Overseas Contingency Operations

Jan 23, 2012

What happened to International Affairs Funding in FY2012?

The State Department’s and USAID’s budgets avoided the chopping block in fiscal year 2012. Before the holidays, Congress approved $54.9 billion for the fiscal year 2012 International Affairs Budget, which was substantially higher than the House passed in July. “This is good news, right?” Actually, it’s mixed news. Deep and disproportionate cuts to the U.S.’ diplomatic, development and international cooperation tools were avoided mostly because a large portion of the State Department’s budget was classified as “Overseas Contingency Operations” (OCO). This budgeting tactic was originally used by the Department of Defense to fund the global war on terror in Iraq and Afghanistan via a separate spending stream outside of the core Pentagon budget. FCNL is concerned that justifying traditional diplomatic, development and international cooperation capacities as part of the global war on terror will negatively impact U.S. foreign policy in the long term.

What’s so bad about OCO?

The State Department’s core budget has decreased by 25% over the past two years. Shifting a large portion of the core budget into OCO has protected the State Department and USAID from severe cuts. However, this budgetary maneuver comes at the cost of classifying core civilian functions as temporary and extraordinary expenses. OCO funding is considered as an emergency and therefore exempt from budgetary caps agreed upon during last summer’s debt deal.

What does this mean for accounts that FCNL supports to peacefully prevent deadly conflict? Essentially, accounts such as the Complex Crises Fund (CCF) were split between core funding and OCO. The chart below reveals that the CCF was funded at $40 million. However, 75% of that funding is classified as “OCO”. Even portions of traditional humanitarian accounts such as Migration and Refugee Assistance and International Disaster Assistance are now classified as OCO.

The final budget will pay U.S. dues to the United Nations in full and support UN peacekeeping operations. Given the anti-U.N. sentiment in the House, this is a significant victory.

It’s easy to understand why this OCO strategy was so attractive for appropriators. Classifying a substantial piece of international affairs funding as OCO protected these important accounts from deep cuts, at best, and elimination, at worst. This budgetary maneuver will have long term implications, though. In the coming years, it will be difficult to transfer this “temporary” funding back into the traditional budget. Budget cuts and fiscal constraints will continue for at least the next nine years, so long as Congress implements the August debt deal.

What does this mean for FY2013?

The administration will release its fiscal year 2013 budget on February 6. It is unclear at this point whether the international affairs funding request will continue the OCO trend or attempt to reverse it. FCNL will continue to push for Congress to support a strong International Affairs budget that fully funds accounts to peacefully prevent deadly conflict.

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