USGLC

OUT OF TOUCH WITH AMERICA’S INTERESTS:
International Affairs Programs Slashed for Fourth Straight Year Despite Growing Global Crises
Analysis of the Administration’s FY21 International Affairs Budget Request

Against a backdrop of growing global crises and less than two months after Congress voted to once again increase funding for the International Affairs Budget, the Administration’s FY21 budget request released today calls for deep cuts to America’s development and diplomacy tools. This marks a four-year trend of targeting the State Department, USAID, and other development agencies for severe and disproportionate cuts despite bipartisan opposition on Capitol Hill.

The FY21 request proposes to reduce funding for the International Affairs Budget by 22% compared to the FY20 enacted level. Specifically, the Administration’s FY21 request includes a total of $43.9 billion in base funding for the International Affairs Budget.

Similar to the past two years, the budget includes no Overseas Contingency Operations (OCO) funding for international affairs programs while at the same time maintaining significant OCO resources for the Department of Defense. The proposal to zero out OCO funding ignores the bipartisan budget deal reached by Congress and the Administration last summer that provided $8 billion in international affairs OCO for FY21, equal to the FY19 and FY20 enacted levels. It is important to note that OCO accounts for 14% of the total International Affairs Budget and zeroing out this funding stream without equivalent increases to the base budget would result in significant cuts to the topline.

The USGLC released a statement today calling on lawmakers to follow their bipartisan playbook from the past three years by rejecting these dangerous cuts and urging Congress to support $60 billion for the FY21 International Affairs Budget.
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Key Takeaways

Below are seven key takeaways from the Administration’s FY21 International Affairs Budget request.

1. Development and Diplomacy Again Bear Brunt of Budget Cuts

The request includes a total of $590 billion for non-defense discretionary (NDD) spending – 7% below the level agreed to by Congress and the Administration in last summer’s bipartisan budget deal. The International Affairs Budget is disproportionately impacted to offset increases to some domestic agencies. This is the fourth straight year cuts to NDD spending have come at the expense of America’s development and diplomacy programs. While the proposed 22% cut to international affairs is a step in the right direction compared to proposals to cut as much as 37% three years ago, it is out of touch with America’s security and economic interests in the face of unprecedented global challenges and opportunities.

2. Global Competition Guides Resource Decisions

Dating back to the December 2017 National Security Strategy, a central tenet of the Administration’s foreign policy has been responding to “the growing political, economic, and military competitions we face around the world.” The FY21 budget aligns diplomatic and development resources to further this objective, with a particular focus on countering Chinese, Russian, and Iranian influence. This includes fully funding security partnerships with Israel, Jordan, and Egypt to deter aggression and promote regional stability, $1.49 billion for the Administration’s Indo-Pacific Strategy to promote good governance and rule of law, $75 million for Prosper Africa, and $12 million for new programs in Latin America and the Caribbean to expand U.S. trade and investment opportunities. Strengthening America’s ability to compete globally is a bipartisan priority on Capitol Hill, but Congress will likely ask tough questions about whether these investments are sufficient given the deep cut to the topline.

3. Signature Initiatives See Funding Surge

As expected, the Administration’s budget significantly boosts resources for two of its top development initiatives: empowering women economically around the world and expanding America’s development finance capabilities. The request calls for doubling funding for the Women’s Global Development and Prosperity Initiative (W-GDP) in FY21 to $200 million. For the newly launched U.S. International Development Finance Corporation (DFC) – which officially opened its doors in January 2020 – program funding would jump nearly four-fold, from $180 million in FY20 to $700 million in FY21. While these initiatives have strong support from bipartisan Members of Congress and development stakeholders, concerns are likely to be raised that these increases not come at the expense of other critical development programs that are also advancing U.S. interests.

4. Deep Cuts to Global Health Despite New Pandemic Threat

As the Wuhan Coronavirus continues its rapid spread across the globe – claiming more than 1,000 lives and infecting more than 40,000 in 28 countries – the Administration’s budget slashes funding for overall Global Health Programs by a staggering 34% compared to the FY20 enacted level. While the request calls for an increase of $15 million (15%) over the FY20 enacted level for USAID’s Global Health Security to improve health systems and address disease threats, the size of the overall cuts could impact America’s ability to prevent and respond to future pandemics. One additional area that sees strong investment is Gavi, the Vaccine Alliance, which receives a $1.16 billion pledge over four years to improve access to vaccines for children in the world’s poorest countries and save children’s lives. As it has for the past three years, Congress is expected to reject cuts to global health, recognizing its critical role in protecting U.S. interests and values.

5. Untapped Opportunities for Global Fragility Agenda

The recent passage of the bipartisan Global Fragility Act highlights the risks fragile and conflict-affected states pose to U.S. interests as well as to global peace and security. While the FY21 budget notes the importance of strengthening fragile states and includes $135 million for the Relief and Recovery Fund that could be used “to implement the Global Fragility Act,” funding for the world’s most fragile countries is a mixed bag. Funding to address the crisis in Venezuela would increase by 811% compared to the FY19 actual level, but the Democratic Republic of Congo (DRC), South Sudan, Somalia, and Yemen would see deep cuts while funding for Syria is zeroed out for the second year in a row. In light of the new Global Fragility law, Congress and the Administration have an important opportunity to evaluate U.S. efforts to address state fragility to ensure they are coordinated, strategic, and fully resourced.

6. Beneath the Topline, Funding Shifts Reflect New Priorities

With a steep cut to the topline, nearly every program and account in the International Affairs Budget would see its funding reduced compared to the FY20 enacted level. While some of the proposed cuts mirror those included in the Administration’s previous budget requests, below are highlights of substantial funding shifts that reflect new priorities from the past year.

Substantial increases compared to the FY20 request:

• Funding for Venezuela grows by $196 million (2,178%) in the FY21 request compared to the FY20 request.
• Administrative and program funding for the U.S. International Development Finance Corporation (DFC) is increased by 178% in the FY21 request compared to the FY20 request.
• Economic and development assistance sees a 13% increase in the FY21 request compared to the FY20 request.

Substantial cuts compared to the FY20 request:

• Funding for Central America is reduced by 19% in the FY21 request compared to the FY20 request.
• Migration and Refugee Assistance is cut by 18% in the FY21 request compared to the FY20 request.
• Global Health Programs see a 5% cut in the FY21 request compared to the FY20 request.

7. Operating Budgets for the State Department and USAID Cut Again

At a time when the health of America’s diplomatic and development corps is under scrutiny, the budget cuts the State Department and USAID accounts that fund our personnel and diplomatic presence around the world by 7% and 5%, respectively. Cuts to these important accounts could also impact monitoring and evaluation of U.S. foreign assistance programs when the Administration has placed a high priority on effectiveness and accountability. Given the bipartisan commitment in Congress to strengthening America’s Foreign and Civil Service workforce, the Administration is likely to face tough questions on the rationale behind these cuts and staffing directives that build on those included in the final FY20 spending package.