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“Modest reforms to pay and compensation will improve readiness and modernization. It will help keep our all-volunteer force sustainable and strong. Keeping faith also means investing sufficient resources so that we can uphold our sacred obligations to defend the nation and to send our sons and daughters to war with only the best training, leadership and equipment. We can’t shrink from our obligations to one another. The stakes are too high.”

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Tuesday
Mar152011

CQ: Blended Funds Offer Flexibility, Risk for State Department Missions

This post originally appeared in Congressional Quarterly. We liked it so much we reposted it here for our readers.


By Frank Oliveri, CQ Staff


As a result of Congress’ reluctance to fully fund State Department budget requests, the Obama administration is increasingly relying on new funding mechanisms for activities in Iraq and Afghanistan that would allow the State Department to draw on more than $1 billion channeled through the Pentagon.

But these mechanisms, which would provide the funds for projects in fiscal 2011 and 2012, create significant congressional oversight challenges and ultimately could undercut the Obama administration’s efforts to create a more robust State Department and U.S. Agency for International Development (USAID).

Furthermore, the success of these mechanisms — referred to as blended funds — depends heavily on the military’s willingness to continue funding them, something the Pentagon may become increasingly reluctant to fight for as it struggles to make ends meet, according to several senior congressional aides involved in oversight of the funds.

Defense and State have initiated one major blended fund and have requested authority for another. The fiscal 2011 defense authorization act (PL 111-383) created the Afghanistan Infrastructure Program for large development projects that would aide counterinsurgency operations in Afghanistan.

Congress granted the Defense Department the authority to reprogram more than $400 million for the effort and authorized the State Department to execute those funds.

The Obama administration has requested an additional $475 million for the program for fiscal 2012.

Faster Response to Urgent Needs

The brainchild of Defense and State, the fund was created as a way to address the urgent need to complete large development projects — such as an electrification project in the southern Afghan city of Kandahar — on a far shorter timeline than State is used to.

Originally, military officials used the Commander’s Emergency Response Program (CERP) funds for many development programs in Iraq and later Afghanistan. CERP funds essentially were intended as walking-around money for commanders who needed to perform smaller, largely humanitarian-related projects during counterinsurgency operations.

But several congressional oversight panels objected to the CERP funds being used for large-scale development programs, which went far beyond the scope of the program’s original intent.

Additionally, Secretary of State Hillary Rodham Clinton and Defense Secretary Robert M. Gates have proposed for fiscal 2012 the creation of a Global Security Contingency Fund, which would pool Defense and State resources to address security crises involving both agencies.

The president requested $50 million for the State Department and $450 million in reprogramming authority for the Defense Department. The White House envisions that the fund would advance efforts to address national security challenges through a cooperative approach between the two departments.

Each of these blended funds is backed largely by Defense Department resources, reflecting the political reality that lawmakers are far more willing to support the uniformed services than their counterparts in State, senior congressional aides said.

This imbalance, several senior aides said, reflected skepticism that grew out of State’s difficulties managing projects during the Iraq War, its continued struggles to ramp up in Afghanistan and the perception among many new lawmakers and voters that foreign aid represents a far larger share of the federal budget than it actually does.

“Polls have shown that voters think foreign aid represents about 20 percent of the federal budget, when in fact it represents only about 1 percent,” said one former senior congressional aide, who was involved in the creation of the Afghanistan Infrastructure Program.

Conversely, national security spending represents about 24 percent of the entire federal budget.

Clinton sent a letter to House Appropriations Chairman Harold Rogers, R-Ky., on Feb. 14 expressing concern that the fiscal 2011 spending bill (HR 1) represented a 16 percent cut to funds for foreign aid and State compared with fiscal 2010 funding levels, which she said “will be devastating to our national security.”

Budget Pressure

These challenges will only be exacerbated by the increasing pressure from House Republicans and some Democrats to cut spending.

Republican Kay Granger of Texas, the chairwoman of the House State-Foreign Operations Appropriations Subcommittee, highlighted on March 10 the challenges faced by State in supporting ongoing efforts in Iraq and Afghanistan when she said the department must reconsider “plans to increase State and USAID staff, support large multi-year commitments and boost lending by international banks.”

Granger’s counterpart in the Senate, Vermont Democrat Patrick J. Leahy, also is skeptical about costly U.S. efforts in Iraq.

Some powerful Senate Republicans, however, while acknowledging the fiscal challenges they face, said they are willing to make the case that State needs greater support.

“We’re surging on the civilian side as we draw down our troops. And the civilian-military partnership is essential to holding and building,” said South Carolina Sen. Lindsey Graham, ranking Republican on the State-Foreign Operations Appropriations Subcommittee, during a Feb. 17 hearing. “There are funds going to Pakistan, Iraq and Afghanistan on the civilian side that I think will be just as important as any brigade.”

Complex Oversight

Although the creation of blended funds helps the administration and congressional staff sidestep sensitive political issues, it also creates significant oversight and jurisdictional problems, several senior congressional aides said.

For example, six different congressional committees — the Armed Services, foreign policy and State-Foreign Operations Appropriations panels in each chamber — have a stake in how the Afghanistan Infrastructure Program and the Global Security Contingency Fund operate. Cross-jurisdictional programs often spark turf arguments between panels, several senior congressional aides said.

One senior congressional defense aide described a scenario in which a request about the program would be sent to the Pentagon. Defense officials might indicate that the program was being executed by State. At that point, the staffer would need to coordinate a request through an aide working on one of the foreign policy or funding panels.

“We’ve tried to overcome that problem by getting all of the committee staff in one room to talk about it,” one senior congressional aide said. “It’s a three-ring circus.”

Although the blended funds are important tools, they also could, in the end, undermine the very agency they were designed to bolster, aides said.

“The more you give State access to DoD money, the more incentive you create to cut State funding,” one senior congressional aide said. “In the end, lawmakers may say, ‘Why should we give money to State when they are already getting money from DoD?’”

One final difficulty, several aides noted, is that the military services are now facing the possibility of significant cuts of their own.

Although Gates has tried to leverage lawmakers’ support for defense dollars to help the State Department, it’s unclear whether that will continue if the Defense Department budget becomes vulnerable. Also, Gates is expected to step down this year, and it’s unclear whether his successor will support State as fervently.

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