The Foreign Service Journal, January 2006

J A N U A R Y 2 0 0 6 / F O R E I G N S E R V I C E J O U R N A L 5 I watched with fascination the inter- necine battle as Re- publicans in Con- gress struggled in November to come up with, in percent- age terms, a tiny package of symbolic budget cuts to off- set the costs of Hurricanes Katrina and Rita. If there had been any doubt that we are now in a new era of U.S. gov- ernment budget crises, this spectacle eliminated it. For the State Depart- ment, the outlook is equally grim. The initial “passback” from OMB of its FY- 07 budget request provided virtually nothing new or additive. Given the budget and election cycles, the FY-07 State budget is Secretary Rice’s first, even though she’s been in office for 10 months. What she decides to “reclama” and fight for, and what she concedes must be sacrificed at the altar of “budget realities,” will speak volumes about her real priorities. As in the rest of life where one hears “watch what they do, not what they say,” where the money goes is what tells the real story in foreign affairs. The FY-07 budget will end the five- year run of growing resources for diplo- macy and foreign affairs. Given the huge events during this period in Iraq and Afghanistan, the fight against ter- rorism, to say nothing of the new focus on “transformational diplomacy,” it would be easy to assume that theWhite House and the Congress had finally realized that a well-funded State Department and USAID, and related assistance programs like the Millen- niumChallenge Account and the PEP- FAR anti-AIDS initiative, are small investments in prevention that mini- mize or even prevent the gargantuan costs later for things like the Iraq war. Can we assume that the department and the White House will do whatever is necessary lest anti-internationalists or budget hawks in Congress, or even OMB, do not realize this? Assume nothing. The State Department has just released the McKinsey & Company update of its 1999 report on “The War for Talent.” The highest marks were given for the commitment the past few years of the department’s senior-most management to fighting for and win- ning the budgetary resources necessary to counter decades of underinvestment in information technology, security for our facilities, and insufficient recruit- ment. McKinsey’s top recommenda- tion for the future is to “institutionalize” this success and to build on it. Yet everything I can pick up in my discus- sions within the department reveals that just the opposite is happening. The palpable ethos of the building has become one of scrimping, belt- tightening, and axing. This is reflected in the timid, minimalist nature of the department’s initial budget request. We can expect no new hiring and lots of retrenchment in the name of rational- ization. USAID and Commerce are rife with rumors of furloughs and RIFs. Expect an acceleration of the under- funding of the original announced commitments we made with such fan- fare to the MCA and PEPFAR. Memories are short and our atavistic tendencies decidedly short-sighted. Three things make this budget crunch different, however. First, the president and the congressional lead- ership come from the same party, so the most crucial part of the budget game is played in-house, before it is sent to the Hill. Second, the stakes are higher, because of international events and because the fragile recent progress McKinsey noted is at risk. Exceptional leadership is required, an absolute refusal to take no for an answer and a willingness to use all means available to trump those, with- in the administration and outside it, who simply don’t get it. The State Department and foreign affairs bud- gets are every bit as important to our national security as our military expenditures. But there’s also one more new element in this equation: we have a Secretary of State with unrivaled influence at the White House. The time has come for her to use her relationship with the presi- dent. Being just another Cabinet team player will compromise both her own success over the next three years and her legacy. n P RESIDENT ’ S V IEWS Budget Crisis Redux: Have We Really Learned Anything? B Y J. A NTHONY H OLMES J. Anthony Holmes is the president of the American Foreign Service Association. The time has come for Sec. Rice to use her relationship with the president.