Advancing a Free Society

Cutting Foreign Aid

Friday, October 7, 2011

The Deputy Secretary of State, Tom Nides, has an op-ed on Politico this morning, arguing against cutting foreign assistance.  It is a losing battle, for reasons both numerous and meritorious.  But that State is finally trying to make its case to voters and sway public attitudes that affect Congressional votes is a promising change. 

Why will foreign assistance be cut?  There are two reasons: first, the magnitude of our debt crisis portends cuts in all accounts, foreign and domestic; second, State/USAID has failed to make a persuasive case for why it needs to be at current levels.

The budget for State/USAID has increased by 155% in the past decade.  The Bush Administration deserves much of the credit for ushering in dramatically higher spending.  Not only did they increase the levels of aid significantly and create programs to combat specific scourges such as the PEPFAR initiative on AIDS in Africa.  It was also the Bush Administration that developed the framework for shifting assistance from the neediest to the governments making the best use of it.  The Millennium Challenge program developed means of measuring a state’s progress in governance and economics that would lead to self-sufficiency, and negotiated contracts with states that held them accountable for meeting program targets such as elementary school completion rates.  That MCC had to be set up completely independent from State/USAID speaks volumes about the aid agency’s unwillingness to adopt performance standards by which its and its recipients’ actions could be evaluated.

Without assessment tools to identify where assistance is achieving improvements, State/USAID can make only generic and unpersuasive appeals, as Nides does, that “significant cuts to the State Department and USAID budget would do serious, long-term harm to our national security — and our economy,” and that any cuts (such as the 15% voted by the House of Representatives) would decimate our interests.  Yet maintaining current spending would ensure that “our national values, moral compass and self-interest are all perfectly aligned.”  This is vacuous posturing.

Nides’ article makes the grandiose case that aid needs to be sustained because of the revolutions in the middle east.  This a weak argument: our aid didn’t cause those revolutions, and is not a substantial enough factor to guide their development on the timeline they require. U.S. foreign assistance is well-spent helping organize democratic transitions, and is reasonably good at it.  But most of our assistance focuses on long-term economic development rather than these near-term infusions of money and the expertise to organize the infrastructure for meaningful elections.  Nides argument tries to cover the whole expense of foreign assistance on the basis of a small slice.

The fundamental political problem for foreign assistance isn’t misperception by the public of its size, but inability to justify why current spending levels are essential.  And then there’s the provability.  Nides says in Libya our aid will “build vibrant political parties and civil society groups — to prevent corruption and encourage political change.”  Which is terrific.  Except that political change has occurred without that aid, and where we have given enormous amounts of it -- in Afghanistan, for example -- it has not produced those results.

A specific problem with Nides’ argument that we need foreign assistance because of change in the middle east is that argues for prioritization, not additional spending.  State believes they ought to be funded to continue everything they are currently doing, in the way they are doing it, and have more money for new developments.  They will instead have to do what businesses and households all over America are doing in these straitened economic times: prioritize and economize.

State/USAID’s claim also misses the bigger point that Americans are enormously generous with foreign assistance -- we just don’t give it through our government.  More than 80% of U.S. foreign assistance is non-governmental.  The vibrancy of American civil society channels foreign assistance through our charities, church groups, sister city programs, high school exchange programs and myriad other non-governmental organizations.  These groups have specific interests and very often bring better business practices than our government does to providing assistance.  The Gates Foundation is a better provider of assistance than is the U.S. government, and may do as much to brand America positively as does our government assistance.

And there has been an explosion of assistance in the past decade, including new donor countries such as China, Brazil and Russia contributing more than $8 billion to development.  The World Bank’s resources have more than quadrupled in the past decade.  Additional assistance has come the form of remuneration sent back to countries of workers’ origin. 

U.S. development assistance has increased 155% in the past decade -- from $10 billion in FY 2000 to $26 billion in 2010.  For State/USAID to get a solid basis for continuing the current level of spending, it needs to answer the underlying question: Is that not adequate?  And if not, why not?