Advocates of creating a combined budget for the Defense and State Departments have mixed reaction to a definition, in the new deficit-cutting law, of “security” spending that includes multiple defense-related entities.

Thomas Nides, the deputy secretary of state for management and resources, said at a Washington think tank yesterday he is pleased the Budget Control Act of 2011 for the first time includes State Department and U.S. Agency for International Development (USAID) funding in a broader definition of “security” spending. This security definition–which pertains to the $350 billion in such spending reductions in the first of two rounds of government funding cuts–also includes the Departments of Defense (DoD), Homeland Security (DHS), and Veterans Affairs (VA), along with intelligence and nuclear-security functions.

“That is good news,” Nides said in a speech at the Center for American Progress (CAP), which released an updated report calling for a unified security budget. The left-leaning CAP maintains permanently having such a mega-budget item would help “rebalance” the U.S. security portfolio and “better protect American interests at home and abroad.”

Still, while Nides said he is heartened to see lawmakers including the State Department and USAID funding with the military-related budgets for the first time in the new law, he is concerned about how that specific funding cut will be apportioned among the “security” entities .

“There is a real risk that Congress could decide to shield defense spending and other categories of spending by cutting everything else, and that, my friends, is the bad news,” he said.

Lawrence Korb, a senior fellow at CAP who served in the Pentagon under former President Ronald Reagan, similarly said it was “good news and bad news” that the deficit-reduction law created the combined security category for the first round of cuts.

The White House said the Budget Control Act of 2011, which President Barack Obama signed Aug. 2, will result in $350 billion in defense-related cuts over the next 10 years. In addition to those reductions, a new congressional Joint Select Committee on Deficit Reduction began talking this week about how to find addition government-wide savings in a second round of cuts that will be decided by the end of the year.

The new budget-control law itself does not specify the $350 billion in first-round defense-related cuts over the next decade. Instead, it provides dollar caps for the “security” spending in the first two years, which are $684 billion in fiscal year 2012 and $686 billion in FY ’13. Observers have noted that Congress will decide how to apportion those monies among the “security” spending entities including the Pentagon and State Department.

Nides and Korb expressed concern yesterday about lawmakers cutting non-military security spending to maintain Pentagon funding.

“Our fear this year is that things may get worse, because as we deal…with our deficit situation people might be more willing to go after the State Department and AID rather than the Department of Defense,” Korb said.

Nides noted that both the House Foreign Affairs Committee and a House Appropriations subcommittee have already called for cutting Obama’s FY ’12 budget request for the State Department.

“We at State and USAID are not trying to rob the Pentagon to pay ourselves,” Nides said. “I am not here today to talk about cutting military spending. Our goal is to match our spending on diplomacy and development and the military with our national security challenges. I’ve said this until I am blue in my face and I’ll repeat it again: The State Department and USAID make up about 1 percent of the federal budget. Deep and disproportionate cuts in the State and USAID won’t do anything or make any sense if our goal is to enhance our national security.”

Korb said in previous years “most people” ignored the proposal for a unified security budget and thought it was “naive.” But, he said more people have accepted the concept over the years, including Pentagon officials.

The report he helped craft on a “unified security budget” notes that for every dollar spent on the State Department and USAID, the government spends $12 on the DoD. And for every dollar spent on DHS, $11 is spent on the Pentagon.