The biggest problem with ‘Foreign Aid’

Note: I’m writing this as an American citizen to my fellow American citizens. I am not speaking in any official capacity or speaking on behalf of the US government.

Foreign aid is not popular in the US. It’s never been popular. Why does the US congress insist on passing budget appropriations to spend American taxpayer dollars in other countries? Don’t we have enough problems at home? Shouldn’t our money be spent in our own country? Those are good questions, and they deserve an answer.

First, let me clear up some misconceptions. The the Coronavirus relief portions of the bill passed by the House and Senate on December 22 don’t include foreign aid. They were passed as part of a Consolidated Appropriations Bill, along with the regular budgeted spending of the US Government for normal business. You can read that here: Consolidated Appropriations Bill, 2021 (.pdf). This consolidated appropriations bill (including most of our regular US annual budget, requested from Congress by the White House) contains other, non-COVID expenditures that count as ‘foreign aid’. The only section that contains COVID relief is Division M and Division N. It’s easy to see why there’s confusion because regular government spending was passed at the same time. This means that Coronavirus relief money isn’t being spent on ‘foreign aid’. You can see how the Coronavirus legislation actually spends money in the graphic below, courtesy of the Tax Foundation.

Takeaway 1: Coronavirus relief money isn’t being spent on foreign aid.

So why is US taxpayer money being spent overseas?

By now we know that Coronavirus relief money isn’t being sent overseas, but the older question remains: Why is US taxpayer money being spent in other countries at all? Why is it written into our annual budget? Don’t we have enough other things to spend money on within our own borders?

This brings us to my biggest problem with foreign aid: the name. When we talk about spending money in other countries, the term ‘foreign aid’ makes it sound like we’re giving money to other countries, charitably, because we have a bunch of extra money to spend. This couldn’t be further from reality.

The US engages in other countries because there are US interests at stake. We spend money in other countries for one of two reasons: to protect US interests, or to promote US values.

Takeaway 2: We spend money in other countries for one of two reasons: to protect US interests or to promote US values.

The definition of US interests and values is a matter of great debate, and I won’t address that here. Instead, I’ll show you where you, the American taxpayer, can see what we’ve defined as current US interests.

Your United States Department of State publishes, for all Americans to see, our strategy for engaging with each country where we have a mission. You can read our mission priorities by country here: Integrated Country Strategies.

Take the country of Malaysia as an example. Here is a direct link to the Integrated Country Strategy for Malaysia (.pdf). The US has three main priorities in Malaysia. The first is peace and mutual security. The second is good governance and the rule of law. The third is expanding and deepening commercial and economic interests. You can read the complete justification for these priorities in the document above. The first priority affects US security and the protection of American citizens. The second priority promotes US values. The third priority protects US jobs and the financial interests of US companies.

The modern city of Kuala Lumpur, Malaysia, as seen from a Chinese temple.
Photo (c) 2018 by Andrew Shinn

As you can see from the Malaysia example above, the US isn’t just giving away money: everything we spend money on promotes US interests or US values. Politicians are driven by votes. Politicians in the executive and legislative branches don’t spend money in other countries because other countries are voting for them; they spend money because the folks back home depend on connections to other countries for their livelihoods.

California farmers want to be able to export cherries and wine to foreign markets. The money our government spends as (badly-named) foreign aid helps to make this possible. The folks in Columbus, Indiana who manufacture forklifts or the people in Midland, Texas who drill for shale oil depend on being able to export those products to other countries. The US spends money to ensure that they’ll have stable markets and stable societies to keep buying their products.

Are people in other countries helped by US spending? Certainly. Educating women in Pakistan makes for a more stable society; one where terrorism isn’t able to flourish as easily. But the ultimate point of that spending is to protect Americans or promote US values.

Another reason to spend money in other countries is that it’s part of great power competition. China’s One Belt, One Road initiative will spend between $4 and $8 trillion to create a network of trading partners in 65 countries. They’re planning to connect China to Malaysia, Mombasa, and Madrid. International trade isn’t a zero-sum game. But if the US wants to maintain a seat at the trading table, we need to be prepared to spend some amount of money.

Spending money in other countries, so-called ‘foreign aid’, is done to benefit Americans. That’s why, after all these years (and with no natural overseas contituency), our legislators keep doing it.

All Americans should be debating what our interests and value are. I encourage you to talk to your legislators about how they can best promote American interests and values in our spending priorities. But the fact that we have values to promote and interests to pursue in other countries is beyond dispute.