Analysis of the Administration’s FY22 Discretionary Funding Request for International Affairs

This year’s federal budget process takes place against the backdrop of a COVID-19 pandemic that has dramatically altered the global landscape in new and unforeseen ways with important consequences for all Americans. From new strains of the virus and concern about future pandemic threats to increasing conflict and humanitarian crises to growing economic competition from countries like China, America is facing a vastly more complex international arena compared to this time last year. These issues will be at the center of budget conversations in Congress and the Administration in the weeks and months ahead.

The Administration’s budget proposal for Fiscal Year 2022 seeks to confront these “21^st century security challenges and threats” – and their direct impacts on the health, security, and economic interests of every American family – by proposing a $6.8 billion increase for the International Affairs Budget compared to the FY21 non-emergency enacted level. If enacted, this would represent the largest increase to the regular International Affairs Budget in over a decade.

The request includes topline Defense and Non-Defense Discretionary Spending levels as well as discretionary spending toplines for federal agencies, but provides few details related to specific program funding levels. The Administration will release a more detailed budget later this spring.

In the first fiscal year since the expiration of the Budget Control Act, which had capped discretionary spending for the last decade, the Administration’s budget request includes increases for nearly all federal agencies, including for America’s premier diplomacy and development agencies.

Specifically, the request includes $63.5 billion for the International Affairs Budget – a 12% increase compared to the FY21 enacted level when excluding emergency funding. Within this overall funding level:

• The State Department and USAID receive a total of $58.4 billion, a 10% increase.

• Treasury International Programs would see a significant $1.4 billion, or 73% increase.

The Administration’s request sends a clear signal that investments in development and diplomacy are essential to our recovery at home and to building a stronger and more prosperous America. Calling the proposal “smart and serious” and an “important down payment”, the USGLC is urging the Administration and Congress to move forward with no less than this International Affairs funding level as the floor in all FY22 negotiations.

There is a long legacy of strong, bipartisan support for America’s development, diplomacy, and global health programs, including for resourcing the U.S. international response to COVID-19. In recent years, Members of Congress on both sides of the aisle have overwhelmingly rejected calls to dramatically cut international affairs programs and have worked together to ensure strong funding for America’s civilian national security toolkit.

As the FY22 budget and appropriations process begins in earnest, the USGLC coordinated a strategic global needs assessment with a broad array of experts across the political spectrum to serve as a resource for Congress and the Administration. The needs assessment identifies at least $14 billion in new resources across the International Affairs Budget, illustrating the growing global needs and what is at stake when it comes to advancing the interests and values of all Americans. The USGLC looks forward to working closely with the Administration and bipartisan Members of Congress to ensure the FY22 International Affairs Budget is fully resourced so that America can face these challenges head on.

Key Takeaways

While the full details of the Administration’s request will not be made public for several months, here are our major takeaways based on today’s proposal.

1. With Global Threats Impacting Domestic Recovery, International Affairs Budget Sees Largest Increase in Over A Decade

While the Administration’s request would represent the largest nominal increase in non-emergency funding for the International Affairs Budget since FY09, in inflation-adjusted (“real”) terms, funding for America’s development and diplomacy programs would still remain below the FY10 and FY17 enacted levels. Given the magnitude of global challenges facing America – including a global pandemic – additional resources will likely be required.

 2. Pandemic Preparedness Prioritized

Building on the emergency resources enacted by Congress to respond to the COVID-19 pandemic – including for the global response – the Administration’s FY22 request prioritizes increased investments in global health security so that America is “better prepared to prevent, detect, and respond to” future pandemics. Specifically, it includes $10 billion for Global Health Programs – including $1 billion for Global Health Security, an $800 million increase compared to the FY21 non-emergency enacted level. The request also previews a new multilateral “health security financing mechanism” intended to “catalyze increased investment in pandemic prevention and preparedness.”

3. Beneath the Topline, Funding Shifts Reflect New Priorities 

Although the Administration’s FY22 request does not include specific funding levels for all accounts and programs within the International Affairs Budget, specific funding increases that were mentioned provide greater insights about the Administration’s key priorities:

• Preventing and Mitigating Humanitarian Crises. As humanitarian crises around the world continue to intensify – exacerbated by the COVID-19 pandemic – the FY22 request includes a roughly $400 million increase for Humanitarian Assistance to support the most vulnerable, including “refugees, conflict victims, and other displaced persons.”

• Addressing Root Causes of Migration. The FY22 request includes $861 million to address the root causes of migration from Central America – part of a four-year, $4 billion commitment. According to the Administration, increased funding would “strengthen host government accountability” to provide security and services to their populations, promote rule of law and combat corruption, combat violence, and promote economic opportunity.

• Combating Climate Change. The request also includes $2.5 billion to combat climate change, a four-fold increase from the FY21 enacted level. This total includes $691 million for the State Department and USAID to help developing countries adapt to and mitigate the impacts of climate change and build resilience.

• Strengthening U.S. Leadership with International Allies and Partnerships. The budget proposes a $500 million increase to meet America’s commitments to international peacekeeping, including for paying down arrears. It also invests in supporting U.S. commitments to and reform at international organizations like the World Health Organization (WHO).

4. Overseas Contingency Operations Funding Shifted into Base

With the expiration of the Budget Control Act and its discretionary spending caps, the FY22 request discontinues the use of Overseas Contingency Operations (OCO) funding for both defense and international affairs. Importantly, the budget does not propose to eliminate funding that had previously been designated as OCO – including $8 billion in the FY21 International Affairs Budget. Instead, it shifts OCO resources into the base budget, ensuring the International Affairs Budget topline is protected.

5. Clear Priorities, but Details Remain to be Seen

While the budget request provides an important window into the Administration’s budget and policy priorities, it remains to be seen how funding will be distributed across the various accounts and programs in the International Affairs Budget to implement them. Areas identified for investment, but without details or associated funding levels, include:

• Growing and Diversifying the National Security Workforce by “increasing the size of the Foreign Service and Civil Service” at the State Department and USAID and investing in “technology and training.”

• Countering Authoritarianism and “malign influence from China” as well investments in fighting corruption and stemming the tide of democratic backsliding.

Additional areas mentioned for investment include support for human rights and for key allies in the Middle East, including Israel and Jordan. The Administration’s detailed budget request – expected this spring – as well as upcoming Congressional budget hearings will likely shed more light on these proposals.

What’s Next
While the Administration’s budget is the first step in the annual budget cycle, ultimately the U.S. Constitution gives Congress the power of the purse. This means spending decisions – including topline and programmatic funding levels – will be determined and finalized through the FY22 budget and appropriations process on Capitol Hill.

The House and Senate Budget Committees are expected to take up FY22 Budget Resolutions this summer, which will set the topline level for overall discretionary spending (also known as the 302(a) allocation). With majorities in the House and Senate, Democrats will likely work to pass a concurrent resolution – providing a potential opportunity to use budget reconciliation to pass additional legislative priorities.

With a 302(a) allocation in place, the House and Senate Appropriations Committees will then determine topline funding levels for each of their subcommittees (also known as 302(b) allocations) – including the State-Foreign Operations Subcommittee, which has jurisdiction over the vast majority of the International Affairs Budget.

Slim majorities in the House and Senate means bipartisan support will be needed for Congress to pass final FY22 spending bills. A late start to the FY22 budget and appropriations process will complicate things further, giving lawmakers a shorter timeframe in which to complete their work before the fiscal year ends on September 30.