Rex Tillerson, U.S. Secretary of State (Photographer: Andrew Harrer/Bloomberg)

Tillerson Defends State Department Cuts Lawmakers Vow to Block

(Bloomberg) -- A proposed State Department budget that would cut spending by more than 28 percent -- rolling back international food aid, humanitarian assistance and health funding -- drew immediate opposition from lawmakers who will decide its fate.

The fiscal 2018 federal budget that President Donald Trump offered Tuesday seeks $37.6 billion for the State Department, the U.S. Agency for International Development and other overseas assistance. Only the Environmental Protection Agency would face a deeper cut, at 29.6 percent from the 2016 level.

Secretary of State Rex Tillerson defended the budget that would slash his department as a plan that’s “responsive to the realities of the world in the 21st century” and “reflects a commitment to ensure every tax dollar spent is aligned with mission-critical objectives.”

Humanitarian assistance would be cut by 31 percent, while global health funding would be reduced by 25 percent. The number of countries receiving development assistance would be slashed by almost 45 percent. But members of Congress said the proposal stands little chance of passage.

"You can’t win the war without soft power,” Republican Senator Lindsey Graham, who oversees State Department funding on the Appropriations Committee, said in a statement. “If we implemented this budget you’d have to retreat from the world or put a lot of people at risk.”

Senator Ben Cardin of Maryland, the ranking Democrat on the Senate Foreign Relations Committee, said he will work with colleagues “to make sure nothing remotely close to this budget is enacted.” He called the proposal “a slap in the face to all the American personnel who work every day to keep this country safe and build a better world.”

Reversing the Rules

The proposal sets up a reversal of the normal rules of Washington budget-making, with the State Department arguing against billions of dollars in funding that lawmakers want to give it. Senate Majority Leader Mitch McConnell said last week in an interview with Bloomberg News that the foreign aid cuts are “highly unlikely.”

“The diplomacy part of what we do overseas is a lot cheaper than the use of the military and frequently has a pretty good return on investment,” he said.

State Department officials said they’ll accept whatever ends up in legislation passed by Congress and signed by the president.

The proposed budget for the year that begins Oct. 1 reflects Trump’s “America First” approach to foreign policy and his administration’s distaste for what it sees as nation-building and overseas entanglements. It would pivot away from long-term development assistance and toward a focus on the military’s fight against Islamic State and toward projects such as disaster management, though that too would come in for cuts.

Instead, Tillerson asked other nations to step up their contributions and “provide a more equitable cost-share” for international efforts. That echoes Trump’s long-standing criticism that other members of the United Nations, the North Atlantic Treaty Organization and other international organizations aren’t paying their fair share.

“This budget requires some tough trade-offs for some competing priorities,” Doug Pitkin, director of the department’s bureau of budget and planning, said in a briefing with reporters. At the same time, he said it “ensures that America continues to be a leader in a changing world.”

Staff Cuts

In the letter justifying the request, Tillerson spelled out four priorities: defending national security, asserting U.S. leadership, fostering opportunity for U.S. economic interests, and ensuring accountability for taxpayers.

The former Exxon Mobil Corp. chief has made clear his support for efforts to cut back his department. His office is weighing a cut of about 2,300 U.S. diplomats and civil servants, representing about 9 percent of the Americans in its global workforce. In March, Tillerson said the State Department’s spending in recent years “is simply not sustainable.”

Critics of the proposed foreign aid cuts say the U.S. is already paying less than its fair share of development aid. While the U.S. contributes more than any other nation, at $33.6 billion year, that’s 0.18 percent of its gross domestic product and about half the 0.32 percent contributed by high-income countries, according to Jeremy Konyndyk of the Center for Global Development.

The State Department’s budget documents offer contradictory arguments on some of the proposed cuts. While funding to the National Endowment for Democracy would be cut by 40 percent, the department argued that supporting democracy abroad “helps create a more secure, stable and prosperous global arena in which the United States can advance its national security interests.”

Tillerson and his aides are in the process of a “listening tour” with staff of the State Department and USAID as they consider a major restructuring. Pitkin said major structural changes or actions such as closing overseas posts may come in the fiscal 2019 budget proposal.

In the meantime, Tillerson may have to settle for more money than he wants if Congress has its way.

Refusing to spend the money “would be tantamount to declaring war on congressional appropriators, which is not a wise thing for an administration to do,” said Jeremy Konyndyk, a senior policy fellow at the Center for Global Development. “We’re in uncharted territory where you have cabinet secretaries going out there for debilitating cuts to their own agencies, so it’s hard to know what to expect.”