U.S. Foreign Aid – Taxpayer Funded Give-Away Programs or Global Investments?

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Stephen R. Rolandi
November 18, 2024

“Foreign Aid goes from poor people in rich countries to rich people in poor countries.” — U.S. Senator Rand Paul (R-Ky.)

“For the United States, supporting international development is more than just an expression of our compassion. It is a vital investment in the free, prosperous, and peaceful international order that fundamentally serves our national interest.” — Condoleeza Rice, Ph.D., U.S. Secretary of State (2005-2009) and National Security Advisor (2001-2005)

The above quotations attributed to Senator Rand Paul and former Secretary of State Rice reflect Americans’ divergent views on the subject of United States foreign aid, which currently accounts for approximately $ 70 billion, or 1% of the total Federal Budget. The issue of foreign aid takes up a larger percentage of news and debates than it does of the Federal Budget, particularly in an election year. This month’s column takes an in-depth view of this subject, and tries to clarify some misconceptions about foreign aid.

We can define U.S. foreign aid, also known as U.S. foreign assistance, as consisting of a variety of tangible and intangible forms of assistance that the United States government provides to other countries. Foreign aid is used to support American national security and commercial interests and can be distributed for humanitarian purpose.

This assistance is financed largely from American taxpayers and other revenue sources that Congress annually appropriates through the budget process. These funds are dispersed through over 20 Federal government agencies that manage foreign assistance programs, with about 50% channeled through the U.S. Agency for International Development (AID).

Over the years, the primary recipients of American foreign aid have been developing nations, countries of strategic importance to the United States as well as nations recovering from war. While American aid to other countries dates back to 1812, government sponsored aid expanded during World War II and the post-war period. A brief review of the history of American foreign aid is provided below:

History

In 1812, despite continued hostilities between the United States and Great Britain, Congress appropriated $ 50,000 for disaster relief food aid to Venezuela after a massive earthquake devasted the city of Caracas. This occurred at the same time that Venezuela was fighting for independence from Spain.

During World War I, the Committee for Relief in Belgium (CRB), which sent food to the hungry in that nation, received $ 387 million from the Federal government (in addition to $ 314 million in aid from the UK and France as well as about $ 200 million from non-governmental sources). The government monies were provided in the form of loans, but a considerable portion of these loans were later forgiven.

After World War I, the American Relief Administration., under the leadership of future Commerce Secretary and President Herbert Hoover, continued food distribution to war-devasted European countries as well as to Russia (RSFSR) during that country’s famine of 1921-23. Levels of aid by the US increased greatly during World War II, mainly due to the Lend-Lease Program. The primary recipient was the UK, and later to the USSR and other allies. By the end of the Second World War, more than $ 50 billion had been disbursed; while this was set up as a loan program, by war’s end only partial re-payment was demanded.

During the Cold War, the US gave large amounts of aid to Greece and Turkey pursuant to the Truman Doctrine, mostly military and economic aid. The most well-known aid program was the European Recovery Program (ERP), known popularly as the Marshall Plan (1947-51). By the time the Marshall Plan was concluded in 1951, US assistance amounted to $ 12.5 billion.

In addition, during this time, US grants and credits amounted to nearly $ 6 billion to several Asian nations, as well as some $ 400 million to Israel and selected Middle Eastern nations, mostly for economic and some military aid.

In more recent years, U.S. assistance is now provided as a grant rather than a loan, so as not to increase the debt burden carried by many developing countries.

The chart below shows increasing levels of foreign assistance from 2001 through 2018:

It should be noted that during the Obama Administration, President Obama announced to the United Nations Millenium Goals Summit that the US would change its policy toward foreign aid by focusing more on effectiveness, by making sure that donated food, medicine and financial assistance would enable countries to get to the point where they would no longer require such aid.

The Biden Administration’s initiatives in this area have continued the Obama era policies while substantially increasing aid to Ukraine since the Russion incursion of February 2022.

As of Federal Fiscal Year 2022, the components of US foreign aid were:

Humanitarian assistance 25%
Peace and security assistance 18%
Economic Development assistance 18%
Health, education and social service programs 21%
Other (human rights, rule of law and governance) 18%

Currently, the largest recipients of US assistance include: Ukraine ($ 78.3 billion); Israel ($ 21.2 billion); Egypt ($ 2.9 billion); Ethiopia ($ 2.0 billion); Nigeria ($1.5 billion); Somalia ($ 1.3 billion); and Kenya ($ 1.1 billion)

Some Conclusions

Overall, the U.S. foreign assistance program has been very successful. However, there is a fear among the American people that foreign aid is funneled and used to increase the personal wealth of corrupt government leaders. It will be interesting to see if in the current Presidential transition what American foreign assistance policy will be. Time will tell.

Post script — for further reading:

“Foreign Assistance: An Introduction to U.S. Programs and Policies,” published by Congressional Research Service (CRS) January 2022;
“Foreign Aid : Policy and Practice,” First Edition by Phyllis R. Pomerantz (2023), published by Routledge;
“Foreign Aid: Diplomacy, Development, Domestic Politics,” by Carol Lancaster, published by University of Chicago Press, 2006;
“COVID-19 and Foreign Aid,” by Viktor Jakupec (editor) and others, published by Routledge.

Author: Stephen R. Rolandi retired in 2015 after serving with the State and City of New York. He holds BA and MPA degrees from New York University, and studied law at Brooklyn Law School. He teaches public finance and management as an Adjunct Professor of Public Administration at John Jay College of Criminal Justice (CUNY) and Pace University. Professor Rolandi is a Trustee of NECoPA; President-emeritus/Senior Advisor for ASPA’s New York Metropolitan Chapter and past Senior National Council Representative. He has served on many association boards, and is a frequent guest commentator on public affairs and political issues affecting the nation and New York State.

You can reach him at:

[email protected] or [email protected] or 914.441.3399 or 212.237.8000.