March 12, 2019

Analysis of the Administration’s FY20 International Affairs Budget Request


Once Again International Affairs Programs Slashed, Out of Step with Today’s Global Realities
Analysis of the Administration’s FY20 International Affairs Budget Request

In an increasingly turbulent world characterized by emerging hotspots and great power competition, the Administration released its FY20 budget request today that calls for dangerous and disproportionate cuts to nearly a quarter of America’s global footprint. For the third year in a row, the budget prioritizes defense spending, while keeping the Administration’s promise to reduce spending for non-defense agencies. And once again, the State Department, USAID, and other development agencies are targeted for one of the most disproportionate cuts.

The FY20 request proposes to reduce funding for the International Affairs Budget by 24% compared to the FY19 enacted level. While this is movement in the right direction compared to previous calls to cut 30% or more, thanks to Secretary of State Mike Pompeo’s efforts, this slight increase of 1.7% from the Administration’s FY19 request still remains far below the $56.1 billion Congress provided in its final FY19 spending package and is out of step with today’s global realities.

Specifically, the Administration’s FY20 request includes a total of $42.7 billion in base funding for the International Affairs Budget. Similar to last year’s request, the budget includes no Overseas Contingency Operations (OCO) funding for international affairs programs while at the same time proposing a substantial increase in OCO resources for the Department of Defense. It is important to note that Congress provided $8 billion in OCO, accounting for 14% of the total International Affairs Budget, in FY19. To maintain FY19 funding levels for development and diplomacy in FY20, Congress will need to ensure that any decrease to OCO is offset by an equivalent increase to the base budget.

Congressional Response
For the past two years, Members of Congress on both sides of the aisle have viewed the Administration’s proposals to slash international affairs spending as “dead on arrival” and have taken decisive action to enact strong funding levels for these critical programs. Before it was even released, the FY20 budget request has already been met with bipartisan opposition in the new Congress – from the Freedom Caucus to the Progressive Caucus.

Combatant Commanders Speak Out
Yesterday, more than a dozen former Commanders from all six of our nation’s regional combatant commands – the Middle East, Latin America, Europe, Africa, the Pacific, and North America – released a statement urging Congress to continue to protect resources for America’s International Affairs Budget, asserting that “Doing so is critical to keeping our nation safe and prosperous.” These retired military leaders join America’s current combatant commanders who have testified before Congress in recent days on the strategic importance of the State Department, USAID, and other development agencies as key partners around the world to protect U.S. interests and values. Their voices add to a powerful chorus of influential business, faith, and military leaders who have spoken out over the past two years in support of strong resources for our nation’s civilian development and diplomacy tools.

The consequences of these proposed cuts to America’s security and economic interests, and our values, could not be more clear – whether it is combating violence and instability, competing against China and other rivals, responding to the largest number of displaced people in human history, or fighting the second largest Ebola outbreak ever. The USGLC released a statement urging Congress to reject, for a third time, the Administration’s proposal and fund the International Affairs Budget at $60 billion in FY20 to keep pace with today’s growing global challenges.

Key Takeaways

Below are seven key takeaways from the Administration’s FY20 International Affairs Budget request.

1. Budget Proposal Undermines Civilian National Security Tools

Despite growing global threats, for three consecutive years the Administration’s budget requests have not resourced the full arsenal of America’s national security tools. The proposed 5% increase to military spending above the FY19 enacted level stands in stark contrast to the proposed 24% cut to development and diplomacy, and breaks with the longstanding bipartisan consensus around the need to strengthen resources for both military and civilian tools. Additionally, the Administration’s use of Overseas Contingency Operations (OCO) funding to achieve this defense spending increase – while zeroing out international affairs OCO despite the clear need for greater civilian resources – will likely draw scrutiny from Capitol Hill.

2. Great Power Competition Drives Budget Priorities

Reflecting the goals outlined in the State Department and USAID’s Joint Strategic Plan released in February 2018, the FY20 budget once again prioritizes America’s economic prosperity and aspires to “renew America’s competitive advantage.” To achieve this goal, the budget prioritizes several programs and strategies to counter Chinese and Russian influence and expand U.S. exports, trade, and investment opportunities – including $1.2 billion to support the Administration’s Indo-Pacific Strategy, $50 million for the new Prosper Africa initiative to bolster U.S.-African trade and investment opportunities, and funding to mobilize private sector capital in the new Development Finance Corporation. While many of these initiatives have garnered bipartisan support on Capitol Hill, expect questions about the sufficiency of requested resources to meet intended goals.

3. Reform Proposals Single Out Humanitarian Assistance

Reflecting a long-standing debate about reducing duplication in humanitarian functions, the budget’s proposal to consolidate the four existing humanitarian assistance accounts is certain to attract pushback from Capitol Hill and questions from stakeholders. Specifically, the request consolidates Migration and Refugee Assistance (MRA), International Disaster Assistance (IDA), Emergency Refugee and Migration Assistance (ERMA), and Title II, PL 480 Food for Peace into a new International Humanitarian Assistance (IHA) account administered by USAID and under the foreign policy direction of the Secretary of State. Additionally, and despite today’s unprecedented humanitarian challenges, the merger is accompanied by a dramatic 34% cut to overall funding for humanitarian assistance compared to FY19 enacted levels. Additional details below.

4. Greater Emphasis on Burden-Sharing and Flexibility

With proposed cuts to overall non-defense discretionary spending well below FY19 enacted levels, the budget relies on increased burden-sharing between the U.S. government and its foreign government and private sector partners as well as new flexibility in how the Administration allocates limited funds to address emerging or unanticipated global challenges and opportunities. When it comes to burden-sharing, initiatives such as the consolidated International Humanitarian Assistance (IHA) account, a proposed new structure for the Global Fund Pledge, and USAID’s Domestic Resources Mobilization (DRM) program focus on the need to leverage funds from others including foreign partners, developing countries, and the private sector. Efforts to increase flexibility include a new $175 million Diplomatic Progress Fund to respond to diplomatic breakthroughs and the inclusion of $500 million in transfer authority to “support a democratic transition” in Venezuela and “respond to related needs in the region.”

5. Women’s Economic Empowerment Front and Center

Following the successful launch of the Administration’s Women’s Global Development and Prosperity Initiative (W-GDP) led by Ivanka Trump, the FY20 budget includes $100 million for a new fund focused on empowering women economically around the world. This request builds on the initial $50 million investment of unobligated FY18 USAID funds to ensure women have equal access to economic resources. While this emphasis on global women’s empowerment has strong bipartisan support on Capitol Hill, Members will likely raise concerns about how overall cuts to the State Department and USAID will hurt women in the developing world.

6. Given Sizable Overall Cuts, Winners and Losers

With yet another steep cut to the topline, nearly every program and account in the International Affairs Budget would see its funding reduced compared to FY19 enacted levels. While some of the proposed cuts mirror those included in the Administration’s previous two budget requests, there are some differences worth noting that provide insight into how the Administration’s priorities have shifted over the past year.

Examples of programs where resources were added compared to the FY19 request include:

  • The Indo-Pacific region receives a staggering 90% increase in funding in the FY20 request compared to the FY19 request.
  • Funding to countering Russian influence in Europe and Eurasia is increased by 17% in the FY20 request compared to the FY19 request.
  • The Transition Initiatives account sees a 29% increase in the FY20 request compared to the FY19 request.

Examples of programs where resources were cut compared to the FY19 request include:

  • The U.S. contribution to the Global Environment Facility (GEF), which was cut by 51% in the FY19 request, is zeroed out in the FY20 request.
  • U.S. contributions to UN peacekeeping operations are cut by 27% in the FY20 request compared to 13% in the FY19 request.
  • Funding for international family planning sees a 61% cut in the FY20 request compared to 50% in the FY19 request.

7. Core Operating Budgets for the State Department and USAID Reduced

Under the Administration’s proposal, the State Department and USAID’s main operating accounts – which fund America’s diplomatic presence around the world and the management, monitoring, and evaluation of U.S. foreign assistance – would see 8% and 7% cuts respectively, compared to FY19 enacted levels. Despite the cuts, both agencies were able to restore some staffing reductions proposed in the FY19 request – although it’s not clear whether this would return staffing to levels required by Congress in the final FY19 spending package. The budget also proposes to reduce funding for diplomatic (8%) and embassy (23%) security – areas where Congress has repeatedly reinstated funding.