State Department budget could benefit after Lew moves to White House

Deputy Secretary of State Jack Lew’s departure from Foggy Bottom was initially seen as a loss for the State Department, but in his next role as White House budget director, he could be in an even better position to help State get the increased funding he believes it needs.

Lew was nominated formally today to be President Obama’s next director of the Office of Management and Budget, replacing Peter Orzsag, who has already departed. Secretary of State Hillary Clinton was reluctant to let Lew go, given his crucial role in managing State’s resources. But if he gets confirmed, the department could benefit by getting a budget request next year that reflects its need for billions more to operate in new and dangerous areas, funding that Lew himself said today he thinks is necessary, especially as State takes over operations in  Iraq from the military.

"We’ve been very clear… that the request we made for this year [for Iraq] represents just a part of the year’s programming, so there will be substantial increases in the operating program costs going forward," Lew told an audience at the Center for Strategic and International Studies Thursday.

"Frankly, we can’t send a civilian into Mosul without recognizing the security requirements that are there…  On some level, it’s a question of ‘Do you undertake the mission or don’t you undertake the mission?,’ and I think we’ve gotten approval to undertake quite a large mission."

The State Department budget is notoriously difficult to defend on Capitol Hill. Most lawmakers put their domestic priorities first anyway, and in this atmosphere of severe fiscal strain and a bipartisan push to cut deficits, foreign ops and foreign aid are under the microscope like never before. Already, the Senate Budget Committee has tried to take $4 billion away from State’s fiscal 2011 request. The Senate Appropriations Committee recently set allocations that included giving foreign ops $2.4 billion less than what the White House wanted.

But even that White House request doesn’t fully reflect the department’s needs for the coming year, Lew said.

 "The challenge is not just to see an increase of civilian spending, but to see that in the context of military spending," Lew said. "Military spending for this year in Iraq will be going down $15 billion. We need to look at the whole of what the U.S. government effort in Iraq is costing."

Lew was speaking in his capacity as State’s budget guru, not as the next White House budget czar, so skeptics will say that Lew’s commitment to expanding the department’s resources might wane once he gets to the Old Executive Building.

But one area where Lew is signaling he will support Foggy Bottom is through supplemental "emergency" requests for funding for Iraq, which are easier to defend because they don’t have to be paid for.

Lew said the approach that the administration used this year, folding some Iraq costs into the regular budget and using supplemental requests for others, is likely to continue next year as the military moves out and State takes on responsibility for its own logistics, communications, and security.

Even so, the State Department may have to scale back its original plans for several "embassy branches" around Iraq, due to the limitations of available resources. "We can’t spread ourselves so thin that we don’t have the capacity to do the job," Lew said.