State Department, USAID Face Drastic Budget Cut

A budget deal ended a government shutdown, but it could gut funding for America’s diplomacy and development programs.

By Dan De Luce and Robbie Gramer, a diplomacy and national security reporter at Foreign Policy.
U.S. Secretary of State Rex Tillerson testifies before the Senate alongside Secretary of Defense James Mattis on Oct. 30, 2017. (Brendan Smialowski      /AFP/Getty Images)
U.S. Secretary of State Rex Tillerson testifies before the Senate alongside Secretary of Defense James Mattis on Oct. 30, 2017. (Brendan Smialowski /AFP/Getty Images)

The State Department and the U.S. Agency for International Development face deep funding cuts under a budget deal worked out last week that ended a government shutdown, and lawmakers are struggling to find additional funds to plug the gap.

The funding shortfall of about $8.8 billion would impose the biggest reduction in resources for the U.S. diplomatic corps and development programs since the 1990s. The budget squeeze coincides with declining morale at the State Department amid a controversial reorganization and the perception among foreign service officers that President Donald Trump has sidelined diplomacy.

While lawmakers from both parties scrambled to find a way to shore up funding, administration officials were mostly absent from the discussions, congressional aides said.

The funding shortfall for the State Department and USAID affects operations for the current fiscal year, and for 2019. The sweeping budget deal hammered out last week among congressional leaders and the White House averted a prolonged government shutdown by setting spending levels for fiscal year 2018 and fiscal year 2019. But while the deal boosted funding for the U.S. military, it reduced nondefense funding in the Overseas Contingency Operations budget, which has previously provided one-third of the budget for the State Department and USAID.

As a result, lawmakers have only weeks to find additional funds for the State Department in the FY 2018 budget, and they will face a similar gap for the proposed FY 2019 budget.

In the meantime, the Trump administration will present its federal budget request for 2019 on Monday, and it remains unclear whether White House officials will address the cuts to State Department funding.

The possible cut in the FY 2018 budget prompted a warning on Sunday from 151 retired senior military commanders, including former chiefs of the Army, Navy, Air Force, Marine Corps, and Special Operations Command, that the reduction could undermine America’s global influence at a time of growing threats to national security.

“We must not undercut our nation’s ability to lead around the world in such turbulent times,” the former officers wrote in a letter to congressional leaders. The letter was released by the U.S. Global Leadership Coalition, an organization that convenes military, business, and faith leaders to support resources for the State Department and USAID.

The retired three- and four-star officers voiced concern over numerous vacant positions in key diplomatic posts and expressed the “strong conviction that elevating and strengthening diplomacy and development alongside defense is critical to keeping America safe.”

The former generals and admirals wrote that diplomacy and reconstruction assistance were particularly crucial in Iraq and Syria in the wake of the Islamic State’s recent defeats on the battlefield. “And while we have seen military progress against ISIS, the question that looms is whether we are prepared to protect those battlefield gains and prevent bad actors from stepping into the void,” they wrote.

To raise spending for the State Department back to current levels, lawmakers will have to make difficult decisions in coming days about funding amid competing demands for other domestic priorities. The appropriations committees will have to divvy up about $63 billion in nondefense discretionary funds for the FY 2018 budget, but about $21 billion is already spoken for and reserved for medical research, opioid programs, veterans and other priorities.

The ranking Democrat on the Senate Foreign Relations Committee, Sen. Bob Menendez of New Jersey, wrote a letter on Friday urging fellow lawmakers overseeing the budget to restore funding for the State Department and USAID to current levels.

“The United States faces an array of complex challenges around the world that requires robust U.S. leadership. The resources devoted to the international affairs budget must be commensurate with addressing these critical needs,” Menendez wrote.

The letter, obtained by Foreign Policy, was addressed to Sen. Lindsey Graham (R-S.C.) and Sen. Patrick Leahy (D-Vt.), chair and ranking member respectively of the appropriations subcommittee that oversees the State Department’s budget.

From security assistance to fighting epidemics and famine, “taking off that huge amount off the top line would have an incredible impact” on U.S. diplomacy and international programs, said one lobbyist following the debate.

The Department doesn’t have any specific comment on the Bipartisan Budget Act of 2018, a State Department spokesman told FPWe are aware appropriators will now work to write the appropriations package to fund the Government through the rest of the fiscal year.

The top-line budget numbers belie how much is actually spent on diplomacy: The cost of protecting and securing embassies has ballooned, eating up a growing portion of the State Department’s overall budget. This is in part because the Justice Department, the Homeland Security Department, and other federal agencies are expanding their footprint at U.S. embassies abroad, and the State Department has to foot the bill for their protection.

The State Department spent 17 percent of its “Diplomatic and Consular Programs” budget on security in 2008, according to data from the American Foreign Service Association. Under the proposed 2018 budget, those security costs rose to 45 percent, meaning only 55 percent of the “Diplomatic and Consular Programs” budget will actually go to conducting diplomacy.

Given the range of threats facing the United States and its allies, Washington cannot afford to “retreat from the world,” said Liz Schrayer, president and CEO of the U.S. Global Leadership Coalition.

A year ago, the Trump administration proposed a 30 percent cut to the international affairs budget, triggering a wave of criticism from former senior diplomats and military officers. Lawmakers from both parties shot down the proposal.

Schrayer said she hopes that Congress will have a similar reaction to another potentially drastic cut. “I think we’ll hear loud and clear the same kind of opposition,” Schrayer told FP. “I think there’s bipartisan support for State and USAID.”

Update, Feb. 12, 2018: This article was updated with comments from a State Department spokesman.


Robbie Gramer is a diplomacy and national security reporter at Foreign Policy. Twitter: @RobbieGramer