Foreign Aid is Minor Money, and Privatizing and Subcontracting Relief Assistance is Big Business

Citizen Wealth Financial Justice

New Orleans   Survey after survey indicates that Americans believe that a huge percentage of the US budget and their tax money is spent on foreign aid. The Kaiser Family Foundation in a survey found the average respondent thought that more than a quarter of the national budget – 26% – was spent on foreign aid and therefore more than half felt it should be cut back.

In truth, only about 1% of the annual budget is spent on foreign aid of all types and that number relative to US Gross Domestic Product and the level spent by other countries is relatively low. Furthermore, in a detailed analysis of the foreign aid budget done by the Washington Post in late 2016, foreign aid is absolutely not some kind of welfare handout to other governments. Of about $42.4 billion in total aid, in fact almost $17 billion, in the broad category of “security” include supporting the training and development of both Afghanistan and Iraq military forces, where the country is still actively at war. Other big piles are spent to support counter terrorism, drug control, international narcotics and law enforcement and the like. Hard to believe the same American tribes that back more military expenditures would begrudge these expenditures of aid.

The other $25.6 billion falls under Economic and Development with more than half spent on global health projects, where Americans received direct benefits, and economic support, where we receive indirect benefits. In these polarized times, many get their heads screwed on wrong thinking much of it is going to help the global poor who should be bootstrapping their way forward on their own or some such. It’s actually even less. A billion goes towards the Millennium fund where the UN and a number of countries are trying to end poverty. Less than $2 billion goes to Food for Peace. $3 billion is development assistance. And, where the rubber hits the road, $2 billion is for disaster relief and $2.8 billion is for international migrants and refugees. In a $4.15 trillion budget, relatively speaking, that’s chump change.

When you look closely at those kinds of expenditures handled by outfits like the US AID, Agency for International Development, it turns out a lot of the delivery of aid has been privatized and subcontracted as well. The Economist in a study found of a half-billion in aid contracts, 70% had been handled by private companies. Nearly a quarter of all USAID spending in 2016 went to for-profit firms, two-thirds more than was the case in 2008 when Obama was elected. Most of these firms are getting their jobs at auctions, rather through grants. Much of their work is through subcontracts rather than having boots on the ground. The Economist also found that of 4500 subcontractors, a third of them were for-profits and the rest were nonprofits and governments. At the bottom line even the “softer” part of our foreign aid is often supporting American companies and nonprofits and not foreign governments, and under any circumstances its pretty miserly compared to the riches of America and a long way from a handout or welfare.