September 17, 2014

Foreign aid: A very small part of the deficit solution

By Rebecca Williams 

A viable plan to reduce our country’s mounting deficits and debt will be built on painful choices that include revenue increases and cuts to all government spending, including entitlements and defense. With such thorny issues at stake, it should come at no surprise that many policymakers turn to the easy issue first -- foreign aid. Even here, though, there are no exceptions to the need for government to act and spend strategically.

Skeptics of foreign aid question its effectiveness and value, and some hope to dramatically reduce America’s debt by slashing aid. Meanwhile, proponents insist that foreign aid is an art more than a science -- a modest investment that furthers U.S. foreign policy and addresses a few of the world’s ills.

But hardliners in both camps distort what actually goes on.

Americans significantly overestimate how much our government spends in this area. Respondents to one poll guessed that around 25 percent of the federal budget goes to foreign aid. In reality, it’s approximately 1 percent. The U.S. government will spend $39 billion on foreign aid in FY2011, a sum equal to 3 percent of the estimated $1.4 trillion deficit. 

Ending or deeply cutting foreign aid will not radically alter federal spending or contribute significantly to debt reduction efforts. Foreign aid is but one piece of the larger puzzle, something to be evaluated like every other component of federal spending.

Within these parameters, though, foreign aid is in desperate need of reform which should be part of the spending conversation. The Foreign Assistance Act is outdated and full of competing goals. Strategy is lacking on major questions like how foreign aid relates to national security. And absent clear prioritization, foreign aid programs have proliferated to the point of being offered in nearly every country, though to varying size and degree.

Implementation also is a problem. A multitude of federal departments and agencies are charged with implementing foreign aid but they lack a coordinating mechanism. Just the international affairs budget -- the largest funding vehicle for U.S. programs abroad -- covers the State Department, Agency for International Development and a host of other independent agencies like the Millennium Challenge Corporation and the Peace Corps. Such a fragmented structure reduces effectiveness and causes duplication, two of the main reasons cited for reducing foreign aid.

The President’s 2010 development review started to address these concerns, arguing that international development is “essential to our security, prosperity, and values.” But the follow-up remains minimal as Obama’s words have not been backed up by coherent organizations, processes, authorities and funding that would elevate development to greater prominence.

For Congress to restore our nation’s fiscal health, foreign aid -- like all government spending -- must be scrutinized and considered for reductions. But it won’t save Congress from the tough choices it will have to make on Social Security, Medicare, Medicaid and defense. Foreign aid shouldn’t distract us from the hard road ahead.

Rebecca Williams is an international affairs researcher with the Henry L. Stimson Center’s project on budgeting for foreign affairs and defense, as well as a regular contributor to its blog, The Will and the Wallet. The Stimson Center is a nonprofit, nonpartisan institution devoted to enhancing international peace and security through a unique combination of rigorous analysis and outreach.