The False Logic of Budget Cuts to Foreign Aid

Our company mission is to find creative ways to help our clients make the world better. Over time, we have worked with several nonprofit organizations that are focused on helping vulnerable individuals and communities around the world. Although our primary work is brand- and strategy-related, we inevitably get caught up in the passion that these organizations have for their missions. Following up on our article focused on arts funding earlier this week, in this post we focus on the U.S. foreign aid budget and its impact on the global nonprofit sphere as well as America’s image around the world.

budget cuts to foreign aidWe recently had a meeting with Kathy Spahn, CEO of Helen Keller International (HKI). She pointed out a photograph hanging on the wall of her office. It’s obviously not a portrait of organizational co-founder Helen Keller but of a father holding two small children in his lap. As you look at the photo, it may seem unremarkable. One child looks chubbier than the other, as if they might be fraternal twins. I say twins because both children are the same physical size. Kathy explains: “This is in Niger. Our team found this family in a hospital ward for malnourished children which HKI was supporting in the Diffa region. The child on the left is five months old and her sister on the right is three years old. The older sister was born during a severe drought which meant she hadn’t received adequate nutrition during the critically important first two years of life. As a result, her growth was severely stunted. This is on my wall to remind me of the impact of our nutrition programs.”

An important funding source for HKI is USAID, a U.S. government agency whose mission is “ending extreme poverty and promoting the development of resilient, democratic societies that are able to realize their potential.” USAID supports a long list of NGOs based in the U.S. and around the world (USAID refers to them as Private Voluntary Organizations or PVOs). You can explore them here. For the 2017 fiscal year, USAID’s budget has $22.7 billion in foreign aid distributions. Add that to funding distributed through the State Department, the Treasury Department, and other sources, and you get a total of $36.5 billion in foreign aid from the federal government for fiscal year 2017. You can explore where it all goes on this interesting and functional website.

American foreign aid is crucial funding for a variety of causes that impact global public health, security, human rights, and many other areas. But it is under threat from the Trump administration, which wants to slash funding for foreign aid as part of a plan to cover a massive increase in defense spending.

American foreign aid is crucial funding for a variety of causes that impact global public health, security, and human rights.

This is a misguided idea. We should actually spend more on foreign aid because we are the wealthiest country in the world and have a moral obligation to help those who are vulnerable and suffering, as much as we can. Our contributions have symbolic importance in reaffirming our global leadership position. They are also a crucial part of “smart power” and ultimately improve our national security.

What’s on the table?

The 2018 fiscal year begins on October 1. Budget details are far from clear and Congress always has its share of disagreements with the White House. But this past Monday, February 27, a budget official announced that the Trump administration would seek a “historic” 9% increase in defense spending in order to make our “depleted military” great again. We spent $598 billion on defense in 2016. Trump is talking about $54 billion more.

Two things on this. First, the disparity in military strength and defense budget between the U.S. and everyone else is already absurd. We spend almost as much as the next 14 largest spenders combined, many of whom are allies. Second, the White House’s attempts to explain where this $54 billion will come from are … sad. Apparently, a senior budget official said that most federal agencies would see budget cuts; the official also singled out foreign aid, saying it would face “large reductions” in spending. According to the “failing New York Times,”, the official “did not explain why foreign aid, which is a very small fraction of overall government spending and is connected to security concerns abroad, was being targeted for steep reductions.”

Cuts to foreign aid would harm our national security, as 120 retired American generals and admirals were quick to warn.

This is troubling on several levels. It would deprive other countries and organizations doing good for humanity of funding they depend on. It would actually harm our national security, as 120 retired American generals and admirals immediately warned following the White House announcement. It would also further damage America’s steadily deteriorating image as a global leader.

But the proposal is also troubling because the relative size of our foreign aid budget is so small that cutting it will do very little to fund Trump’s defense agenda. So one could draw the conclusion that calling out foreign aid serves a symbolic purpose: to leverage the fact that most Americans significantly overestimate how much we send to other countries in order to give a vacuous boost to Trump’s “America First” agenda.

The $36.5 billion that Obama’s final budget gives to foreign aid is less than 1% of the overall federal budget of $4.15 trillion.

The $36.5 billion that Obama’s final budget gives to foreign aid is less than 1% of the overall federal budget of $4.15 trillion (0.88%, to be exact). However, a 2016 Kaiser Family Foundation poll showed that fewer than 3% of Americans could accurately put the total below 1%. Nearly half (47%) thought the total was over 20%, and the average estimate was 31%. Trump, in typical fashion, can use this ignorance to his advantage. The image of Uncle Sam wandering around the world giving away nearly a third of his budget to other countries fits neatly into Trump’s populist and nationalist rhetoric.

I am not using the word ignorance to be accusatory or condescending. I don’t think giving accurate estimates of our foreign aid spending is a reasonable expectation and I will readily admit that I would not have guessed below 1%. The U.S. spends much more on foreign aid than any other country (as you can see from the first chart in this article from the World Economic Forum). It’s easy to see how this could contribute to the misperception. Still, the misperception is startlingly wide; my point is that it probably does a lot of needless damage to public opinion about our generosity around the world. Much good would come from making the reality more well-known.

A step in the wrong direction

The reality is that we are actually not very generous relative to our wealth. If you didn’t already, take a look at the second chart in that article from the World Economic Forum. We aren’t on it. As a percentage of gross national income, our foreign aid contribution is 0.17%. That puts us 20th in the world and doesn’t even meet one quarter of the UN’s recommended level for developed countries (0.7% of GNI).

As a percentage of gross national income, our foreign aid contribution is 20th in the world at 0.17%, far from meeting the UN’s recommended level for developed countries.

So, as we argued for the arts and humanities in our last post, with foreign aid we find the U.S. in a position where it should be doing more and is instead on the verge of doing less for dubious reasons. We are not talking about “budget dust” here—we spend much more on foreign aid than on the arts—but we’re still talking about a miniscule piece of the overall federal budget. Cutting it could only make a small dent in the proposed defense spending increase.

Let’s examine. Of the $36.5 billion foreign aid total, $8.3 billion goes to “peace and security.” In reality, most of this is money we give to other countries to spend on contracts with American defense firms (Israel has long had an exemption from this policy to bolster its own defense industry but that exemption is being phased out). So this $8.3 billion is a way to subsidize the U.S. defense industry while strengthening key allies. Given his emphasis on national security and the very increase that prompted this post, it’s doubtful that Trump would argue for cutting money here, though it’s difficult to predict given his lack of coherent foreign policy.

If we assume that the military portion is safe, that leaves us with a little over $28 billion in non-military foreign aid. The largest category in that sum is health, the majority of which ($6 billion) goes to fighting HIV/AIDS. Other categories include humanitarian assistance, economic development, and programs aimed at promoting democracy and human rights. “Large reductions” in spending on foreign aid would likely come out of these areas.

Most Americans think we give away much more than we do, significantly overestimating how much we send to other countries.

Really? How big will these reductions be? Will we cut the total in half? That’s hard to imagine, and it would be tragic, but even that would only yield a quarter of the total needed to finance Trump’s desired defense increase. And that ignores the damage that cutting foreign aid would do to our national security. In the words of Secretary of Defense James Mattis, “if you don’t fully fund the State Department, then I need to buy more ammunition ultimately.”

It’s more than just the State Department, of course. A letter signed by those 120 admirals and generals said: “We know from our service in uniform that many of the crises our nation faces do not have military solutions alone. The State Department, USAID, Millennium Challenge Corporation, Peace Corps and other development agencies are critical to preventing conflict and reducing the need to put our men and women in uniform in harm’s way.” This is what is called “smart power.” The military seems to understand it; unfortunately, our new White House administration may not.

Cutting foreign aid to fund the American military’s return to greatness is a non-sequitur from a practical standpoint, but in Trump’s America, it is a symbolic home run.

But suppose they do. Cutting foreign aid is not logical and it won’t recoup much money anyway. What if they had a more subtle reason to single it out? I realize that this is ultimately conjecture, but I cannot ignore the political value of the administration’s move. Trump spent much of his campaign talking about “America First,” about how our allies need to do more, about how we are “losing everywhere.” He will spin this into the same narrative: we’ve been giving too much away; now we’re going to stop and spend more on protecting ourselves instead. Cutting foreign aid to fund the American military’s return to greatness is a non-sequitur from a practical standpoint, but in Trump’s America, it is a symbolic home run.

What should be done?

The final say on the federal budget rests with Congress. We might be cynical about how dysfunctional it is, and it’s hard to see the impact one phone call, one letter, or one social media interaction will have, but don’t let that deter you. Members of Congress do listen to their constituents. So call, write, post, ask to meet with a staffer.

Specifically:

  1. Tell your representatives that you care about America’s global leadership. Tell them that you want our country to help those in need around the world to a degree commensurate with our wealth.
  2. Urge them to oppose any cuts to the foreign aid budget. In fact, urge them to increase it.
  3. Tell them that you know what is at stake in doing less for struggling countries: it will have consequences for millions of people around the world, and at the end of the day, it will make us less safe. Urge them to use their visibility to spread this message.
  4. Remind them that most people think we give away much more than we do. Urge them to use their visibility to correct this misperception and thus, help improve public opinion about American generosity.

Beyond action with Congress, we urge you to directly support one of the many organizations that are doing crucial work around the world. Government funding is just one of many important funding sources for these organizations. We won’t make any recommendations as there are far too many worthwhile destinations for your money. Just pick a cause you care about and do your due diligence. Hopefully, you’ll find an organization with a clear and meaningful message that resonates with you. If you find one that doesn’t grab your attention and hold it, tell them to get in touch with us!
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Photo credit: HKI

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