Dear Friend -
I'm writing this from 30k feet - returning home from an overseas trip.

Maybe it's a sign of the times, this is probably my first time not being in the U.S. on what has long been the traditional beltway "Budget Day" - the annual day when the Administration sends its budget request to Congress. But this year is significantly different (more on that below).

Over the past few weeks, I have been to the Munich Security Conference, Africa, and now the Middle East - certainly covering many of the global hotspots and key places of debate. While I will share more of my detailed observations in a future note, I want to update you on how these trips so clearly underscore the importance of the decisions being made in Washington, D.C. right now.

The reality is that it is jaw-dropping to consider the current worldwide threats facing America.

* From Russia's advancement on Europe and presence in Africa, to the global competition with China, to Iran's destabilizing efforts across the Middle East, to the unprecedented and rising global humanitarian crises from Gaza to Sudan and beyond, the decisions we make at home boomerang everywhere - maybe most importantly back to our shores. And I'm seeing it everywhere I go.

* My big worry is this: Never have the converging threats been so extreme while resources for America's civilian national security toolkit have been so constrained. I'm deeply worried that America is tying our hands behind our back when it comes to our investments in diplomacy and development to protect our national interests.

It's in this serious context that I share my top 7 takeaways following this week's budget release below - and what it means for confronting all the threats we face, including for America's global economic agenda, and some of the trade-offs in the new proposal.

On a lighter note, while I missed the fun of Oscars Night - and John Cena's apparent performance - let me know what you thought of the winners! I've added to my watch lists best documentary, "20 Days in Mariupol", and Disney's nominee for best animated feature, Elemental - both of which speak to USGLC's community.

More soon,

Liz
Liz Schrayer, USGLC

Top 7 Takeaways on This Week's Budget Release

What It Means for U.S. International Affairs Programs and U.S. Interests Here At Home

March 12, 2023

#1 The Global Topline: Falling Further Behind in Protecting America's Interests

* Budget trifecta: Today's budget release from the Administration is not being released in a vacuum, but instead comes as part of what is now a trifecta of budget decisions that haven't been made - all of which will have a consequential impact on our national interests and on America's role in the world:
* The likely diminished international affairs resources for this year - Fiscal Year 2024 - which still have not been finalized by Congress
* The all-important but stalled National Security Emergency Package - which includes critical economic and humanitarian assistance
* And now, the severely capped Fiscal Year 2025 resources for next year

* By the numbers: This week's Administration proposal includes a 1% increase for next year's FY25 U.S. International Affairs Budget - or $64.4 billion in discretionary non-emergency funding - when compared to the last fiscal year available.

* Bipartisan budget constraints: It should be noted that the Administration's budget proposal was drafted within the context of a two-year bipartisan budget deal that imposes overall spending caps. This results, as you will see below, in funding for key areas remaining largely flat, such as humanitarian, economic, development, and security assistance - concerning given the realities globally.

* Unfinished business: With the constraints on the base budget, America's ability to confront the rising global threats now depends even more on Congress enacting the all-important National Security Emergency Package for Ukraine, Israel, Taiwan, and the rising global humanitarian crises, including Gaza - and on minimizing potential cuts to this year's still unfinished budget. Policymakers on Capitol Hill and budget watchers will surely be asking whether America is investing enough in the civilian tools that are essential to protecting U.S. national interests when global threats are on the rise.

#2 Russia: Countering Intensified Aggression and Malign Influence

* Resources for Ukraine: As Russia continues its war of aggression in Ukraine and expands its footprint across the globe - including in Africa and Eurasia - this year's budget request increases bilateral funding for Ukraine by 17% with the goal of beginning to reintegrate funding previously provided to Ukraine through emergency supplementals into the State Department and USAID's enduring budgets.

* Reality check: Given that this is next year's budget, these additional resources for Ukraine would not be available for months - potentially even next year - and are not a replacement for the emergency war funding request for Ukraine that was initially sent to Congress now more than 7 months ago.

* Wagner re-launch: Last month, Russia announced it was re-branding the Wagner Group's presence in Africa as "Russia's Africa Corps" - following the death of the mercenary group's founder Yevgeny Prigozhin. In a year when 19 elections are expected in Africa, Wagner is offering dictators a "regime survival package" as President Putin claimed last year that the Kremlin was providing close to a $1 billion per year for the group's operations.

* Countering Kremlin disinformation in Africa: Of note, the Administration's budget proposal provides $25 million for a new fund to counter Russian disinformation and "build institutional resilience, strengthen civil society, and improve electoral systems and processes" in Africa.

#3 China: Leveraging Development and Diplomacy Tools to Compete

* U.S. Indo-Pacific Strategy: Asserting that the People's Republic of China (PRC) "is the geopolitical challenge of our era," the Administration's request increases discretionary funding to counter China's global influence across several accounts and programs - including a 15% boost to implement the Indo-Pacific Strategy.

* Global economic agenda: While the Administration highlighted a number of programs in its request - including the Partnership for Global Infrastructure and Investment (PGI), USAID's EDGE program, and investments in U.S. and multilateral development programs - there was no significant new global economic initiative announced in this year's proposal. Expect questions on Capitol Hill about how the U.S. strengthens how it shows up when it comes to America's global economic agenda and its impact on our national security.

* Support for Taiwan: The proposal includes a first-ever $100 million bilateral request for security assistance for Taiwan to bolster its self-defense in the face of Chinese aggression.

* Leveraging multilateral tools to counter China: The Administration's proposal includes an important new U.S. contribution of $1 billion to the World Bank for an International Bank of Reconstruction and Development (IBRD) loan guarantee and grants to other IBRD funds. According to the Administration, this funding would allow the World Bank to expand its lending capacity by approximately $36 billion - providing an alternative to the PRC's coercive financing.

* Reality check: Given China has increased its economic development spending around the world by 525% in the last 15 years alone, expect Members of Congress to push on whether these proposed investments are sufficient to ensure diplomacy and development are central to America's China strategy.

#4 Humanitarian Assistance: Stable Funding Despite Dire Needs

* Spiraling global needs: With nearly 300 million people worldwide in need of humanitarian assistance this year, the Administration's proposal largely holds funding flat for overall humanitarian aid programs - proposing a slight 1% increase. For more on the global needs, see the IRC's 2024 Emergency Watchlist.

* Emergency package: The Administration makes clear, once again, that to meet the unprecedented level of global needs - including in Sudan, Gaza, South Sudan, and Burkina Faso - this year's request must be paired with the $10 billion in emergency humanitarian assistance included in the pending national security supplemental request. Moving forward, Congress and humanitarian leaders will likely be asking whether the regular budget is reflecting the true scope and scale of enduring and rising global humanitarian needs.

#5 Global Health: Sustained Investments to Continue U.S. Leadership

* Global health topline: The Administration's request for next year reduces overall funding for global health by 7%. According to the Administration, this reduction is entirely due to a requirement in U.S. law that limits America's contribution to the Global Fund to no more than one-third of total donor contributions. However, expect more discussions around whether there are greater non-U.S. donor Global Fund pledges available to unlock a higher U.S. contribution.

* Tough questions: For the remaining global health accounts, funding is either held flat - such as for nutrition and global health security - or only slightly increased - such as for maternal and child health. Global health champions are likely to ask tough questions about these funding levels and their impact on America's longstanding global health leadership.

* PEPFAR: Meanwhile, policymakers are watching to see if an important reauthorization of PEPFAR, America's global HIV/AIDS program, can make it into the current year spending bills being finalized in Congress.

#6 Difficult Tradeoffs: What's Up and What's Down

Within the Administration's request, there are several notable areas that see funding increases or decreases. Notable increases and decreases include:

* Food security: The proposal increases funding for agriculture and food security by 15%, including for Feed the Future with a greater focus on five target countries of Tanzania, Zambia, Malawi, Mozambique, and the Democratic Republic of the Congo (DRC).

* Climate change: The proposal increases funding for bilateral international climate change programs by 28%, in line with the Administration's whole-of-government commitment to help developing countries adapt to the impacts of climate change.

* Countering fentanyl and synthetic drugs: The budget proposes a 58% increase in International Narcotics Control and Law Enforcement (INCLE) funding to help stem the flow of synthetic drugs like fentanyl, which is the primary driver of recent increased drug overdose deaths in America.

* Gender: The proposal expands the Administration's commitment to advancing gender equality and the empowerment of women and girls, providing a 15% increase across all accounts. This includes funding to combat gender-based violence, strengthen women's participation in peace and security, and empower women economically.

* Peacekeeping: The proposal reduces total funding for peacekeeping operations by 11%. The Administration notes that, as a result, the U.S. will continue to accumulate UN peacekeeping arrears.

* Embassy security: Funding for embassy construction and maintenance is cut by 10% - which covers many security-related costs critical to protecting the 91,000 U.S. government personnel at 289 locations around the world.

#7 Investing in America's Global Workforce

* Strengthening global workforce: Reflecting a core Administration commitment to strengthen, revitalize, and modernize America's global diplomatic and development workforce, the Administration's request increases funding for the State Department and USAID accounts that fund personnel and the U.S. diplomatic presence around the world by 6% and 7%, respectively.

* Diplomatic Reserve Corps: The Administration also includes a new proposal to establish a Diplomatic Reserve Auxiliary Corps at the State Department to "provide a cadre of trained personnel capable of surging contingency response efforts and improving Department's workforce resilience."

What's Next

* With the ball now in Congress' court on all three critical budget decisions - finalizing this year's budget, passing the all-important National Security Emergency Package, and beginning work on next year's budget - the stakes for U.S. global leadership and protecting the security and economic interests of American families could not be higher.

* Stay tuned as it will be critical for leaders from across the business, veteran, non-profit, faith, and agricultural communities to speak out alongside fellow citizens at critical decision points in the coming days.

* For USGLC's full analysis and report on the FY25 Budget Request will be released shortly at this link.

For the purposes of this analysis, comparisons are to the Fiscal Year 2023 adjusted enacted level - the last available year for comparison - which includes $2.1 billion in FY23 base funding that was shifted to emergency.

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