Is Foreign Aid a Waste of Money?

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Why you should care

Because it’s your tax dollars at work.

OZY’s electrifying prime-time TV show, Third Rail With OZY, is continuing to serve up provocative questions each week, and we want you to weigh in with your thoughts. This week: Is foreign aid a waste of money? Email thirdrail@ozy.com with your thoughts, and we might feature your answer next week. Missed the debates from last season? Catch up here.

When a recent interviewer asked President Donald Trump about overseas projects such as the massively successful Marshall Plan, the president replied with a shrug. “For me, it’s America first. We’ve been doing that so long that we owe $20 trillion, OK?” Trump has proposed to slash foreign aid, a move applauded by much of his base, but one met with resistance from both parties. The debate raises the question of what kind of return on investment America gets for its spending abroad.

The foreign aid budget can be hard to quantify, but using a broad measurement across several agencies, the nonpartisan Congressional Research Service found that it was $48.57 billion in 2015 — or 1.3 percent of America’s total spending. (Polls show most people falsely believe it’s far higher.) Much of the funding goes to economic development, humanitarian aid or supporting international institutions like the United Nations — but a third of America’s foreign aid goes to military and security funds: It’s no coincidence that America’s foreign aid budget spiked after 9/11.

Aid money can fuel corruption and fall short of accomplishing its goals.

Aid has often gone to revitalize places where American troops have fought, from post–World War II Europe (the aforementioned Marshall Plan) to South Korea. Now millions of American dollars each year flow to Southeast Asia, where the painstaking work of clearing unexploded bombs and cleaning up toxic Agent Orange sites continues more than four decades after the end of the Vietnam War.

The U.S. foreign aid debate used to be mostly divided on party lines: Liberals wanted to spread American money around to solve the world’s woes without guns, while conservatives wanted to pinch pennies and worry more about the home front. A shift came in the late 1990s, says Brookings Institution senior fellow George Ingram, for two reasons. First, big nongovernmental organizations such as the U.S. Global Leadership Coalition and the ONE Campaign started to woo Congress more aggressively. Second, religious groups got on the foreign aid bandwagon. Perhaps the most enduring positive of George W. Bush’s presidency was his initiative to fight HIV and AIDS in Africa. “It sort of shifted the dialogue and made foreign aid much more bipartisan,” Ingram says.

But new, libertarian-leaning leaders elected in the tea party era like Sen. Rand Paul, R-Ky., relaunched the criticism from the right. Though it remains a small proportion of the overall budget, foreign aid is at its highest inflation-adjusted level since the Marshall Plan days. Paul has tried to block military aid to Pakistan and other nations where terrorists roam. Aid money can fuel corruption and fall short of accomplishing its goals. Sudan, for example, remains a mess despite taking hundreds of millions of dollars in foreign aid for decades.

Ingram says the U.S. lacks a clear global development strategy, but on the whole, aid produces clear benefits in places like South Korea, which took a far different path from North Korea thanks in part to development aid. “It’s pretty well-spent, and there’s a lot of scrutiny and documentation and evaluation of how the money is used,” Ingram says. “Take a look at investments in business in America by venture capital funds. They’re lucky if three out of 10 are successful. With development, we’re talking about much more complicated and much longer-term processes.”

Congress likely will cut foreign aid next year — the House and Senate have competing plans — but nowhere close to Trump’s proposed 30 percent knifing. And the debate will continue.

But what do you think? Is foreign aid overdue for an overhaul? Let us know by emailing thirdrail@ozy.com or by answering in the comments below.

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