MR. TONER: Good afternoon, everyone. As all of you know, just a few hours ago, the White House presented President Obama’s budget request for Fiscal Year 2013. And joining us this afternoon, our Deputy Secretary of State for Management and Resources Tom Nides and U.S. Agency for International Development Administrator Rajiv Shah to discuss in more detail Secretary Clinton’s Fiscal Year 2013 budget request for the State Department and USAID.
They’re going to speak briefly, take a few questions. I know Deputy Secretary Nides has to run. He’s traveling to Iraq later today. But following the briefing, we do invite you to join us across the hall where we’re going to have an on-background discussion in greater detail if any of you need to indulge your inner wonk on some of these issues.
But without further ado, Tom.
DEPUTY SECRETARY NIDES: Thank you. Thank you all very much. Good morning. Let me start by welcoming you today to the rollout of the 2013 budget request for the State Department and USAID. I know tomorrow is Valentine’s Day and I was going to actually give some of you flowers, others of you chocolate, but because of the budget constraints, what I’ve done is given you this very, very pretty book and you can take it home with you and enjoy it. It’s just considered a very nice pre-Valentine’s Day present. So with that – I thought that was funnier earlier, but I guess it wasn’t as funny for you guys. (Laughter.) Okay. Steve’s laughing. Okay, and I’m obviously delighted by USAID Administrator Raj Shah, who will discuss in greater detail the development programs for all of you.
This budget follows a year of transformational change in the world, as you all know. New powers are emerging, America is strengthening relationships in the Asia Pacific region, while keeping commitments around the world. In Iraq, we completed the largest military-to-civilian transition since the Marshall Plan, and the budget reflects the beginning of a normalizing of our footprint. And Afghanistan has 33,000 U.S. troops who surged in come home. Our civilians will continue to do their work to secure our hard-won gains. This budget also reflects that.
Meanwhile, the Middle East is reinventing itself before our eyes. And since I presented last year’s budget, there hasn’t been a day when we weren’t managing multiple crises at once. The demands on us have never been higher, and you will see all of that in this budget request. Of course, this is also a time of economic hardship in our country, and we all get that here. And so this budget seeks to stretch every tax dollar as far as possible without compromising our core national security interests.
Now, if my high tech skills serve me correctly, I will show you in graphic detail how our budget fits into the overall federal budget. First, as you know, 58 percent of the federal budget is spent on mandatory programs like Social Security, Medicare, and Medicaid. Second, 22 percent supports discretionary national security programs at the Department of Defense, Homeland Security, and Veterans Affairs. Third, 13 percent goes to discretionary non-security programs run by Transportation, Education, Justice, Commerce, and HUD. And fourth, 6 percent pays the interest on our federal debt. And if you think there isn’t a lot left over, you’re right. State and USAID account for just 1 percent of the federal budget. See that thin, yellow line? That’s us – 1 percent. Today, I want to explain how we use that 1 percent to make the outsized contribution to America’s prosperity, security, and leadership.
From day one, Secretary Clinton has made it a priority to work smarter and more effectively. This is the first budget that reflects reforms outlined in the Quadrennial Diplomacy Development Review, better known as the QDDR, where we have streamlined our efforts, we’ve not shied away from making tradeoffs, and painful but responsible cuts.
Interestingly enough, a recent Gallup poll found that Americans believe we spent a quarter of our budget on foreign assistance. But let me remind you again what the chart shows: State and USAID do all of what I have described – not with 25 percent of the federal budget, but with little less than 1 percent.
So let me take a few minutes to quickly go over some of the numbers. My colleagues will stick around after this to go into more details if you wish. As you know, FY 2013 budget for International Affairs programs, known as the Functional 150 account for all of you budget folks out there, totals $56.4 billion. This includes State and USAID, but the 150 account includes the Treasury’s international programs, the Millennium Challenge Corporation, the Peace Corps, among others. So within the 150 account, you will find the State Department and USAID’s requests, which totals $51.6 billion. And that is what I’m going to focus on today, the $51.6 billion.
We have limited our requests to what is absolutely necessary to achieve our mission. Even as our needs and responsibilities grow, our budget increases by less than the rate of inflation. This money goes to four principal areas. Let me you show you the basic breakdown of the budget by the percentages.
Twenty-three percent of the budget is spent on the frontline states – Iraq, Afghanistan, and Pakistan. Twenty-eight percent of our budget goes to preventing conflicts, supporting our allies and partners through direct assistance and multilateral contributions, among other things. Another 28 percent is also spent on human and economic security. And the remaining 20 percent – or 21 percent supports our people, embassies, and global presence.
Now, the specific numbers. First, the 23 percent or one – or $11.9 billion of requests goes in defending our now security interests in the frontline states of Iraq, Afghanistan, and Pakistan. Our Civilian Overseas Contingency Operations budget, better known for OCO, funds the temporary extraordinary cost associated with these missions. Using the same methodology from the last year’s request, we’ve asked for $8.2 billion in OCO, and $3.7 billion in our base budget for a total of $11.9 billion for the frontline states. And let me now just break it down to you specifically.
In Iraq, we’re requesting $4.8 billion for next year, which is about 10 percent less than last year. The transition is already saving American taxpayers a great deal of money. With now – with State in the lead, and with the troops no longer on the ground, the government is spending $40 billion less this year than last. And as discussed during last week’s press briefing, we’re continuing to be thoughtful about the rightsizing of our presence in Iraq, hiring more local staff, procuring more goods locally, which should further reduce our spending.
In Afghanistan, we’re requesting $4.6 billion. Civilians are vital to our efforts and they are securing our gains against the Taliban. They’re helping us take Afghans lead responsibility for their own security and they’re laying the groundwork for what comes next: sustainable economic growth, national reconciliation, and the long-term civilian partnership, all of which helps us ensure that Afghanistan never again becomes the safe haven for terrorists.
And then Pakistan, our 2013 request is $2.4 billion. Our relationship with Pakistan is challenging, but make no mistake, effective cooperation with Pakistan is critical to Afghanistan’s future and to America’s national security. Our request includes funds to strengthen democratic institutions, countering extremism, supporting joint counterterrorism efforts, and protecting our civilians on the ground.
Second, we devote 28 percent or $14.6 billion, preventing conflicts and supporting key allies and partners. This year, our request includes a new $770 million Middle East and North Africa incentive fund to support political and economic reforms in the region. Our investment in supporting our allies and partners includes everything from police training in Latin America, to efforts to promote stability in places like Haiti, in the South Sudan, to more than 70 military-to-military partnerships, which are managed by the State Department. It funds peacekeeping missions around the world and our presence in international institutions and it matches last year’s record high of $3.1 billion for the State of Israel, which continuing – and continuing our efforts to support our Arab partners.
Third, we devote another 28 percent of our budget, $14. 7 billion, to our investment in human and economic security, specifically global health, food security, and climate change, poverty reduction, and cross-cutting efforts to empower women and girls in our humanitarian budget. For all these programs, we’re focused on achieving measurable outcomes that have real impact on improving people’s lives. Even with the financial constraints we face, this budget fully supports the President’s goal of treating more than six million people infected with HIV/AIDS by the end of 2013. This is a $2 million – two million more than our goal, continuing our strong support of PEPFAR, that puts us on the path to an AIDS-free generation. The money we spend on human and economic security also funds humanitarian responses in the care for refugees. I will leave it to Ambassador – Administrator Shah to speak in more detail about the innovation programs implemented by USAID.
And fourth, 21 percent or $10.4 billion of this budget supports the men the women of the State Department and USAID, who make the work I have described possible. This budget pays for all of our operations in 274 missions around the world. It funds political officers who advance our interests and defends democracy and human rights. It funds development officers, who spread opportunity to make the world a safer place. It funds consular officers who help bring businesses to the U.S. and help America’s emergencies around the world. And it funds economic officers who help American business compete in new markets and put America back to work, and as I like to say, not a bad return on our investment.
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. And so – as I like to remind you once again, which is 1 percent of the federal budget, the State Department USAID will maintain our country’s leadership in a changing world, would help promote our values, jumpstart our economy, and above all, keep America safe in 2013 and beyond. And let me now turn the floor over to my friend, Raj Shah.
ADMINISTRATOR SHAH: Thank you. Thank you, Tom. And I want to start just by reiterating Tom’s both opening and closing point that the entire budget and the activities all described live within the 1 percent of the federal budget that Tom highlighted. I intend to go into a little bit more detail in the core development priorities of the FY13 budget proposal, and starting with the point that the President and the Secretary have focused on elevating development as part of our foreign policy, because the lives we save around the world, the results-oriented investments we make in health, education, clean water, and fighting hunger, are part of our national security strategy to keep us safe and our part of our economic security strategy to ensure that we’re expanding the number of countries and communities with whom we can trade and, as a result, create jobs here at home.
The budget accounts are familiar to you, things like development assistance, global health and child survival, the international disaster relief and Millennium Challenge accounts. In all of these areas, we’re taking a more business-like approach to delivering results. The FY13 request demonstrates a willingness to focus and concentrate investments in those areas where they’ll deliver maximum results and more value for U.S. taxpayers.
I’ll begin by describing global health. At $7.9 billion, this is a budget request that focuses on cost-effectiveness and saving lives. It allows us, as Tom mentioned, to meet the President’s goal of putting six million patients on treatment for HIV/AIDS, building on the progress we’ve already seen under this Administration of going from 1.7 to 3.9 million under coverage today. This is in part possible because of a more than 50 percent reduction in the cost of doing treatment, thanks to the leadership of Ambassador Goosby and the PEPFAR program. This will also allow us to invest in HIV prevention, including the elimination of pediatric AIDS by treating pregnant women.
This allows us to meet our global commitments in immunization, where by getting together with the global community we’ve made investments to help save more than four million lives over a five-year period by expanding access to new vaccines to poor children around the world. And it allows us to extend our investments in malaria and maternal and child health, where we’ve seen concrete and specific results. Since 2008, child mortality has been reduced by 16 percent, maternal mortality has been reduced by 13 percent, and very clear studies just coming out in the past few weeks have shown the effectiveness of U.S. investments in global health in places like Rwanda and Tanzania.
Second, our Feed the Future program, the President and Secretary’s signature effort to advance food security around the world, is based – is funded at $1 billion and is predicated on the point that it’s cheaper and smarter to help countries feed themselves than to address famine, food riots, and failed states that result from food insecurity. Again, this is an area where we’ve changed the way we work to focus on delivering results, measured as the number of people that move out of a condition of hunger through their own sustainable efforts, where we focus our investments on those countries that are taking on reforms to ensure they can be successful, and where we work more actively in partnership with the private sector to stretch taxpayer dollars even further.
We’ve seen important results in places like Bangladesh and Tanzania, where food production is up and the number of people and the number of children who are chronically hungry have gone down. We’ve implemented new partnerships, such as with Pepsi in Ethiopia and Wal-Mart in Central America, that are reaching tens of thousands of families and stretching U.S. taxpayer dollars even further in delivering these results.
Third, we have a priority in our humanitarian accounts. Across State and USAID, these accounts help us deal with food emergencies, address water when water is not available to needing communities, address refugee flows around the world, and support internally displaced populations in conflict and other countries everywhere around the world. In these areas as well, we’ve taken a reform approach and prioritized efficiencies, investing in early warning systems that highlight faster where disasters are likely to occur, pre-positioning food and supplies to reduce the cost and improve the time to delivery, and expanding both local procurement and initiatives like the Secretary’s 1,000 Days Initiative that targets food assistance to pregnant women and children so that it achieves better results in terms of nutrition, learning, and outcomes.
These types of strategies allowed us to reach more than 4.6 million people who are at risk in the Horn of Africa during the past several months and the drought and famine that ensued. Despite the fact that that’s now been downgraded in part due to effective humanitarian support, the U.S. will continue to make investments in humanitarian crises in the Horn, in the Sahel, and in other parts of the world where it’s necessary. And we’ll continue to use our leadership and our ability to make those investments to diversify the burden and ensure that the whole world is living up to its shared responsibilities at times of need and crises.
And finally, Tom mentioned that $10.4 billion of the overall budget is for investing in our staff and our reform initiatives across State and AID, including 1.5 billion for USAID’s operating expenses and a set of reforms we call USAID Forward. These reforms came out of the Secretary’s QDDR initiative and are allowing us to use new technologies, like mobile banking in Haiti and Afghanistan, to fight corruption and expand access to banking services and financial services. They’re allowing us to invest in scientific and technical partnerships, like the Grand Challenges program, which – where we’ve launched programs like Saving Lives at Birth and efforts to use technology to help all children improve their literacy outcomes at grade levels.
In each of these efforts, every investment of one U.S. taxpayer dollar leverages three or four dollars from other donors and other partners before we go forward. And perhaps most importantly, these investments allow us to build a staff model that allows us to oversee contracts and programs in a way that’s designed to reduce waste, fraud, and abuse, cut down on contractor costs, and save taxpayers’ money.
So I would end just by recalling Tom’s opening point, that this entire portfolio of investment takes place within 1 percent of the federal budget and is part – a critical part of keeping us safe and secure and improving our economic prospects around the world. Thank you.
MR. TONER: We have time for a few questions. Go ahead, Elise.
QUESTION: I’d like to ask maybe Secretary Nides about some of the areas where you’re expected a cut in funding, for instance aid to Egypt, which although the 1.3 billion is in there, I mean, it doesn’t – if things aren’t resolved with the Egyptians it looks as if it was cut. Also I might refer to the UNESCO funding. Although this year you don’t have an estimate, for next year you have close to $79 million.
DEPUTY SECRETARY NIDES: That’s right. 79 million. Right.
QUESTION: Yeah. So I’m just wondering, are these in anticipation of resolving these issues? Are you kind of reserving the money? What – if you could explain that a little.
DEPUTY SECRETARY NIDES: Sure. Well, let’s do UNESCO first. As you know, the Congress has prohibited us for funding UNESCO this year. And as you know, the President has also articulated quite clearly that he would like a waiver to allow us to participate in UNESCO. We have put the money in the budget, realizing that we’re 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. So we will work with them and work with our friends and colleagues on Capitol Hill in hopes that we can work an agreement out for us to fund. UNESCO does an enormously – a lot of enormously good work, and we’d like to make sure that we have a contribution commensurate with their work.
As it relates to Egypt, our goal is, is to provide the money which includes about $1.3 billion of FMF, which is the foreign military funding financing, and then the $250 million of direct assistance which is put into 2013. Our goal is, is to provide them those funds. I mean, it’s obviously clear to all of us that we have issues that we need to work through, and we are working very aggressively to do so. But this budget reflects our commitment and our desire to make – to fully fund those initiatives.
MR. TONER: Go ahead, Andy.
QUESTION: I’m just curious – one follow-up on Egypt and then to the broader Middle East and North Africa Incentive Fund. Okay, this is – you’re saying on the Egyptian side this is your hope that you’ll be able to give them the money that you’ve outlined here. How much pushback are you expecting from Congress on these particular numbers? Do you have an argument for the people in Congress who are going to say that they shouldn’t be getting this money? And secondly, on the $770 million for the broader incentive fund, how much of that is going to be actually new money and how much of that is sort of moved from other places?
DEPUTY SECRETARY NIDES: First on Egypt, we’re going to have a – I think the desire from the Hill and certainly from the Administration is to resolve the issues that are currently occurring in Egypt. And I think there’s bipartisan support once we can get these issues resolved is to support Egypt. I don’t think that’s – I think there would be no argument on that, at least from where we sit. And we have, obviously, issues we’ll need to deal with and which we’re actively engaged in. So our hope is and desire, as we proceed this year and have discussions around the budget, would be clearer to all of us as the situation gets clearer for us in Egypt, and that we’ll be able to provide the assistance that we hope to provide.
As relates to the $770 million of the Middle East Transition Fund, this is something that Secretary Clinton has really – and with the President – has focused principally on. The notion is we’re in a new world. The Arab Spring has come; we need to make sure we have the tools and the flexibility in which to fund these initiatives. I cannot tell you today where that money will be spent because we’ll be, obviously, in consultation with the Hill. We’ll be coming up with initiatives that we’ll then be discussing with the Hill.
But this is something we coordinated and talked a lot about with our friends on the Hill, with – the idea is to have some flexibility to support everything from Tunisia, to support areas like potentially in Egypt and in areas where things are changing every day in Syria, things where changing – we have no idea – the world is evolving as we see it, and we felt it was important to have a pool of money. Some of it is money that we have taken from other areas. Some of it is new money. But it’s obviously all capped in the overall budget request which, as I pointed out at the beginning, is basically up about 1.5 percent from last year. So as you can see, we’re doing lots of trade-offs to come up with those monies.
Yeah.
QUESTION: Just a quick – one quick follow-up. Would that include the 250 million in non-military aid for Egypt?
DEPUTY SECRETARY NIDES: This is – that 770 is – that’s a different pot of money.
QUESTION: Different pot of money, okay.
DEPUTY SECRETARY NIDES: It does not include – yeah, you have the Egypt money which is a billion five, of which is – the numbers here – I think doing it from memory – but a billion three is FMF, 250 million or 250-some million is for direct assistance. And – am I screwing this up? Okay, good. And then – I just saw him looking at me like with their hands on their face, so I just want to make sure I didn’t get – I’m doing it from memory.
So the 770 is new money, yes.
MR. TONER: Go ahead, Josh.
QUESTION: Thanks. I’m looking here at –
DEPUTY SECRETARY NIDES: Don’t stump me, Josh. Don’t do that to me. (Laughter.) I was doing so well, okay? Okay.
QUESTION: No, no, no. Okay. So the core – the enduring budget, the core budget –
DEPUTY SECRETARY NIDES: Yes, sir.
QUESTION: -- was funded at 43.7 billion and the request this year is 48 billion. That’s a 4.3 or 10 percent increase.
DEPUTY SECRETARY NIDES: Yes – but you’re good at math so you’ll understand this – there’s two ways they did this. The budget – they switched around between OCO and core budget, so the Hill last year in our budget request made a decision to move some items into the OCO account out of the base account. And we’ve had a lot of dialogue back and forth with them in – as relates to 2012.
We are making – we are shifting some of those things back into our base budget. The overall budget, especially in the frontline states, is basically up just a little bit as reflects to Afghanistan. So even though it looks like the base budget is up, in fact, the base and OCO together is basically flat, is up 1 percent.
QUESTION: Right, right. So my question is, since there are discretionary spending caps going into effect –
DEPUTY SECRETARY NIDES: Sure.
QUESTION: -- for the first time based on the Debt Control Relief Act – Budget Act, do you expect these – that to be funded in the regular budget, or do you expect Congress to just shift it back? And how does this fit into your long-term –
DEPUTY SECRETARY NIDES: We’ll – listen – you’re – you’ve watched the Congress for a long time, as well as I. This is the beginning of a process. I mean, 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, and that’s important because you better see those costs come down over time. And that’s why the – I think the idea of putting the OCO part of the State Department as relates to the frontline states was critically important. So that’s the benefit of the OCO, and I think the Congress will look at that in ’13 and I think my assumption is – strong assumption – they will continue to fund the OCO in a way that they feel reflects those costs.
QUESTION: One quick – very quick follow-up. So one specific thing is 626 million for assistance to Europe, Central Asia, and Eurasia, totally zeroed out in democracy assistance.
DEPUTY SECRETARY NIDES: 18 percent.
QUESTION: Out of 626 million down to --
DEPUTY SECRETARY NIDES: Yeah, Europe – these guys will get it. But Europe and Eurasia went down 18 percent.
QUESTION: No, but I’m saying that 18 percent is the democracy promotion funding?
DEPUTY SECRETARY NIDES: Yes, yes.
QUESTION: And that went from 626 million to zero, right?
DEPUTY SECRETARY NIDES: Is that –
STAFF: We’ll follow up on that.
QUESTION: Well, what’s the –
STAFF: We didn’t zero out the democracy program (inaudible). The entire assistance to the region is down, but it’s spread across lots of different sectors.
DEPUTY SECRETARY NIDES: You’ll get --
QUESTION: So generally, why are we cutting all of our assistance to those three regions by whatever it is that we’re –
DEPUTY SECRETARY NIDES: Well, again, I mean, I think we’ll have – again, as the document will show, Europe and Eurasia is down about 18 percent. As the Secretary and the President has discussed many times, we have a limited amount of money, we have a huge amount of new activities occurring, and we need to shift resources based upon the activities that are occurring.
MR. TONER: Just – all right.
STAFF: It’s on page 11.
MR. TONER: So let’s save this for – let’s save this for the backgrounder. Okay. Last question, anyone? Yeah.
QUESTION: Yeah.
MR. TONER: Yeah. In the back.
QUESTION: Go ahead.
QUESTION: I’m just wondering, the 2.4 billion for Pakistan with 1.5 billion the core money, is the core money what comes because – due to the Kerry-Lugar bill?
DEPUTY SECRETARY NIDES: Yeah. The Kerry-Lugar-Berman number went from one five to one one, I think, is the numbers.
QUESTION: Okay.
QUESTION: And the security assistance – has it come down, or is it staying the same level?
DEPUTY SECRETARY NIDES: The security assistance for Pakistan is staying the same, is that right – staying the same, staying the same.
QUESTION: Thanks.
MR. TONER: All right. Thanks, everyone. Appreciate it.
QUESTION: Quickly for Ambassador – for Administrator Shah?
ADMINISTRATOR SHAH: Sure, I can take one. Sure, sure. Yeah. Go ahead.
MR. TONER: If he has a chance to take – sure, go ahead. One quick question, but let’s keep it lights out.
QUESTION: All right. We got a $313 million cut for global health programs. Could you please explain?
ADMINISTRATOR SHAH: Well, the global health budget was keyed against the results we’ve committed to. So the President made a commitment to put 6 million people on AIDS treatment. Given the cost structure of that, we have a budget that reflects an ability to do that. We’ve made a commitment to eliminating the transmission of HIV/AIDS from mothers to children with a budget that supports that effort. The President’s made a commitment to support the Global Fund, and this reflects that as well. And this reflects areas like malaria, maternal and child health, where we’ve essentially been seeing very, very good and very cost-effective results in terms of the cost of saving lives. So at $7.9 billion, we’re maintaining a very strong commitment to global health on the behalf of the President and Secretary.
MR. TONER: Great. Thanks, everyone.
