Exclusive: How the State Department Escaped the Shutdown

From the CIA to Treasury, the shutdown has crippled key national-security functions. But John Kerry’s State Department barely has a scratch. Josh Rogin and Eli Lake report.

10.08.13 5:00 PM ET

Until yesterday, 400,000 Defense Department employees were furloughed without pay due to the government shutdown. At the Treasury Department, the offices that enforce and monitor sanctions on North Korea, Syria, and Iran have been reduced to a skeleton crew. And large numbers of CIA analysts and logistics officers—including, until last week, 72 percent of the civilian workforce—have been told to stay home until the government has a 2014 budget.

Yet while these and other federal agencies struggle to keep the lights on, John Kerry’s State Department appears to have largely avoided the pain.

At Foggy Bottom—admittedly a much smaller agency than Defense—only 340 employees have been sent home. The department recently informed Congress of several plans to spend money on non-critical items, such as $8 million for a new consulate building in Hyderabad, a city in southern India, according to a document obtained by The Daily Beast. In addition, its Iran negotiating team is fully funded and moving forward with plans to meet Iranian government officials in Geneva next week.

“Instead of keeping people around at the State Department to fly to Switzerland to play patty-cake with Iranian dictators, the president should be keeping people around the Treasury Department to protect our national security and enforce our sanctions,” one senior GOP Senate aide complained to The Daily Beast.

The complaint is not uncommon. Hindered by confused guidance from the White House, the many branches of the nation’s national-security apparatus have taken drastically different interpretations of how to implement the shutdown, according to interviews with over a dozen furloughed and non-furloughed federal employees across the Obama administration’s bureaucracy. One of the most confounding aspects of the process, these officials say, is why the State Department is seen as largely untouchéd.

Members of Congress and administration officials say the State Department has been able to shield the blow for now in part because it still has money left from the last fiscal year and its funding mechanisms allow for most programs to carry money over during the crisis.

“Each agency across the Federal government has different funding mechanisms, and thus a lapse in annual appropriations means different things to different agencies,” an administration official told The Daily Beast. “These funding mechanisms were not designed with a government shutdown in mind, so it’s not surprising that, during a shutdown, the different funding mechanisms may give an appearance of inconsistency as to which programs continue.”

But people both inside and outside the government are perplexed that the White House’s Office of Management and Budget and the Justice Department’s Office of Legal Counsel are not enforcing any semblance of consistency in how the shutdown is implemented for agencies that are charged with national security functions. The lack of coordination across agencies is creating confusion about which personnel to furlough—and resentment among those who feel that important national security tasks are being set aside while less important activities get funded.

“Each agency seems to interpret ‘only necessary functions’ differently. It’s rather outrageous that the White House is allowing this,” one furloughed administration official said.

A State Department official told The Daily Beast that the State Department has curtailed many non-essential activities and that if appropriations don’t materialize soon, they will be forced to furlough large amounts of workers similar to what other national security agencies have done.

“The State Department can continue to function for a limited period of time with the exception of a small number of offices impacted initially. But the clock is ticking. An extended shutdown would force wide scale closures and furloughs,” the State Department official said. “At the moment, we estimate that we can make payroll through one more cycle, but we’re monitoring this daily and will act when is becomes evident that funds will be insufficient to continue. We’re not conducting business as usual.”

Sen. Patrick Leahy, the Democrat who chairs the Senate subcommittee that funds the State Department agreed, saying, “The State Department has carry-over money from prior years and the ability to transfer funds between some accounts that will help contain the damage for a few weeks, but the writing is on the wall. If the shutdown continues our diplomats, our embassies, our trade relations, our leadership in international organizations and our national security will suffer.”

Get The Beast In Your Inbox!
By clicking "Subscribe," you agree to have read the Terms of Use and Privacy Policy
Thank You!
You are now subscribed to the Daily Digest and Cheat Sheet. We will not share your email with anyone for any reason

The Obama administration says even with the money left over ,some missions critical to U.S. foreign policy are in peril. “Our security assistance for Israel, our closest ally in the Middle East, is being delayed,” Secretary of State John Kerry said Sunday. “The new fiscal year started this last week, but because of the shutdown, some entities don’t have the funding that they need, including supporting the peacekeeping mission in the Sinai, at a time of growing unrest in a critical area.”

But the office of Congresswoman Kay Granger (R-TX), the chairwoman of the House subcommittee that funds the State Department, disputed this claim. Granger’s spokesman Matt Leffingwell told The Daily Beast the State Department has plenty of money it can shift around to use for critical items such as the security of Israel, if it wants to.

“While the State Department has not provided exact estimates of carryover funding to Congress, we know that the Department held back more than $1 billion of foreign assistance funds appropriated during fiscal year 2013,” he said. “If the Secretary is concerned about any delays, he could immediately notify the Congress that he plans to provide additional funds to Israel and the Sinai mission.”

Meanwhile, inside the intelligence community, the shutdown has taken a dramatic toll on the CIA. Sen. Dianne Feinstein (D-CA), the chairwoman of the Senate Select Committee on Intelligence, disclosed last week that 72 percent of the civilian work force in the intelligence community had been furloughed.

More people have since gone back to work after Congress passed and the president signed a law funding the military. But the CIA is still working with significant reductions. One Congressional staff member who works closely with the intelligence community budget told The Daily Beast that the gaps mainly affected logistical support for operations that were not deemed mission critical. This means that personnel and equipment are not being sent overseas for operations that don’t deal with top tier threats like al Qaeda or Syrian chemical weapons, this source said. Another U.S. official said, “It’s easier to furlough a logistics officer than to put on hiatus someone working on al Qaeda.”

The annual intelligence community budget is a little more than $75 billion annually. The budget comes from two large accounts known as the military intelligence program and the national intelligence program. The bill to fund the military restored the military intelligence program, but the CIA, which gets its budget from the national intelligence program, remains in fiscal crisis.

Across the government, money just isn’t as fungible between accounts as one might think, the State Department official said. For example, the India consulate money was based on a long negotiation and construction won’t actually begin for some time. Congressional aides also note that the State Department was given $5 billion for embassy construction and security in March but continues to claim that the shutdown is hurting their ability to protect diplomats abroad. State Department officials respond that the $5 billion is already planned for specific projects and new money is needed for new embassy security projects.

Rep. Nita Lowey, the ranking Democrat on the House committee that oversees the State Department budget said, “Neither our enemies abroad nor our global health and humanitarian challenges overseas ‘shut down’ with the federal government. Our engagement in these critical areas cannot be subject to political gamesmanship in Washington.”

For top Republicans, the various implementations of the shutdown inside the national security bureaucracy represents another example of the Obama administration trying to magnify the painful effects of the shutdown for political purposes.

“If the president and his administration spent as much time trying to find a resolution to this shutdown as they are trying to make it as painful as possible for federal employees and the American people, we could have resolve this issue days ago,” Kevin Smith, spokesman for House Speaker John Boehner (R-OH), told The Daily Beast.