President Donald Trump proposed to cut funding to USAID and the Department of State as part of his proposed annual budget, amounting to about 37% of the department’s total budget. Today, development assistance accounts for less than 1% of the United State’s annual budget. The Economist reported that aid made up about 0.23% of GDP in 2005 but was reduced to about 0.17% of GDP in 2016. The Washington Post found we spend about $42.4 billion of our $4 trillion budget on security and development aid. Of those groups, about $25.6 billion is allocated to the latter and $16.7 billion to the former. In total, about 131 countries receive aid from the United States. Of those, the largest recipients of development assistance are Afghanistan ($1B), Jordan ($632M), Kenya ($618M) and Nigeria ($604M). The United State’s development aid is an often overlooked and essential way the country exercises Soft Power abroad. Certainly we can think of practical ways that military aid can increase the influence of one country in another or that country’s ‘Hard Power.’ Alesina and Dollar found a positive correlation between increases in bilateral development assistance and votes in the UN general assembly in line with American interests. The Economist found the same effect except from Chinese development aid to developing economies. We also might consider the image American food aid has in the developing world. Burlap sacks with an American flag and USAID are seen across sub-Saharan Africa and South and South East Asia, providing food for 3 billion people in the +60 years USAID began providing food aid. Bearce and Tirone found that aid flows and market liberalization reforms were positively correlated in developing economies. Foreign investment and American multinational activity overseas are perhaps the strongest way America asserts Soft Power and promotes our long-run economic interests. During the Cold War, aid was instrumental in asserting the United States as a moral, economic and political leader in the world.

Today, it appears that our foreign policy has settled into a mode of complacency when it comes to asserting Soft Power. With proposed cuts to the Foreign Aid budget we run the risk of isolating and reducing American interests abroad, not to mention an increasingly influential China in the developing world. Is humanitarian aid successful? Very few development economists would assert that foreign aid is without any limitations, it often is accused of propping un authoritarian despots, failing to reach those who need it most and is fraught with waste and corruption, evidenced by the figure bellow.

That being said, perhaps looking at specific programs when considering the proposed 37% cut will be more instructive of the potential effect the cut will have. The Brookings Institution broke down the elements of the budget finding, health programs make up the largest portion of this aid ($8B), of that $6.5B goes to PEPFAR, which has treated 11.5 million people across the globe with HIV/AIDS. US funded health programs have been instrumental in the eradication of Polio and Smallpox across much of the developing world in the last twenty years. The second largest area of the budget ($7.5B) goes to humanitarian assistance. With a rising global number of displaced persons and with an estimated 65 million displaced as December of 2015, the need for humanitarian aid to address refugees will be instrumental in stemming future immigration crises and future conflicts. Lastly, if we worry that our aid budget does more harm than good by propping up autocrats, I am afraid that the country most developing economies will turn to is China, who acts with less regard for moral relativism.

If for now we are willing to forgo development and humanitarian aid and instead decide to favor military spending to assert a more direct (Hard Power) approach to America’s role overseas, we may find ourselves playing second fiddle to the country that favores foreign aid and international commerce to global military presence that being China. In 2015, the United States exported $21B in weapons to countries abroad that is in addition to the $14B in security aid we already provide overseas. It goes without saying that military support is the United State’s preferred method of foreign influence. Days ago, 120 retired 3 and 4 star military generals and admirals voiced opposition to the proposed cut saying,

“many of the crisis our nation faces do not have military solutions alone, the military needs strong civilian partners to tackle extremism.”

They were joined by a coalition of faith-based groups organizations unable to overlook the,

unparalleled suffering and loss of life due to extreme poverty, disease, natural disasters, and conflict [around the world].”

If we choose to overlook the diplomatic and commercial gains to development assistance, and we decide not to assert ourselves as a global leader in economic development and international diplomacy we can always differ to an appeal towards morality. This is the question we ask today. Is America going to reduce its foreign footprint and are we going to leave people suffering from disease, famine and conflict to continue to suffer and look for kindness and charity elsewhere (even if some aid allows despots to remain in power)? Fortunately, American foreign aid sees bipartisan support in Washington, prominent Republican Senator Lindsey Graham saying that any cuts to foreign aid would be a “dead on arrival.” The Secretary of State did not seem too upset with the proposed budget cuts, because of the relatively “fewer overseas conflicts” America will be involved with, with this new administration. An interesting assertion considering the proposed $54B additional funds for the defense department. In aggregate, I believe there is a strong argument to maintain our current aid budget, as a method to exercise soft power to promote the US’s leadership role and to help some of the most impoverished parts of the world. Relying on military might may become less effective in asserting dominance overseas as more countries and populations become connected and wars are increasingly fought with non-state actors.

A Case for Foreign Development Assistance