USGLC

REFORM, NOT RETREAT

DRACONIAN CUTS TO DIPLOMACY AND INTERNATIONAL ASSISTANCE ARE NOT HOW AMERICA WINS IN THE WORLD

Analysis of the Administration’s FY26 International Affairs Budget Request

June 3, 2025

*Excludes $26.8 billion in emergency funding primarily for Ukraine, Israel, Taiwan, and global humanitarian assistance.
**Includes $2.5 billion in base emergency funding which has not been made available because the Administration chose not to concur with Congress’ emergency designation.
***Assumes $21.6 billion in rescissions of previously appropriated funding.

These staggering reductions are not happening in a vacuum. They come on the heels of four months of executive actions that have resulted in the termination of thousands of international assistance programs, the elimination of the U.S. Agency for International Development (USAID), and the dramatic downsizing of America’s presence in the world – creating critical gaps in our ability to protect U.S. national security, strengthen our economy, and hold ground against America’s rivals, while also placing millions of lives at risk.

In a statement responding to the skinny budget, USGLC President & CEO Liz Schrayer said, “Diplomacy, development, and international assistance are fundamental tools of U.S. national security – not giveaways. A smaller American footprint abroad means we are less prepared to fight disease, hunger, and terror before they migrate to our shores, and it means fewer buyers for American-made products, hitting our farmers and businesses hardest.”

There is broad, bipartisan agreement that U.S. international assistance can work better for the American people – and that strategic reforms to maximize the impact of every dollar are necessary. That is why USGLC released our Blueprint for America to Win in the World with ten actionable ideas to ensure U.S. international assistance protects American interests, strengthens our security, and promotes prosperity at home and abroad.

At the same time, when America’s rivals – China, Russia, Iran, and North Korea – are working to replace U.S. influence around the world, returning to 1940s-level investments is not how America will win. That is why a powerful chorus of bipartisan Members of Congress, current and former military leaders, and influential business, veteran, faith, farmer, and civic leaders from across the country have been calling for smart reform, not retreat.

In the days and weeks ahead, USGLC urges Congress to reject these draconian cuts and work through the appropriations process to advance meaningful reform and modernization while ensuring sufficient resources and capacity for a range of existing and new priorities.

Key Takeaways

Below are nine key takeaways from the Administration’s FY26 International Affairs Budget request. Additional details are provided later in this analysis.

1.    International Affairs Topline: Dramatic and Damaging Reduction

As foreshadowed in the “skinny” budget, the International Affairs Budget receives the deepest cut of all major departments and agencies in the Administration’s FY26 request. A cut of this magnitude impacts nearly every program and account. Additionally, as a percentage of U.S. GDP, funding for the International Affairs Budget would drop to a historic low. Under President Ronald Reagan’s “Peace through Strength” policy, U.S. funding for diplomacy and international assistance reached a historic height of nearly 0.6% and has averaged just under 0.3% for the last decade. If enacted (including rescissions), the Administration’s FY26 request would cut funding to approximately 0.03% of U.S. GDP amid escalating threats from our rivals.

INTERNATIONAL AFFAIRS BUDGET AS PERCENTAGE OF TOTAL GDP FY1977 – FY 2026 (REQUESTED)

2.    Rescissions: Uncertainty Surrounds Proposed Funding

The Administration’s FY26 request includes a proposal to rescind, or cancel, $21.6 billion in funding previously appropriated by Congress. However, the request provides very few specifics on what programs or accounts are proposed for rescission – except for a proposed $1.2 billion rescission from Millennium Challenge Corporation (MCC) programs “that are no longer aligned with Administration priorities.” Expect significant questions and skepticism from both Republicans and Democrats in Congress about the scale and scope of the Administration’s proposed rescissions, which would require Congressional approval to be implemented.

3.    Reorganization: Budget Raises More Questions Than Answers

After moving to formally dissolve USAID in late March, a few weeks later Secretary of State Rubio announced a comprehensive reorganization of the State Department to be completed by July 1, 2025. At the same time, the FY26 budget proposal makes clear that funding considerations related to the reorganization are “not reflected in this request.” As the Administration looks to dramatically reshape America’s diplomatic and international affairs footprint within a matter of weeks, serious questions remain about its ability to successfully implement this restructuring without a deeper understanding of resource needs.

4.    Investment Priorities: Development Finance and Exports

While the FY26 request includes cuts to almost every program and account across the International Affairs Budget, America’s development finance and export agencies are a notable exception. The U.S. Trade and Development Agency (USTDA) and the Export-Import Bank see their funding sustained at FY25 enacted levels. Although the U.S. Development Finance Corporation (DFC) – established during the first Trump Administration with broad bipartisan support in Congress – sees a 19% reduction in discretionary spending, the request includes a substantial $3 billion in mandatory funds for a new revolving fund to “expand use of DFC’s equity tool.” There continues to be strong, bipartisan support for the DFC in Congress, but Members have historically been skeptical of new mandatory spending requests.

5.    Economic and Development Assistance: Replaced by America First Opportunity Fund

The Administration’s FY26 request eliminates the four traditional economic and development assistance accounts, replacing them with a new America First Opportunity Fund (A1OF) equipped with less than one-third of the resources. In line with the Administration’s focus on “reorienting our approach to foreign assistance to one that advances our national interests,” the new Fund would provide broad flexibility for the Administration to respond to a wide range of priorities aligned with its America First foreign policy agenda. Members of Congress are likely to ask tough questions about this new Fund and dramatic cuts, which upend a longstanding bipartisan consensus that development assistance is a critical tool to support long-term growth in developing countries – helping countries achieve self-sufficiency and become important partners for the United States.

6.    Humanitarian Assistance: Cut and Consolidated

In line with the Administration’s intent to consolidate America’s “fragmented humanitarian assistance programs and focusing on crises in which there is a clear, direct nexus to U.S. national interests,” the FY26 request proposes to cut overall funding for humanitarian assistance by 61% (including the elimination of the Food for Peace Program) and consolidate remaining resources into a new State Department-administered International Humanitarian Assistance (IHA) account complemented by a presidentially-directed Emergency Migration and Refugee Assistance (ERMA) Fund. While there is broad, bipartisan agreement that humanitarian assistance can be streamlined to improve efficiency and increase effectiveness, assisting the most vulnerable with a focus on recovery and resilience must continue to be at the core of these efforts.

7.    Global Health: Bipartisan Priorities Significantly Cut or Eliminated

Long a bipartisan priority that has engendered enormous goodwill for the U.S. and support for America’s foreign policy and national security priorities, the FY26 request cuts overall funding for global health by 62%. Among its many damaging impacts, the proposal would eliminate funding for critical areas such as vaccinating children against some of the world’s deadliest diseases, including through Gavi, and would scale back global HIV/AIDS programming to primarily focus on treatment only for existing recipients. Senate Appropriations Chair Susan Collins (R-ME) has already foreshadowed Congress’s deep skepticism over the scope and scale of the Administration’s proposed global health cuts.

8.    Levers of American Influence Drastically Cut or Eliminated

The Administration’s FY26 budget request drastically cuts funding for America’s assessed contributions to the United Nations (UN) and other international organizations by 83% while eliminating funding for voluntary contributions. Additionally, it eliminates funding to support UN peacekeeping missions and cuts other peacekeeping activities by 93%.

The proposal also calls for the elimination – or near elimination – of organizations and agencies that have been critical in advancing U.S. economic, security, and humanitarian interests overseas, including:

• Inter-American Foundation (IAF)
• National Endowment for Democracy (NED)
• U.S. Agency for Global Media (USAGM)
• U.S. Institute of Peace (USIP)

9.    Global Workforce: Operating Budgets on the Chopping Block

Although the Administration’s reorganization remains ongoing, the FY26 request assumes the integration of USAID programs and management resources into State – resulting in the elimination of USAID’s Operating Expenses (OE) account. At the same time, the request still includes a 9% cut to the State Department account that funds personnel and the U.S. diplomatic presence around the world. Bipartisan Members of Congress are likely to ask tough questions about whether the Administration’s request will provide the State Department with sufficient resources to monitor, evaluate, develop, and oversee existing and new programs.

Included in the Analysis

• I. Discretionary Funding: Notable Programs and Policy Issues
• II. What’s Ahead
• III. Additional Information and Resources
• IV. Account-by-Account Details

About This Analysis

This analysis generally compares the Administration’s FY26 request to FY25 enacted levels. In some cases, these comparisons differ from those included in the Administration’s budget materials. This is because, unlike the Administration’s budget materials, the FY25 funding levels used in this analysis include $2.5 billion in base emergency funding enacted by Congress, which the Administration chose not to designate as such and thus is unavailable to be spent. The analysis below notes where the inclusion of this base emergency funding impacts comparisons.

Additionally, the discussion and tables below do not reflect the Administration’s proposed $21.6 billion rescission of previously appropriated funds because the Administration has not specified how most of the rescissions would be distributed across international affairs programs and accounts.

Lastly, in several areas – such as spending by region and sector allocations (e.g., democracy, food security and environmental programs) – this report provides fewer details than in past years due to more limited information from the Administration’s FY26 supporting budget materials.

I.    Discretionary Funding: Notable Programs and Policy Issues

The Administration’s FY26 request would sustain funding for key allies and partners, such as Israel and Jordan, while making significant cuts to security-oriented accounts critical to advancing U.S. national security and strengthening regional and global stability.

International Security Assistance: Significant Reduction. The FY26 request includes $6.1 billion for security assistance programs, $2.8 billion (-31%) below the FY25 enacted level. Of this:

• International Narcotics Control and Law Enforcement (INCLE) is cut by $1.28 billion (-91%), with the remaining $125 million to support programs “that disrupt and reduce illicit synthetic drug trafficking fueling transnational crime and terrorism.” According to the Administration, during this “strategic pause” in new funding, the Department will “rely on prior-year INCLE balances” to continue other programs.
• International Military Education and Training (IMET) receives a $24 million (-20%) cut, while funding for Nonproliferation, Anti-Terrorism, Demining, and Related (NADR) is reduced by $125 million (-14%).
• Foreign Military Financing (FMF) is reduced by $983 million (-16%), with the largest beneficiaries being:
  • Israel would continue to receive $3.3 billion, consistent with the Memorandum of Understanding (MOU) covering FY19 to FY28.
  • Egypt would receive $1.3 billion, consistent with previously enacted levels.
  • Jordan would receive at least $200 million, plus $1 billion each in loans and loan guarantees.
  • Taiwan would receive $100 million, plus $2 billion each in loans and loan guarantees, to bolster its self-defense capabilities.

Peacekeeping: Nearly Eliminated. The Administration’s request eliminates funding for United Nations (UN) peacekeeping missions through the Contributions to International Peacekeeping Activities (CIPA) account – representing a cut of $1.23 billion (-100%) compared to the FY25 enacted level. Given that U.S. funding accounts for approximately 25% of UN peacekeeping resources, eliminating this contribution will severely undermine the UN’s ability to support its 11 ongoing peacekeeping operations.

Under the request, funding for non-UN peacekeeping missions through the Peacekeeping Operations (PKO) account would see a $380 million (-93%) decrease from the FY25 enacted level. The Administration also proposes renaming PKO the National Security Engagement Account (NSEA).

PEACEKEEPING FUNDING

Export and Investment Assistance

America’s development finance and export agencies fare better than most other international affairs programs in the Administration’s FY26 request, in line with its commitment to strengthen the U.S. economy, create U.S. jobs, and counter China’s economic influence.

Development Finance Corporation (DFC): Significant New Mandatory Funding. The request includes a total of $810 million for the DFC, $195 million (-19%) below the FY25 enacted level. Of this, $573 million is for administrative expenses, and $230 million is for programs – reductions of $182 million (-24%) and $13 million (-5%), respectively. Notably, the budget includes $3 billion in mandatory funding for an equity revolving fund to “expand use of DFC’s equity tool for strategic investments” by reinvesting realized returns from its initial investments without requiring further appropriations from Congress.

U.S. Trade and Development Agency: Held Flat. The Administration’s proposal includes $87 million for the U.S. Trade and Development Agency (USTDA), equal to the FY25 enacted level. The request highlights advancing “America’s global energy dominance and countering China’s economic influence” as funding priorities.

Export-Import Bank: Sustained Funding. The FY26 request provides $149 million for the Export-Import Bank, maintaining funding at the FY25 enacted level. Of this total, $125 million is for administrative expenses, $15 million is for programs, and $9 million is for the agency’s Inspector General. The Bank is self-funding and the Administration projects its collections will far exceed its operational costs, returning an estimated $183.6 million in receipts excess of expenses to the U.S. Treasury. Additionally, the Administration notes the request would support an estimated 53,000 U.S. jobs.

Responding to Humanitarian Crises

Humanitarian Assistance: Consolidated and Cut Sharply. As America and the world grapple with historic levels of humanitarian need in all corners of the globe, the Administration’s FY26 budget request includes $4 billion for humanitarian assistance programs, a $6.3 billion (-61%) decrease from the FY25 enacted level. Of this total, $2.5 billion is for a new, consolidated International Humanitarian Assistance (IHA) account administered by the State Department, and $1.5 billion is for a presidentially directed Emergency Migration and Refugee Assistance (ERMA) Fund. This consolidation would result in the elimination of the International Disaster Assistance (IDA) and Migration and Refugee Assistance (MRA) accounts.

Food For Peace: Eliminated. The request eliminates the Title II, PL 480 Food for Peace Program, which involves the use of U.S.-flagged vessels to ship U.S.-produced food aid to countries in need – arguing that “far more efficient food aid programs” are preserved. The program, which enjoys widespread bipartisan support in Congress and from America’s farmers, received $1.6 billion in FY25.

HUMANITARIAN ASSISTANCE FUNDING

Economic Growth and Development Assistance

DEVELOPMENT AND ECONOMIC ASSISTANCE

Global Health

The Administration’s FY26 request provides a total of $3.8 billion for Global Health Programs, $6.2 billion (-62%) below the FY25 enacted level and consolidates funding into one State Department-managed account. According to the Administration, this funding level “focuses on containment and testing, as well as maintenance of treatment and oversight for those already receiving care.” With a cut of this magnitude, nearly every area of U.S. global health funding is significantly reduced.

Global HIV/AIDS: Large Reductions in Favor of Greater Burden-Sharing. The FY26 request includes $2.9 billion in bilateral funding for PEPFAR, $1.5 billion (-34%) below the FY25 enacted level. According to the Administration, this level would be sufficient to continue treating current recipients, with the goal of “developing and executing country handover plans to transition towards greater recipient government responsibility and financing.” The request does not include a specific U.S. contribution to the Global Fund but allows for the possibility of funding to be provided through the America First Opportunity Fund (A1OF) or by shifting funds from bilateral HIV/AIDS programs. Any U.S. contribution would be limited to $1 for every $4 provided by other donors – doubling the current 1:2 matching requirement.

Other Global Health Programs: Major Cuts and Eliminations. The request eliminates funding for international family planning, neglected tropical diseases, vulnerable children, nutrition, and Gavi, the Vaccine Alliance. Funding for maternal and child health sees a 91% cut, with remaining funds only available to support polio eradication. Funding for malaria and tuberculosis also see significant cuts.