shifted from the Mubarak regime to the Supreme Council of the Armed Forces (SCAF), a group of military leaders who have dispensed justice through military tribunals, engaged in periodic crackdowns on critical media, raided the offices of civil society organizations, mistreated women activists, and engaged in violence against Christians. While a protracted election process, still under way at year’s end, was conducted with an adherence to fair practices that stood in vivid contrast to the sham polls of the Mubarak regime, the dominant forces in the new parliament will be Islamist parties whose devotion to democracy is open to question. 

As 2011 drew to a close, officials in Egypt made headlines by conducting a series of raids on NGOs that monitor human rights and promote democracy. Most of the targeted organizations were Egyptian; a few were international groups (Freedom House was one of the latter). The authorities were insistent that the raids, which included the seizure of files and computers, were legal and technical in nature. Government officials emphasized and reemphasized that they believed human rights organizations had a role to play in a democratic Egypt. Their actions indicated otherwise.
In fact, the behavior of the Egyptian authorities, now and under Mubarak, reflects a deep-seated hostility to NGOs that support democracy and human rights. This in turn points to a broader institutional continuity between the current Egyptian state and the old regime that will present major obstacles to democratic development in the coming months and years, and similar dynamics may play out in other countries where authoritarian rule is being defied.

http://www.freedomhouse.org/report/freedom-world/freedom-world-2012