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President Bush's FY 2009 State and Foreign Operations Budget Submission

Patrick F. Kennedy, Under Secretary for Management
Richard L. Greene, Deputy Director of U.S. Foreign Assistance
Washington, DC
February 4, 2008

3:05 p.m. EST

MR. CASEY: Okay, guys, since we knew you didn’t get enough from the last briefing, we thought we’d do one more for you this afternoon. We wanted to take this opportunity, in light of the President’s presenting his latest budget, to talk in a little more detail about what that means for the Department and related agencies. So we’ve got Under Secretary for Management Pat Kennedy as well as Deputy Director for Foreign Assistance Rich Greene here to go through with you some of the highlights and see what questions you have about it. I’ll let each of them make a brief opening presentation and then we’ll go to your questions.

Pat, do you want to start us off?

UNDER SECRETARY KENNEDY: Sure, thank you very much. I am – you’ve presumably gotten a lot of the budget numbers off the charts, so I’m not going to start with reading you a whole series of numbers which will only confuse you. We’ll try to talk about the basic themes of it, but the total requests for the Administration of Foreign Affairs is about $8.2 billion and that’s about a $700 million, $690 million increase over the prior year. And then when you add in the other accounts, international organizations, international commissions and the related appropriations such as Eisenhower scholarships, et cetera, the total ’09 request is $11.4 billion, which is about a $700 million increase over 2008.

Looking at the major State Department operating accounts, the theme here is basically twofold. One is sufficient funding to maintain ongoing operations and cover new initiatives and the issues over the past few years have been the fact that inflation overseas has been running at a higher rate than at the United – than in the U.S. and there’s a way you build the budgets. That can be a problem for the State Department. And the second issue is exchange rates. We’re projecting that if the dollar stays at the current level now – it does not go up or – not go down, we will be short $85 million in ’08 against what the dollar was estimated to be, when we locked the budget for ’08. And so you have to build that loss into the ’09 budget, so exchange rates, overseas inflation, plus maintaining the programs we have and I’ll get to those in a minute.

But there is essentially two major new initiatives that (inaudible) built into this budget. The first is in the area of additional personnel for the State Department. The President’s budget request incorporates about 1,000 new positions for State and the funding and that’s divided in a couple of ways and I will run those numbers: about 300 additional positions for language training. State Department has been criticized heavily on the Hill and in the General Accounting Office reports and by others saying we do not have enough officers in the State Department who speak the languages that we need most now, whether they be Arabic, Chinese, Dari, Farsi, Pushto, whatever. So we need to push out and so the increase that we’re requesting of 300 additional positions in order to put people into language training are for what we call the hard languages. Those take a year or two of training and not Portuguese, Spanish, French or Italian.

Second category is about 150 additional positions for mid-career and senior professional training. You want to do that in such a way that we do more training in conjunction with the U.S. military and in conjunction with other U.S. Government agencies.

QUESTION: Is that (inaudible)?

UNDER SECRETARY KENNEDY: 150, a hundred – 300 hard language training and then 150 for professional education. We need, as you – you all watch the way the world is going. You see more and more activities overseas where you have the State Department, the U.S. military, and potentially other agencies as well working in conjunction and there are more and more military and civilian individuals who have never trained together or never worked together.

And so what we want to do is increase that and so that would have more State Department people being sent to the Armed Forces Staff College in Norfolk, the – more to the Army War College, the Air Force War College, or, in a bad joke, sent to Fort Leavenworth. And that is not only the U.S. military prison, but it is the U.S. Army’s premier mid-career training institution as well. So if we can get more State Department officers out and training in conjunction with the military, we think this will improve our capabilities exponentially and the military has made clear to us that they welcome this joint training.

QUESTION: So that at any given time, there will be 150 people --

UNDER SECRETARY KENNEDY: That’s right.

QUESTION: -- in that program?

UNDER SECRETARY KENNEDY: Yeah, every – every year, there would be 150 and 150 cycle through. They’re mostly one-year courses and then we cycle – cycle them through again – cycle another batch through.

QUESTION: Just so I understand, the idea is that you hire an additional 150 people so you can spare an additional --

UNDER SECRETARY KENNEDY: Exactly.

QUESTION: -- 150 to go get training? Fine.

UNDER SECRETARY KENNEDY: That’s right. Right now, if we pulled – right now, if we pulled someone off the line and send them to the training which is desperately needed, that job does not get done. And with everything that we flowed into Iraq and Afghanistan, plus other issues around the world, you end up, simply, significantly short and we cannot afford – and the Secretary believes very strongly in this, we cannot afford not to invest in the future at the expense of the present.

Another category that I think is important to call out is 50 additional positions for what are called POLADs, political advisors. These are State Department personnel assigned to U.S. military combatant commands or other senior U.S. military commands. The military – we have a number of those positions right now. The military is very, very interested in having additional personnel at EUCOM, CENTCOM, AFRICOM or whatever and this will enable us to – again, if we get the people trained and deployed together, this means we’re building better bridges at the – at both the policy level and at the primary execution and planning levels.

QUESTION: And again, those – these smaller numbers are in addition to the 1100 or the --

UNDER SECRETARY KENNEDY: No, the – I’m breaking – I’m breaking down --

QUESTION: -- are part of, you’re breaking down the 11 – okay.

UNDER SECRETARY KENNEDY: It’s 1,076.

QUESTION: Okay.

UNDER SECRETARY KENNEDY: There’s a few additional in Public Diplomacy at 20. The next major category I wanted to talk about, and this is – it’s called the Civilian Stabilization Initiative and some of you may have been briefed by John Herbst on the Civilian Reserve Corps. This is 351 positions that the Civilian Reserve Corps would have and that’s – that has a variety of components which I can go into later if you’re interested. There are a couple hundred positions for additional security personnel to be deployed both overseas and domestically. And when you add in a couple of smaller categories, it rounds up to 1,076.

QUESTION: (Inaudible) about 20?

UNDER SECRETARY KENNEDY: 20 – there’s 20 in Public Diplomacy and there are 19 in Educational and Cultural Exchanges, so 39 or 40 total in the – in the overall Public Diplomacy arena.

QUESTION: Is this 1,076 all for ’09 or is that a --

UNDER SECRETARY KENNEDY: It’s all for ’09. It’s all for ’09.

QUESTION: You’re talking about more security personnel. Is that mainly to do with the fact that you’re going to have to staff the convoys in Iraq with Blackwater?

UNDER SECRETARY KENNEDY: No, that’s actually – that’s actually – we’re asking for those positions in – in – in a future supplemental. But they’re – the situation around the world is simply significantly more dangerous than it is now. Also, the State Department has responsibilities for – in the visa and passport security arena. As we issue more and more visas, as we issue more and more passports, we need to make sure that those individuals from the Diplomatic Security Service who pursue, investigate and turn over to the U.S. attorneys, material related to those who attempt to commit fraud in getting visas and passports, that we expand that. Otherwise, the integrity of the document could weaken and we have no intention of letting that happen.

QUESTION: Do you have an exact number on the security? Because you said a couple hundred, right?

UNDER SECRETARY KENNEDY: 200.

QUESTION: 200?

UNDER SECRETARY KENNEDY: 200.

QUESTION: Exactly 200?

UNDER SECRETARY KENNEDY: Exactly 200.

QUESTION: Another on the – briefly on the numbers. The 300 for Languages, are those all student positions or are they faculty as well?

UNDER SECRETARY KENNEDY: Student positions, student positions.

QUESTION: So is there a breakout -- of the 1,076 new positions, how much that is going to cost – that is (inaudible)?

UNDER SECRETARY KENNEDY: You know --

QUESTION: (Inaudible) come down?

UNDER SECRETARY KENNEDY: No, I don’t have that because what it is, is it’s broken across dozens of different subaccounts and we have not – we did not – we have not costed it that way. You know, the security positions are costed in the security line, the positions for Public Diplomacy, the positions for Educational and Cultural Exchanges are across – Barbara, do we have --

STAFF: I don’t believe so, sir.

UNDER SECRETARY KENNEDY: Well, Matt, let me get back to you in a second.

QUESTION: But there are --

UNDER SECRETARY KENNEDY: My – the people who are much smarter than I am who actually built the budget --

QUESTION: Right, but it is part of the 8.2 billion?

UNDER SECRETARY KENNEDY: Yes, yes. It’s part – yes, the --

QUESTION: Percentage-wise, how much is it above what you have now staffing-wise or numbers, what’s the base? 8,000 or so? No --

UNDER SECRETARY KENNEDY: The – we have about 8,000 in the Foreign Service and then there – and then another – another comparable number in the Civil Service. And then our Foreign Service National colleagues constitute another – and I didn’t bring that sheet with me, so --

QUESTION: But these 1,100 positions are only Foreign Service?

UNDER SECRETARY KENNEDY: Yes.

QUESTION: Okay.

UNDER SECRETARY KENNEDY: Only – yes, although there’s always the possibility that there might be a few Civil Service personnel assigned as POLADs because we see the POLAD, using that as an example, as not only a way for us to build better links with DOD, but as we send junior people to serve as POLADs – you know, they come back, they might rotate into the Political-Military Bureau to the Office of the African Bureau that deals with Political-Military Affairs and then they – they work their way up through the system. So I believe that we would see some of those 50 POLAD positions occupied by civil servants as a contribution and a rotation in and out of the Political-Military Bureau as well.

And then, turning the – before turning the floor over to Rich, the other major accounts also are going upside: Security, Educational and Cultural Exchange, our overseas facilities programs, and our contributions to international organizations and contributions to international peacekeeping. The demand on security, both for exchange rate losses and just simply more concern about stability in different regions of the world, the need to continue the Cultural Exchange program, which we believe pays significant dividends in building understanding of the United States both from people we send overseas on exchanges and people we bring into the United States.

Overseas facilities; this will permit us to build nine new embassies and then contributions to international organizations; the peacekeeping to cover exchange rates and the changing dynamic of more peacekeeping operations overseas. So that --

QUESTION: Sorry if you never – if you didn’t go – if you went over this in the very beginning --

UNDER SECRETARY KENNEDY: Please.

QUESTION: But – so it sounds like the exchange rate is really killing you.

UNDER SECRETARY KENNEDY: It’s a major issue, yes. I’m not sure how to define – killing is a --

QUESTION: Well, I mean it’s really hitting you hard.

UNDER SECRETARY KENNEDY: It’s hitting us hard. It’s hitting us hard.

QUESTION: Are you assuming, in the FY ’09 budget, that the dollar will stay where it is now or are you --

UNDER SECRETARY KENNEDY: We have to --

QUESTION: -- assuming a deterioration?

UNDER SECRETARY KENNEDY: No, we assume that the dollar – we take the exchange rate as we are building the budget and by OMB rule, we simply project that forward, so --

QUESTION: It could be – so if it deteriorates further, it could be the same place next year?

UNDER SECRETARY KENNEDY: If it deteriorates further, we have further – we have further concerns.

QUESTION: But if it goes back to 1-to-1 against the Euro --

UNDER SECRETARY KENNEDY: If we --

QUESTION: -- are you going to pay back the money – the extra money?

UNDER SECRETARY KENNEDY: Actually, yes.

QUESTION: Oh, really?

UNDER SECRETARY KENNEDY: In – there is an account in the State Department that – it’s empty at the moment, called the Buying Power Maintenance Fund. Should we receive windfall profits, we have the authority to put those funds into the Buying Power Maintenance Fund, which we once did, and then we’re permitted to drain them out as the exchange rate comes down. We – the fund was established a number of years ago. It was funded, but in the intervening years, the decrease in the value of the dollar has drained the fund so now, the fund is empty.

QUESTION: But as a question of policy and expectation, you don’t expect that to happen this year, do you? Are you --

UNDER SECRETARY KENNEDY: I don’t expect it to – I don’t expect it to go back to one Euro to the dollar, no, although I will leave it to Reuben Jeffery to give you the larger econometricians view of that.

QUESTION: I just wanted to give you a chance to make some news.

QUESTION: (Inaudible) Secretary Paulson.

UNDER SECRETARY KENNEDY: That’s right.

QUESTION: Can I ask a peacekeeping question? The budget shows that it’s going down by about half a billion. Is that because it’s in anticipation for a supplemental – ’08 supplemental on that score or --

UNDER SECRETARY KENNEDY: No the – for peacekeeping, it’s going down. It’s going down by 193 million. However, it’s actually – in 2008, the supplemental was in the base. In 2009, there will be a separate supplemental. So when you look at these numbers, you have to check the footnotes because it -- sometimes it looks like things have actually gone down when they’ve gone up, because you then have to back out the supplemental request for ’08, which was incorporated into the ’08 budget. In ’09, there is the base budget and the supplemental is being carried separately.

QUESTION: The figures that we have from the White House budget that came out earlier this morning --

UNDER SECRETARY KENNEDY: Yes.

QUESTION: -- from those – for the State Department section --

UNDER SECRETARY KENNEDY: Right.

QUESTION: -- is -- for international peacekeeping, for example, is $1.497 billion.

UNDER SECRETARY KENNEDY: That’s correct.

QUESTION: Okay. And that --

UNDER SECRETARY KENNEDY: That’s correct.

QUESTION: All right.

UNDER SECRETARY KENNEDY: Now, that’s 193 million less than the ’08 budget, but the ’08 column includes a supplemental --

QUESTION: A supplemental --

UNDER SECRETARY KENNEDY: -- which may or may not occur in ’09. There’s no – been no decision made about what is in the ’09 supplemental except that there will be one.

QUESTION: So the ’09 may – in figure, in fact, may be higher than this?

UNDER SECRETARY KENNEDY: When you add a --

QUESTION: When you add the supplemental.

UNDER SECRETARY KENNEDY: When you add a supplemental at whatever level it seems. Let me turn this over to Rich and then we’ll be going back to questions.

MR. GREENE: Thanks, Pat. What the Secretary is about is trying to raise the importance of development as a policy priority and that’s the lens that I want you guys to see this budget. One manifestation of that is that we were the last cabinet-level agency to close out with OMB during budget negotiations. It went on further and deeper than I think ever before.

And as part of this strategy, you see a pretty robust number for ’09. You see the first year of a pretty significant attempt to rebuild AID’s capacity. You see strength in collaboration with other U.S. Government agencies with significant foreign policy interests, foreign assistance interests. You see trying to build relationships in coordination with the private sector, where we see significantly increased leadership, resource flows and commitments to development. And you also see us attempt to improve our internal management of the foreign assistance allocation process. In ’09, the overall foreign assistance request totals 22.7 billion. Now, that is a 2.1 billion or 10.3 percent increase over what the Administration asked for last year, pretty significant.

QUESTION: 2.1, you said?

MR. GREENE: 2.1 billion or 10.3 percent over what we asked for last year and why we think it’s important to use as a benchmark what we asked for last year is because that’s the best manifestation of what the Administration is interested in doing and what our priorities are. And that 2.1 billion is composed of – primarily of 625 million for the – the increase for the global HIV initiative, 550 million for the Merida – Mexico and Central America -- Central Security Initiative, 600 million increase for development assistance, 200 million increase for AID operations and $150 million increase for military FMF for Israel.

QUESTION: This is all about the ’08 request, not about the ’08 appropriations?

MR. GREENE: All about the ’08 request, yeah, yeah.

QUESTION: You said the last one was 150 million increase?

MR. GREENE: Increase, yes.

QUESTION: So can you do it again? 625 --

MR. GREENE: 625 for the global HIV, 550 for Merida, 600 for development assistance, AID operations 200, and Israel 150. That gets the bulk of it.

QUESTION: And development assistance includes Millennium Challenge or not?

MR. GREENE: It does not include Millennium Challenge.

QUESTION: That’s development assistance across the board for all countries?

MR. GREENE: Correct.

QUESTION: And this is the total for all countries or is this --

MR. GREENE: This is a increase.

QUESTION: Just the increase?

MR. GREENE: I’m trying to get to the components of the 10.3 percent increase of what we asked for, which again --

QUESTION: So it’s not the total for HIV or any of the others --

MR. GREENE: Correct.

QUESTION: Right.

MR. GREENE: Correct. Correct.

QUESTION: Rich, I’m sorry. It’s not that we’re picking on you, but he’s – the 150 for Israel was what part of aid to Israel?

MR. GREENE: That is the FMF, Foreign Military Financing. It’s the first year of a 10-year, $30 billion commitment to Israel.

QUESTION: First year --

MR. GREENE: The one at which – and the total is 2.550 billion.

QUESTION: 2.55?

MR. GREENE: Yeah.

QUESTION: Can you – the 600 million increase in development assistance, is that concentrated in a couple of countries or is it really piecemeal?

MR. GREENE: Let me just run through the introductory riff here. Primarily, Africa has a real big chunk of it, probably Latin America, the second biggest chunk. In terms of how we’ve built this budget and the themes that we emphasize in our many conversations with the Secretary, Deputy Secretary, NSC, White House, first, we’re sustaining a large GWOT investment. There’s 2.3 billion in this request for Iraq, Afghanistan and Pakistan. And like DOD, the ’09 budget level will be supplemented by a forthcoming GWOT supplemental some time this year. Clearly, there have been challenges on the assistance front in Iraq and the global war on terrorism.

QUESTION: Oh, sorry. I didn’t know that.

QUESTION: Can you -- what’s – that 2.3 billion, how much is that more than last year?

MR. GREENE: It’s – again, these are – I wish there was a simple answer, but because of unenacted sups, because of supplementals that come, it pretty much straight-lines. But there’s still supplementals to come and we haven’t worked through some of those numbers yet.

QUESTION: What does straight-line mean?

MR. GREENE: Straight-lines means --

UNDER SECRETARY KENNEDY: Same as last year, the prior year.

MR. GREENE: Clearly, there have been implementation channels –

QUESTION: (Laughter.) Sorry. So the Iraq, Afghanistan and Pakistan --

MR. GREENE: Primarily, yeah.

QUESTION: -- funding is roughly – you’re saying it’s roughly -- going to be roughly the same?

MR. GREENE: Roughly the same, but I cannot say that definitively yet because there is a large ’08 supplemental that has not been enacted by the Congress and there will be a forthcoming 2009 supplemental by the Administration sometime this year. If you see all the press is talking about a forthcoming -- DOD press -- you guys are talking about a forthcoming DOD supplemental. We are part of that.

UNDER SECRETARY KENNEDY: If you remember, they passed -- when they passed the budget in December, they put bridge funding in there, but they did not do the entire, you know, requested appropriations. So we – we’ll have to see what happens next on that.

MR. GREENE: Ryan Crocker was, by Friday, imploring us to keep up, maintain Iraq assistance levels, talking about what a crucial time it is, talking about significant security improvements, talking about how we need a development surge. So first theme in terms of building the budget was maintaining our global war on terrorism investments. Second theme was supporting a number of presidential commitments and initiatives. The first is the large investment in global HIV/AIDS initiative. The total number for the Administration will be 6 billion in ’09 and that’s 6 billion of a five-year, $30 billion program; doubles the previous level for HIV.

Second major initiative is --

QUESTION: It’s double from last year’s?

MR. GREENE: Double from the last time period, from the last five year -- this is 30 billion over five years and the other was, I think, 15 over five years as well.

QUESTION: And can you give us the comparison for the 6 billion for your FY ’09 request versus FY ‘08 guesstimate or your ’08 request?

PARTICIPANT: It’s the same. It’s about 6 billion. It’s just slightly higher -- around 6 billion again.

QUESTION: Okay. Thank you.

MR. GREENE: There’s about 1.7 billion in this request for democracy promotion, including the President’s Freedom Agenda. There is, as I said before, 550 million for the Merida Security Initiative now. So there’s 550 million in the ’09 request. There’s also 550 million outstanding in the ’08 supplemental request, meaning there’s 1.1 billion on the table for Merida for Mexico and Central America. There is 385 million to support the President’s Malaria Initiative. There’s 94 million to support the President’s International Education Initiative. There’s 64 million in these accounts to support the President’s Climate Change Initiative. You’ll find a lot larger component of the Climate Change Initiative is in the various Treasury accounts.

Okay. So we’re supporting global war on terrorism. We’re supporting Presidential commitments. Third, we’re --

QUESTION: 64, climate change?

MR. GREENE: 64, yeah, and -- but the larger component of the President’s initiative is in the Treasury accounts – a lot of the (inaudible).

Third major theme is rebuilding AID’s operational capacity. AID’s workforce has simply not kept up with its programmatic responsibilities, where programmatic funding has gone up by about 40 percent and staffing has gone down by 25 percent. In ’09, we’re requesting funding for 300 additional Foreign Service officers on top of a base of about 1,000. The objective would be to double AID’s Foreign Service officer base by the year 2011.

QUESTION: And that’s separate from the 1,076?

MR. GREENE: That is separate, yep. And there’s also a doubling of AID’s core capital investment fund as well.

Fourth major theme in building the budget is renewing our focus on poverty reduction. The development assistance request’s core poverty reduction account is up 60 percent higher than our request in 2008, again, with a focus on Africa, secondary focus on Latin America.

Fifth, we’re continuing our focus on security assistance. Those levels are up about 5 percent over 2008 with the Israeli increase being the -- by far, the largest increase. Significant FMF programs continue to be Egypt, Colombia, Pakistan and Lebanon.

And sixth, we maintain a pretty robust health focus. On top of the Global HIV account, the $6 billion program, there’s 1.6 billion in the Child Survival and Health programs account.

QUESTION: Do you have a total for both poverty reduction and security assistance?

MR. GREENE: Security assistance is 5.1 billion. Poverty reduction, again, is one of these things that’s spread out all over the place. But the core DA account -- 1.6 billion, but there are all kinds of other places in the budget that we’d say applies to that as well.

QUESTION: And to reduce the poverty you just hand that money out to people?

MR. GREENE: No.

QUESTION: What, 60 percent – that 1.6 billion is 60 percent higher than last year?

MR. GREENE: Than what we asked -- to be clear -- what we asked for last year.

QUESTION: Okay.

MR. GREENE: It’s not 60 percent higher than what was enacted. It’s what we asked for.

QUESTION: And what was the increase in the security assistance then?

MR. GREENE: Five – about 5 percent over what was enacted.

QUESTION: Do you have a country breakdown for each of these, FMF for instance?

MR. GREENE: Yeah, just don’t have them here. But --

QUESTION: It’s on the web someplace?

STAFF: Yeah, it’s in the Summary and Highlights. It’s on the web.

MR. GREENE: Yeah.

QUESTION: So the Foreign Military Funds – can I just verify? The Foreign Military Finance line item that we have in the OMB budget is 4.8 million – I mean billion, 4.8 billion?

MR. GREENE: Yeah, yeah.

QUESTION: 4.8 billion. And of that, how much of it is Israel?

MR. GREENE: Israel is 2.550 in ’09.

QUESTION: Okay. What, FMF?

MR. GREENE: Yeah, the first year of a ten-year plan to provide $30 billion.

So overall – still throwing more numbers at you, I’ll rest with Mr. Kennedy and we’ll respond to your questions, but a strong request, part of an overall plan to elevate the importance of development and other assistance as policy priorities.

UNDER SECRETARY KENNEDY: And as I said, you know, the Secretary’s commitment to make sure that there are sufficient funds to maintain ongoing State Department operations in face of inflation, exchange rate losses, in operating – new operating requirements that have expanded – expanded scope, and then the concomitant additional personnel for the reasons I said and then the Civilian Stabilization Initiative.

QUESTION: Well, it sounds – I mean, it sounds as if – like, you went over the additional things that, you know, you’re looking to have training and stuff, but it looks like you’re – I mean, this is part of the transformational diplomacy – you know, trying to get a better – a better ready Foreign Service for the 21st century? Is that right? I mean it’s not because you necessarily have kind of personnel shortages; it’s more that you want this kind of extra reserve so that the Foreign Service that you have can become stronger?

UNDER SECRETARY KENNEDY: Yes, but I wouldn't say we need an expanded reserve. The answer is that in order to do – to transform, in order to carry out the activities that we have to carry out, we need more personnel who speak Chinese. It takes two years to adequately train someone to speak Chinese.

We do not – in order to do that, you have two choices: You can take someone off the line, so to speak, for two years and have the work that they’re doing go undone or you can have the ability to put them into a training status while there is still some other live body that can carry out their line function. So it is transformational and it’s -- but it’s transformational in this sense of adding time to provide the skill sets that we need, whether it’s working with the Department of Defense, more POLADs, training, co-training opportunities with Defense and other agencies that are engaged in national security affairs, or language training in the languages I think we would all agree that we simply have to do more on.

QUESTION: Can I ask just a simple question? Do you have figures on a country-by-country basis where you could tell us, in aggregate, here’s what we’re asking for for Afghanistan, Pakistan, Iraq in FY ‘09 versus what either we asked for in ’08 or what we expect to get in ’08? Do you aggregate those numbers on a countrywide basis?

UNDER SECRETARY KENNEDY: Yeah, yeah.

QUESTION: And are they available today?

MR. GREENE: You sort of have to work at it. We don’t – they’re in – you can get to them by this document that’s on the web, our Summary and Highlights document. We’re getting to the point, since we’ve locked this thing up so quickly, where we have a simpler table for you to use. It just says 7, 8 and 9 for Iraq.

QUESTION: And how would I get to it by that? I mean, because if you – do you mean going through every single account and then adding up the various components on a country-by-country basis?

MR. GREENE: Yeah, that’s what – we’re in the process of building that now.

QUESTION: If you guys could do that, this is the question our editors ask every year.

QUESTION: Every year.

QUESTION: And it sort of reduces us all to sort of tears.

MR. GREENE: Us, too.

QUESTION: Yeah. If you can – if you guys could do that for next year, that would be wondrous.

MR. GREENE: Yeah, we’ll have it. We just don’t have it right now, which doesn't help you write your stories today. I realize that.

QUESTION: Where is this document – Summary and Highlights?

MR. GREENE: It’s on the State Department web.

QUESTION: Does it match up with the historical perspectives and analytical tables that are in the budget that OMB released?

MR. GREENE: I hope so. (Laughter.)

UNDER SECRETARY KENNEDY: They’re supposed to.

QUESTION: Well, but –

MR. GREENE: There’s plenty of people checking that. (Laughter.)

UNDER SECRETARY KENNEDY: Well, the thing – we do these highlight tables and then we also prepare what’s called the CBJB, the Congressional Budget Justification presentation. And so that’s when we do these things. But as Rich said, we lock this, you know, after Christmas. Actually, we lock this in early January. We’ve got -- the highlight numbers are what you see, then we have to build a large volume of material that we present to the Congress, and that’s when you get to the numbers presented the way you’ve asked for them.

QUESTION: When do they come out, just out of curiosity?

MR. GREENE: On the assistance side --

UNDER SECRETARY KENNEDY: The 30th of February. (Laughter.)

MR. GREENE: And let me tell you why.

QUESTION: I’ll be waiting a long time for that.

MR. GREENE: The why is that we’ve got – that we’re basically negotiating with every mission in the – AID, State mission, State embassy, to try to come up with a program that makes sense. We know the outlines, we know sort of the overall objectives, but we’re just trying to come up with something that makes sense. And also, we’re still – on ’08.

And on ’07, Pat and I could go on for hours – and we won’t – on the machinations of going through exactly what the status of funding is for various programs around the world.

QUESTION: So what is the total, total, total? If we combined both of you guys, what you presented today, what is that? Is that the – what is that called, the Function 150?

UNDER SECRETARY KENNEDY: 150.

MR. GREENE: Total 150 is 39.5 billion. The total State, AID request, including State operations, is 33.9 billion.

QUESTION: And you --

QUESTION: Do that again?

QUESTION: Where does the 38.2 billion come from?

QUESTION: Can we just start with those two numbers again? The 39.5 billion –

MR. GREENE: Is the total --

QUESTION: -- is the total State and AID?

MR. GREENE: No, it’s the total 150 request.

QUESTION: Right. So that --

UNDER SECRETARY KENNEDY: That includes Peace Corps, Millennium Challenge –

MR. GREENE: AID, BBG --

QUESTION: The total discretionary budget authority of 38.2 –

MR. GREENE: Well, this includes some things that aren’t discretionary.

QUESTION: And can you give us the comparison for ’08?

UNDER SECRETARY KENNEDY: Things like contributions to retirement funds are considered mandatory appropriations.

QUESTION: So if we were writing a story about all of the money that the Administration is proposing to spend on foreign affairs – the State Department, AID, everything –

MR. GREENE: 39.5 billion --

QUESTION: -- is 39.5 billion. How much more --

QUESTION: Yeah.

QUESTION: And what’s the comparison for the previous year?

MR. GREENE: I don’t – I just have that for the foreign assistance side.

Do you want to quickly do the equivalent of 39.5?

UNDER SECRETARY KENNEDY: The total State Department appropriations request is 11.4 billion. However, on top of that, there’s another 2.1 billion which is derivative of fees and receipts; i.e., passport receipts, visa fee receipts, affidavit of support receipts. If we’re driving you crazy, you now know what we go through every year trying to stitch it together.

QUESTION: Yeah, but you get paid to do this.

UNDER SECRETARY KENNEDY: Not enough.

MR. GREENE: Not enough.

QUESTION: Well, what we’re looking for is the – if we are – if it is correct to say that the total the Administration is requesting for all foreign affairs is going to be 39.5 billion in fiscal ’09, what was it in fiscal ’08?

QUESTION: They’re working on that.

MR. GREENE: We’ll get you that.

QUESTION: And then what’s the 33.9?

UNDER SECRETARY KENNEDY: 33.9 is the total State, AID component of that. The difference is then things like Millennium Challenge, Peace Corps –

MR. GREENE: Treasury.

UNDER SECRETARY KENNEDY: -- Treasury, Agriculture, other elements in the 150, all of which those individual accounts are available in the document that OMB put on the website.

QUESTION: Okay. But we should use the 39.5 billion if we want to talk about all the --

UNDER SECRETARY KENNEDY: Function 150, yes. Use the 39 --

QUESTION: And – sorry. And the 11.4 billion --

UNDER SECRETARY KENNEDY: -- is called --

QUESTION: -- State Department operations?

UNDER SECRETARY KENNEDY: No, it’s called – it’s the total – total Department of State appropriations, which consists of, you know, four subaccounts. I can give you those four subaccounts, if you wish.

QUESTION: Please don’t.

STAFF: Last year’s Function 150 request was 36.2 billion.

QUESTION: 36.2 billion.

QUESTION: Thank you.

QUESTION: And there’s no way, obviously, of saying what FY08 is likely to be, given that you don’t have the full funding stream for FY08, right?

STAFF: We can tell you what’s been enacted thus far, which is 36.4 billion. But there’s still another 5.4 billion that’s outstanding in the supplemental.

QUESTION: How can – that doesn't make sense at all.

MR. GREENE: No, it does make sense because the Congress added money to the request. We requested a particular amount and Congress passed --

QUESTION: Do you expect any --

QUESTION: But the easiest way for us – this is – you asked for – you’re asking for this year 39.5 and you asked for last year 36.2.

MR. GREENE: 36.2.

QUESTION: But that’s –

MR. GREENE: That’s the comparison.

QUESTION: So last year, Congress added to this. Where do you – do you expect to have any tough fights on the Hill for any of the stuff that’s in there or do you – or do you think they’ll be pleased with the added jobs and --

UNDER SECRETARY KENNEDY: Well, remember, they added – they added money and they shifted money, not necessarily in the lines and accounts in which they were requested. And so that presents another level of difficulty for us, which it’s hard to tell what’ll happen this year. You know, we request a dollar. They give us 75 cents and then add 50 cents in another line. Well, we appreciate the 50 cents they added, but then we’re struggling to figure out how to deal with we believe fully that we need the dollar to maintain this program activity but we only got 75 cents, of which we then lost 5 cents to overseas inflation and exchange rate losses.

And so the answer to your question is each account, you know, stands and falls, and you fight on individual battlefields. It’s not – nobody – nobody really looks at the 150 account except as a display of what the U.S. Government is doing overall. They talk about Peace Corps, they talk about Millennium Challenge, they talk about – even with foreign assistance it’s DA versus FMF.

QUESTION: How hard to you expect, though, the Secretary to be fighting, for instance, for these thousand new jobs?

UNDER SECRETARY KENNEDY: She has made it clear that she intends to go all out. Absolutely all out.

QUESTION: This is the last year of this Administration, obviously. Why do you expect Congress to entertain any of these long-term – first steps in long-term plans?

MR. GREENE: I think on the foreign assistance side, for the most part, these increases that I’ve – for the most part, the increases I have laid out have been welcomed and the kind of things that they want to see in the budget, but to be fair, were some of the kind of things that they were disappointed they didn’t see last year.

UNDER SECRETARY KENNEDY: On the State operations side, the Congress has consistently expressed either directly or through the GAO concerns about language training of State Department personnel, about the fact that we do not have the robust mid-career and senior professional training program that our military – that our military colleagues do. There has been large discussions, included with heavy support from DOD, around the concept that we have named the Civilian Stabilization Initiative. The military does not want to have to do all the activities using the Civil Affairs reservists that the Civilian Stabilization Initiative would enable the Secretary of State to deploy those personnel either alongside of or right after the military personnel deployed in an unsettled region.

So this is the State Department moving ahead in an area in which civilian expertise is paramount. I mean, a lot of the reservists in here – I mentioned the 351 direct positions, but then there’s also 2,000 positions that are actually not positions; these are individuals working in a variety of U.S. Government agencies with skills who – that the budget request would authorize and provide funding for us to borrow them from the Bureau of Prisons if we were helping a country restructure its prison system, or borrow people from the Department of Transportation and the FAA if we were trying to – you know, to reestablish the air traffic control system.

And then the final component of that is a 2,000-person totally non-federal civilian reserve corps of individuals at state and local governments or even the private sector who would sign up and commit, and we would pay for training and then we would pay them, in effect, when they are called out, again, to engage in this civilian stabilization.

So why do we think this might work? It’s because these are the kind of things that Congress has talked about and a lot of people have said we can not and should not always depend on the military to carry out what are essentially civilian reconstruction functions in another country.

QUESTION: But hasn’t it happened maybe, oh, once or twice where people on the Hill have said that, hey, this is a good idea, we should do it, and then refuse to pay for it?

UNDER SECRETARY KENNEDY: That is not an unknown concept.

QUESTION: Right. So --

UNDER SECRETARY KENNEDY: On the other hand – but that is not – that should not preclude us from advancing a logical solution to the issues that we face today.

QUESTION: Can I ask two things, one real easy? Can you give us a comparison – you said that the State appropriations would be 11.4 is the request this year. What was the comparison for last year?

UNDER SECRETARY KENNEDY: 10.7.

QUESTION: And then presumably, captured somewhere within the, you know, $700 million that is the difference --

UNDER SECRETARY KENNEDY: Right.

QUESTION: -- would include the funding for the additional 1,076, correct?

UNDER SECRETARY KENNEDY: Right.

QUESTION: Correct, okay. And then second question, the Millennium Challenge Corporation put out a press release this morning trumpeting the fact that the request for them is up 680 million from last year’s enacted. But last year’s request was 3 billion, not 2.2 whatever, and I thought when the President first announced this, by now he hoped to be at 5 billion a year. And is this simply because the people on the Hill are still mad at you guys -- that the MCC hasn’t been able to get the money out the door fast enough and therefore they’re simply reluctant to fund it at those levels?

MR. GREENE: I think MCC has significantly accelerated their rate of program implementation. Again, they’re still only four years in on what’s a very complicated enterprise that gets rave reviews wherever it goes. And I think like all funding requests, it’s a balance between what’s executable and what room could be carved out in the overall request.

QUESTION: And I am right that it was supposed to be at 5 billion for this year?

MR. GREENE: I don’t – I don’t --

QUESTION: I’ll check.

MR. GREENE: I don’t agree with that.

QUESTION: Okay.

MR. GREENE: Yeah. I don’t know if there was a commitment to a particular number this year. I know there were request levels for the last couple of years, but I’m not sure how that applies to this year.

QUESTION: Okay.

QUESTION: On the Merida initiative, there were some complaints in Central America that they were receiving nothing the first chunk request $50 million. Are you keeping the same composition now for --

MR. GREENE: We’re changing the composition in ’09. The composition in ’09 shifts to 400 for Mexico and – or 450 for Mexico and 100 for Central America. In the supplemental it was 550.

QUESTION: So Mexico is receiving less amount than you originally –

MR. GREENE: Central America is going up in ’09.

QUESTION: Are you planning to make it up in a later supplemental or –

MR. GREENE: Well, we still have – there’ll be another year for Merida in ’10 and we’ll – you know, we’ll see what that will be.

QUESTION: When did --

QUESTION: Can I just follow up on that one?

MR. GREENE: Yeah.

QUESTION: And about the ’08 supplemental, are you still planning to keep the Merida, the first chunk, in that part or perhaps presenting it as a standalone deal?

MR. GREENE: No, it is part of the President’s Emergency Supplemental Request for ’08 and we hope to see rapid passage. I mean, there’s a lot of other things in there as well: Iraq, Afghanistan, Merida, North Korea.

QUESTION: Can I ask a couple questions? The OMB budget has in the text references to 400 million for – I’m sorry, 400 million for Iraq, 1.1 billion for Afghanistan and 830 million for Pakistan. Are those –

MR. GREENE: Those are foreign assistance levels. Now, the – in order to – again, I know this is complicated, but welcome to our world. There will also be a subsequent ’09 supplemental by the Administration which will have additional funding for all three of those areas.

QUESTION: Okay. So this is, like, basic?

MR. GREENE: This is base funding.

QUESTION: And how does this – how do those three figures compare to your earlier FY08?

MR. GREENE: Roughly, about the same.

QUESTION: Yeah?

MR. GREENE: Yeah.

QUESTION: What was the 8 – what’s the 8.2 billion figure for State and operations, and when did that become 8.4?

UNDER SECRETARY KENNEDY: The 8.2 billion – remember I said it was the 11.4?

QUESTION: Yeah.

UNDER SECRETARY KENNEDY: 11.4 has essentially four components: 8.2, which is called Administration of Foreign Affairs; 3 billion which is contributions to either international organizations or peacekeeping; about 110 million for international commissions, which is accounts that we carry, International Boundary and Water Commission, International Joint Commission, International Fisheries Commission; and then another 101 million for what are simply called Related Appropriations – Asia Foundation, NED, East-West Center, Eisenhower, a series of small accounts.

QUESTION: Okay. The one --

UNDER SECRETARY KENNEDY: Those roll up to the 11.4.

QUESTION: Right. To run this building, though, and embassies abroad with the exception of Iraq and Afghanistan, is 8.2?

UNDER SECRETARY KENNEDY: Yes, 8.2.

QUESTION: And you don’t have that comparison off the top of your head, do you?

UNDER SECRETARY KENNEDY: Between -- the last year?

QUESTION: Yeah.

UNDER SECRETARY KENNEDY: Well, the previous year it was 7.5.

QUESTION: Thank you.

UNDER SECRETARY KENNEDY: However, the 7.5 also included supplemental money which has not yet been requested in ’09. So the increase --

QUESTION: I’m sorry. (Laughter.)

UNDER SECRETARY KENNEDY: We want to be forthcoming. We don’t want to drive you crazy, but we also don’t want to mislead you. And it’s this distinction -- sometimes you put the supplemental in the base, which is often called Title 9 money, but then sometimes you submit two separate bills.

MR. GREENE: And you can tell why neither of us can discuss what we do with our families. (Laughter.)

QUESTION: Can you tell me – now we talked about 30 – we talked about 39.5 as the Function 150.

MR. GREENE: Right.

QUESTION: Okay. And State and AID is 33.9 billion?

MR. GREENE: Yeah.

QUESTION: So where does this number from the White House budget, 38.2 – what is that?

MR. GREENE: That’s the difference – there are some mandatory components of the – the White House number, I think, is discretionary and there are some additional mandatory accounts like paying contributions to retirement funds and (inaudible).

UNDER SECRETARY KENNEDY: I’ll give you an example just to confuse you.

QUESTION: Oh, go ahead, please

UNDER SECRETARY KENNEDY: I’m telling you that the State Department budget is 11.4. That’s – that is almost all discretionary. But buried in there is $122 million to pay the pension obligations of all the foreign affairs community. And so there is mandatory and there is discretionary; most is discretionary. And it – I wouldn't go looking for the difference in those two numbers. That will confuse you.

Sir?

QUESTION: What number are you supposed to – I’m sorry. If we weren’t going to use the Function --

UNDER SECRETARY KENNEDY: No, use the Function 150 number.

QUESTION: But the Department – but that’s like the Administration (inaudible). If you were going to say, you know, the State Department request is --

UNDER SECRETARY KENNEDY: It’s 11.4.

QUESTION: Okay.

QUESTION: How many new embassies are in this request, and what would be that number?

UNDER SECRETARY KENNEDY: The construction, it would -- nine new embassies are included in the ’09 request.

QUESTION: And the dollar number associated with the nine?

UNDER SECRETARY KENNEDY: Well, the request for Capital Security Construction is 844 million.

QUESTION: That’s not – this does not include Embassy Baghdad? That’s not --

UNDER SECRETARY KENNEDY: No, that’s all paid for. That’s done.

QUESTION: Last year, the State Department saw some severe resource shortages when it came to passport processing.

UNDER SECRETARY KENNEDY: Yes.

QUESTION: Is there anything built into the ’09 budget to increase staffing or resources for --

UNDER SECRETARY KENNEDY: To make – just to add to your confusion, I told you the State Department budget request was 11.4 billion. I know you’ve all written that down several times.

QUESTION: Yeah.

UNDER SECRETARY KENNEDY: On top of that, and nowhere here, is another 2.1 billion which is fee-generated, which is fees – that you can say with some degree of precision that the consular activities are funded from fees, not from appropriated funds. And so one charge is for a passport, one charge is for a visa; the execution process that leads to a passport or visa – the people, the equipment, the material, the supplies, even the rent comes out of those fee generations. And so yes, we’ve been working with OMB and so fees have been adjusted recently. The passport fee has gone from $97 for a passport to 100. Visa fees have also gone up. This generates sufficient additional funds so we can make the capital investments and hire the additional people in order to do the processing.

QUESTION: And you said the foreign ops was 22.7?

UNDER SECRETARY KENNEDY: Pardon me?

MR. GREENE: 22.7 without the Global HIV initiative, 26.1 with that. I’m sorry, I’m sorry. 22 – oh, God. 22.7 with the global HIV initiative, 22.7 with the global HIV initiative.

QUESTION: That’s just the State (inaudible)?

MR. GREENE: Yeah.

QUESTION: (Inaudible.)

QUESTION: And then the rest of that would make up for, like, Millennium Challenge and all that – all this?

MR. GREENE: Yeah.

UNDER SECRETARY KENNEDY: Charlie, do you have another question?

QUESTION: No, I surrender. (Laughter.)

QUESTION: So 39.5 is the number that you suggest we use?

MR. GREENE: 39.5, yeah, yeah, yeah. The higher, the better.

UNDER SECRETARY KENNEDY: Remember, that is – you know, there’s -- 050 is Defense, 150 is Foreign Affairs, there’s a 250 and a 3, but these are OMB budget categories and they will track back to the overall President’s budget. So if you want to say what’s the U.S. Government spending on – or appropriating for Foreign Affairs, that’s the number. But then there are these fees and there’s these transfers and – but you’re not far off. And if your editor says where do you get the figure, you could say that’s the published --

QUESTION: I’d get you to do it. (Laughter.)

UNDER SECRETARY KENNEDY: Yeah.

QUESTION: Here’s his number. (Laughter.)

UNDER SECRETARY KENNEDY: That wouldn’t do anything for you. (Laughter.)

QUESTION: Can I just clarify the different corps that are being proposed? There’s an Active Response Corps of 250 people?

UNDER SECRETARY KENNEDY: 250 people.

QUESTION: And then there’s a – and what – and that’s for fast deployments?

UNDER SECRETARY KENNEDY: Yes. Those people – rapid deployment within 48 hours.

QUESTION: Okay. And then there’s a 2,000-member standby corps across various agencies?

UNDER SECRETARY KENNEDY: Yes.

QUESTION: How many of those would be State Department?

UNDER SECRETARY KENNEDY: I don’t think that they’ve worked that out yet.

QUESTION: Okay.

UNDER SECRETARY KENNEDY: But I think most of those would not be – most of those would not be State Department because what you’re not looking for is political analysis and development. You’re looking for everything from water treatment plants to aviation and airport control, so --

QUESTION: It’s like technical --

UNDER SECRETARY KENNEDY: Yes.

QUESTION: -- kind of support?

UNDER SECRETARY KENNEDY: It’s technical professionals that exist in everybody from the Bureau of Land Management to the Federal Aviation Administration.

And the third category is another 2,000 that are non-federal, predominantly state and local but could conceivably have nongovernmental personnel and private sector personnel who would be deployed. These would – and they get paid during their two weeks of year – two weeks a year of training and they get paid when they are called up.

QUESTION: But the 250 active response are all State?

UNDER SECRETARY KENNEDY: No, they’re State, AID, Treasury, Ag, Commerce --

QUESTION: Okay. Not to be confused with the Civil Stabilization --

UNDER SECRETARY KENNEDY: No, this is the – the Civilian Stabilization Initiative is the title for the Civilian Response Corps, and then within the Civilian Response Corps is the people, and then there are three flavors of people.

QUESTION: And you want 351 people for your flavor? (Laughter.)

UNDER SECRETARY KENNEDY: The 351 includes the 250, which we would be funding even the people in the other agencies. But that also includes, you know, 100 people to manage and oversee the entire process, including the other 4,000 people, because you have to have something to manage them and keep – and develop the training programs, call them up, work out a training schedule.

MR. GREENE: So you’re talking about a pretty significant --

UNDER SECRETARY KENNEDY: That’s my – that’s paying my salary -- no. (Laughter.)

MR. GREENE: -- a significant increase in personnel from a number of sources. You’re talking about from the Civilian Stabilization Initiative, you’re talking about 1,100 people for State Department corps, and you’re talking about 300 people for AID.

QUESTION: Can you say that again? Sorry. I’m so sorry.

MR. GREENE: Three significant increases of personnel surge: the Civilian Stabilization Initiative which Pat just talked about, talking about the different components, the --

QUESTION: Which was how many people? I’m sorry.

UNDER SECRETARY KENNEDY: I have a – there are 1,076 going to the State Department, including the 351 for the Civilian Stabilization Initiative. And then there’s the 300 --

QUESTION: -- for AID.

MR. GREENE: AID.

UNDER SECRETARY KENNEDY: And then just to confuse you, there is also some fee-funded passport production individuals as part of the ever-expanding demand for U.S. passports and ever-expanding demand for visas abroad. So --

QUESTION: But is the State Department funding all of these corps?

UNDER SECRETARY KENNEDY: We’re funding – we’re funding all 250 of the corps plus the 100 management personnel, yes – 101 management people.

QUESTION: Okay, got it.

UNDER SECRETARY KENNEDY: We fund them and they work – some of them work when they’re not deployed within other agencies building their own skill sets and building bridges and --

QUESTION: Literally.

UNDER SECRETARY KENNEDY: -- in effect, so the reachback – and reachback, so that if we – you know, someone is at Agriculture, when you call that person up, they have the professional skills but they also have, you know, a knowledge base and a network in the agency from which they’ve come that allows them to take advantage of that.

MR. GREENE: But it’s pretty clear that the Secretary’s top priority in terms of all the budget negotiation was getting us more people.

UNDER SECRETARY KENNEDY: Absolutely.

QUESTION: Can I ask --

MR. CASEY: I’ll tell you what. You can ask, but then – now that, Pat, you have thoroughly confused me and I need some, at least, Neapolitan ice cream to go with the three flavors of people, we’ll just make this the last question. (Laughter.)

QUESTION: Okay. There’s roughly 5 billion in this chart that says additional funding requirements. Do you know, is that – is that the amount of the ’08 sup that is yet to be provided? Okay. And what’s your --

UNDER SECRETARY KENNEDY: I’d have to see what --

QUESTION: I’m getting a nod from behind you. But --

UNDER SECRETARY KENNEDY: I’d have to see what sheet you’re looking at. I mean, I need to answer a question (inaudible).

QUESTION: (Inaudible.)

QUESTION: Is that going to get done with the next – at this next – when Congress comes back in March to provide the rest of the war money and everything?

UNDER SECRETARY KENNEDY: That is the pending ’08 supplemental which was not passed as what was then called bridge funding. And you get --

QUESTION: Is it your expectation it will be done with the next --

MR. GREENE: We hope.

UNDER SECRETARY KENNEDY: We hope. We have expressed our views. As you can imagine, when you request supplemental money and they give you a bridge fund, that money eventually runs out during the course of the year and we need the balance of the funding to keep going in ’08.

QUESTION: Can you just introduce yourselves again?

UNDER SECRETARY KENNEDY: Patrick Kennedy, Under Secretary of State for Management.

MR. GREENE: Rich Greene, Deputy Director of Foreign Assistance.

2008/083



Released on February 5, 2008

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