The Cable

5 coming battles over the 2013 international affairs budget

The State Department rolled out its fiscal 2013 budget request today, which contains several items that are sure to meet resistance when lawmakers roll up their sleeves and dig into the budget this spring and summer.

International programs don't have strong constituencies on Capitol Hill to begin with, and Congress has its own ideas for how to spend foreign aid.

The State Department knows all of this, of course, and has framed its fiscal 2013 budget request as a small portion of the federal budget that contributes directly to national security. State's $51.6 billion request, however, faces a GOP-led House that is searching hard for discretionary budget items to cut and a foreign-policy-minded Senate that wants to use aid to press foreign governments to act more in line with U.S. priorities.

"This is a moment of historic change around the world. They are also tight times for our government and for our people -- the two truths that have guided us from day one," Deputy Secretary of State Tom Nides said Monday. "And so, as I'd like to remind you once again, with just 1 percent of the federal budget, the State Department and USAID will maintain our country's leadership in a changing world, what'll promote our values, jumpstart our economy, and above all keep America safe in 2013 and beyond."

Here are five of the items in the State Department's budget that will spark debates in Congress this year:

1)      The top line budget numbers. The State Department and USAID requested $51.6 billion for fiscal year 2013, but $8.2 billion is categorized as temporarily needed funding for Afghanistan, Iraq, and Pakistan under what's called the Overseas Contingency Operations fund (OCO) account. The remaining $43.6 billion is the "core budget" request and represents a 10 percent increase over fiscal 2012 levels as enacted by Congress.

For fiscal 2012, lawmakers moved a lot of funding from the core budget to the OCO account in order to fit State Department funding inside the mandatory discretionary spending caps set forth in the Budget Control Act of 2011. Now, State is trying to move that funding back into its core budget so that it will have it whenever the need for emergency funding wanes.

In general, State prefers to use the OCO accounts when possible because Congress is more willing to fund programs that are needed in the current wars... and because the OCO account is off budget. ("Obviously, the benefit of the OCO account in general allows for all of you who report on this and for the Hill to look at the costs of our frontline states, to look at the costs of Iraq, Afghanistan, Pakistan," said Nides.)

But outside experts see the OCO account, which has been used by State since last year and by the Pentagon since 9/11, as a slush fund. "I think OCO accounts are a scourge," said Gordon Adams, former national security director at the Office of Management and Budget during the Clinton administration. "Special extra accounts are a refuge for budget scoundrels. Funding for all three of those countries are going to be subject to debate and dispute."

2)      Middle East Funding Initiative. The administration is requesting $770 million for this new initiative, which is meant to support U.S. activities in countries affected by the "Arab Spring." This is the largest single new program in the State Department's budget request, but there's not a lot of detail in the request about how the money will actually be spent.

Nides said it's impossible to predict. "The Arab Spring has come. We need to make sure we have the tools and the flexibility in which to fund these initiatives," he said. "I cannot tell you today where that money will be spent, because we'll be, obviously, in consultation with the Hill."

Some $70 million of that total comes from existing programs, the Middle East Partnership Initiative (MEPI) and USAID's Office of Middle East Partnerships (OMEP). The remaining $700 million is "new money," an administration official said. "We came to the Middle East changes without any resources dedicated to this in the budget," the official said, explaining that State has spent about $800 million since last year to respond to the protests in countries like Egypt, Libya, and Yemen, but had to cobble those funds together from other accounts.

"That will be controversial because there's no content. It's a contingency fund and Congress doesn't like to give State contingency funds," said Adams. "It's probably not a bad idea in theory but it is way too large for having no program."

3)      Egypt military funding. The State Department is again asking Congress for $1.3 billion in direct aid to the Egyptian military. The $1.3 billion in military aid that Congress appropriated for fiscal 2012, however, has not been sent yet and might be held up for a while because of the escalating crisis concerning pending charges against 19 American NGO workers in Cairo. By law, Secretary of State Hillary Clinton has to certify the Egyptian military is moving towards a true democratic transition before that money can be released and many top lawmakers are urging her not to do so. There are even bills to halt the funding regardless of Clinton's determination. Additionally, the administration is requesting $250 million in direct assistance to the civilian government, which it believes to be more responsible for the NGO crackdown than the military.

Nevertheless, the administration is hoping that will all be worked out by next year. "Our goal is, is to provide them those funds," said Nides. "I mean, it's obviously clear to all of us that we have issues that we need to work through. And we're working very aggressively to do so. But this budget reflects our commitment and our desire to fully fund those initiatives."

4)      Pakistan civilian assistance. The U.S.-Pakistan relationship is in tatters, but the administration is still requesting more than $2 billion in aid to Pakistan. But in a shift from last year, the administration is requesting significantly less money for assistance to the Pakistani civilian government while increasing requested aid for the Pakistani military. That may seem odd considering that the Pakistani military and intelligence services have been widely accused of playing both sides in Afghanistan, and that Osama bin Laden was discovered hiding in a military garrison town for years.

Nevertheless, the administration is requesting only $1.1 billion for in Pakistani civilian assistance for 2013, even thought the Kerry-Lugar-Berman bill authorized up to $1.5 billion each year. Meanwhile, the administration requested $800 million under the Pakistani Counterinsurgency Contingency Fund (PCCF), a reimbursement program for the Pakistani military jointly run by State and DOD, and State is requesting $350 million in foreign military financing for Pakistan, up from $98 million in fiscal 2012.

An administration official said that becuase Congress only gave State about $1 billion last year under the Kerry-Lugar program, that's about how much they decided to ask for  in FY 2013. "It's still one of the largest recipients of assistance in our budget," the administration official said. "We have a lot of negotiation to do and we'll be making that argument that we can and we'll have to figure out with Congress what the final number will be."

5)      Palestinian Authority assistance. The administration requested $370 million for economic support funding for the West Bank and Gaza in fiscal 2013, down from the $397 million given to the PA in fiscal 2012 but still one of the largest U.S. assistance programs in the budget. Congress is extremely sour on PA assistance, however, because peace talks have broken down and because Fatah and Hamas are planning to form a unity government.

The reduction in West Bank funding is because equipment for the U.S. police training program there has been largely completed, an administration official said. State also cut the amount of direct cash transfers to the Palestinian Authority from $200 million to $150 million. "We think the economic situation is slightly better so we think we can do a little bit less," the official said.

What's more, the administration is also requesting $79 million for UNESCO in 2013, even though the U.S. government is legally barred from contributing to UNESCO because the organization admitted Palestine as a member.

"The Congress has prohibited us for funding UNESCO this year. And as you know, the president's also articulated -- and quite clearly -- that he would like a waiver to allow us to participate in UNESCO," said Nides. "We have put the money in the budget, realizing that we are not going to be able to spend the money unless we get the waiver. And we have made it clear to the Congress we'd like a waiver."

The Cable

State Department requests budget increase for 2013

Foggy Bottom took a big budget cut in 2012, so the State Department is asking for more money next year while requesting more than $8 billion for diplomatic activities in Afghanistan, Iraq, and Pakistan.

The president's fiscal 2013 budget request, released today, asks Congress for $51.6 billion for the State Department and USAID, which the administration describes as a 1.6 percent, or 0.8 billion increase over fiscal 2012 levels as enacted by Congress in the latest appropriations bill. That $51.6 billion total includes $8.2 billion in the Overseas Contingency Operations account, which is meant to pay for the temporary costs of the wars in Southwest Asia and their aftermaths.

The administration's request for the entire international affairs account, known as the 150 function of federal budgeting, is $56.3 billion, a $1.4 billion or 2.6 percent increase of fiscal 2012 enacted levels. The $8.2 billion being requested for the OCO account is about $3 billion or 26 percent less than the level enacted for fiscal year 2012.

"Even in tough times, this request represents a smart and strategic investment. The State Department and USAID are among the most effective -- and cost effective -- tools we have to create economic opportunity and keep Americans safe," Secretary of State Hillary Clinton wrote in her letter accompanying the State and USAID budget request.

"We know that this is a time of fiscal constraint and economic hardship for the American people. So we are seeking out every opportunity to work smarter and more efficiently.  We have proposed painful but responsible cuts without compromising our national security mission."

The budget request would cut funding for global health programs by $300 million and cut the request for humanitarian assistance by another $300 million, Clinton wrote. Overall assistance to Europe, Eurasia, and Central Asia was cut by 18 percent in the request.

The budget request also includes $770 million for a Middle East and North Africa Incentive Fund -- call it the "Arab Spring" budget. It is not yet clear to what extent the $770 million represents new funding vs. the repacking of old programs.

The White House's budget document can be found here. The State Department's fact sheet is here. State's budget summary document is here and their budget justification document is here.

We'll have more after a series of briefings...