According to the World Bank, 22% of the world’s population lived on less than $1.25 per day in 2008. More than 1 billion people do not have access to food and 1 billion still lack access to clean, potable drinking water. The statistics on global poverty are endless and with one of the largest economies in the world, the United States is in a prime position to provide support to developing countries through foreign aid. America has a long history of using its economic advantages to help countries in need through multi-lateral and bi-lateral support. Successful, sustainable development and poverty reduction, however, is not easy, and often in the presidential debates, the intricacies of global interdependence—through multinational corporations, national defense, aid, or loans—get simplified.
In a 2010 poll, Americans were asked to estimate how much of the federal budget goes to foreign aid. While the median estimate was 25 percent, the median response for what they thought the “appropriate” percentage should be was only 10 percent. In reality, about 1 percent of the national budget is allotted to foreign aid. Steven Kull, director of the Program on International Policy Attitudes, said about the overestimate that it “may be due to Americans hearing more about [recent] aid efforts occurring in Iraq, Afghanistan and Haiti.” The actual investment in foreign aid is a small fraction of the discretionary budget. David Kilcullen explains in his book The Accidental Gorilla that in personnel terms, the Department of Defense is about 210 times larger than the US Agency of International Development (USAID) and the State Department combined, and it has 350 times as large a budget.
While foreign aid is often left out of the Presidential Debates, we aim to take a closer look at how President Obama and Mitt Romney propose to deal with foreign aid, and more specifically global poverty, in the upcoming presidential election. Does the United States have a responsibility to the rest of the world to help reduce global poverty, or should the country focus on domestic issues and policies?
This debate is an edited version of a debate that is part of the US Presidential Election Project and as such there are some differences from normal debatabase debates. The two sides are not necessarily for and against, they may agree on a few things, but are instead Obama and Romney’s positions so may not add up to a compelling case. As in other debatabase debates the counterpoints will be highlighting the flaws in the argument. The Points For are Barak Obama's position and Points Against Mitt Romney's.
Despite a large national deficit, the Obama administration has stated over and over again that they have no plans to cut Official Development Assistance (ODA), and the 2011 budget reflects that by putting the United States on a path to double foreign assistance by 2015. The Obama administration has requested $56 billion for international affairs in Fiscal Year 2013 that would go towards USAID funding and programs. This would go a considerable way towards the target, first pledged in 1970, of rich countries committing 0.7% of GNP to Official Development Assistance.
This increase is necessary because Obama has increasing commitments to meet. The administration wants to embrace the United Nations Millennium Development Goals to cut global poverty by 2015 in hopes that foreign assistance can help countries build “healthy and educated communities, reduce poverty, develop markets, and generate wealth”. The Obama administration wants to increase foreign assistance to make investments to combat terrorism, corruption and transnational crime, improve global education and health, reduce poverty, build global food security, expand the Peace Corps, address climate change, stabilize post-conflict states, and reinforce conflict prevention.
In a speech promoting good governance in Ghana, President Obama stated, “the true sign of success is not whether we are a source of aid that helps people scrape by—it is whether we are partners in building the capacity for transformational change.” The goal remains to expand diplomatic and development capacity while renewing the United States as a global leader.
It is wrong to be expanding the aid budget at a time of economic crisis when the government is dramatically failing to balance its books. The list of things that the Obama administration wants to do with aid are either things that are best left to the military and intelligence services such as combating terrorism and transnational crime, or are areas where the United States has no responsibility to be providing assistance such as global education and health. The reality is that there are not rising commitments for foreign aid; far from it. The number of people in absolute poverty (less than $1.25 per day) has declined from 1.91 billion in 1990 to 1.29 billion in 2008 despite a rapidly rising population. Moreover it is not foreign aid that is bringing about this decline but trade and the resulting economic growth in developing countries. It is therefore completely the wrong strategy to be increasing foreign aid to tackle these problems.
While foreign aid is obviously for the benefit of the recipient country that country is not the only one that benefits; U.S. business is often a major beneficiary. It does this in two ways: First they benefit directly through carrying out the contracts for supplying aid, for example Cargill was paid $96million for supplying food aid in 2010-11. Secondly there are also indirect benefits. Through the work of the United States Agency for International Development (USAID), the Obama administration hopes to “develop partnerships with countries committed to enabling the private sector investment that is the basis of sustained economic growth to open new markets for American goods, promote trade overseas, and create jobs here at home”. Essentially, through foreign aid, both the economies of the developing world and the United States come out ahead. Even Microsoft founder and philanthropist Bill Gates has been quoted as saying that the 1 percent the United States spends on foreign aid “not only saves millions of lives, it has an enormous impact on developing countries – which means it has an impact on our economy”.
While it is undoubtedly true that some foreign aid money will flow into the hands of US firms it is wrong to argue that this is beneficial to the economy. What needs to be considered is not just whether some aid money ends up in the hands of Americans but whether that same money could be spent in such a way where more of it would. The answer is undoubtedly yes. The same money would benefit the economy much more if handed back to the citizen to spend themselves or directly invested in the United States. The developing world would then in turn benefit because more Americans spending means more purchasing of goods made in developing countries. The United States exports $2-3billion worth of goods to Africa every month while it imports around $6billion clearly then Africa is benefiting from trade with the United States and more spending in the United States will benefit Africa.
While a second Obama administration is not going to cut back on foreign aid the Obama campaign however, does argue for pragmatic budgetary approaches to foreign aid, creating transparency measures to ensure that “assistance [is] more transparent, accountable and effective”. The Obama administration has signed the Busan Partnership for Effective Development Co-operation which makes transparency a key pillar of overseas development and has succeeded in significantly increasing transparency; in 2010 the U.S. was ranked 24th in Quality of Official Development Assistance rankings on transparency, by 2012 it had moved up to 9th. It is also clear how beneficial transparency is for the recipients of aid; Uganda implemented Public Expenditure Tracking Surveys in 1996. Surveys had shown that only 13% of funds for schools was actually getting to the schools but the introduction of PETS increased this to between 80-90% simply because it was public that the school should have received money.
Everyone is for transparency when it is taxpayers’ money that is being spent however transparency does not make it a worthwhile investment. Ban Ki-moon, the United Nations Secretary General says that “Last year, corruption prevented 30 per cent of all development assistance from reaching its final destination.” This means huge amounts of money is not helping development as it is meant to. Obama’s transparency initiatives will no doubt help show what the US is spending and where but will it tell us who else benefits? Moreover the administration’s record on aid transparency is very patchy; some budgets like the Millennium Challenge Corporation, created by the Republicans during the Bush Administration, are very transparent while big departments like State and Treasury are just the opposite.
In Obama’s 2012 campaign, promoting good governance through foreign aid makes sense for a range of foreign policy and development objectives. Through contributions in healthcare, education, poverty alleviation and infrastructure, investing in foreign aid and increasing the foreign aid budget will help create a more peaceful and safe global environment. Robert Gates, former US Secretary of Defense, has stated that “cutting aid jeopardizes US national security. It also creates a greater vacuum in so-called fragile states, which can easily be filled by those who do not have US interests at heart. There is no doubt that foreign assistance helps ward off future military conflicts.” In much the same way as encouraging people to eat healthily will likely reduce expenditures on healthcare in the future so some spending on aid with resulting development and better perceptions of the United States can reduce conflicts in the future so saving money in the long run by preventing the need for expensive armed interventions.
Aid does not benefit national security; there are two ways to increase national security. First is to increase spending on those agencies that maintain national security; the Department of Defense and the intelligence agencies. Second is by expanding the economy which provides the necessary wealth to maintain national security. Foreign aid clearly does not benefit national security because the recipient will spend it how they want and often this will be in ways that are detrimental to U.S. security, whether this is though the aid being spent on products from China or being lost to corruption. Aid from the United States has often not been beneficial in the past the U.S. gave Egypt $1.5 billion per year in aid yet is now controlled by the Muslim Brotherhood, Pakistan received $963 million and yet supports the Taliban fighting against the US in Afghanistan.
As a fiscal conservative, Governor Mitt Romney believes that Americans and the United States economy will be better off cutting foreign aid expenses. In an October 2011 Republican primary debate, Romney passionately defended the GOP stance of questioning humanitarian assistance and foreign aid. He said, “I happen to think it doesn’t make a lot of sense for us to borrow money from the Chinese to go give to another country for humanitarian aid . . . . We ought to get the Chinese to take care of the people that are taking that borrowed money.” This was a reference to the size of the deficit; currently Obama’s projected deficit for 2012 is $1.33 trillion and much of that is borrowed from other countries and China has most holding $1.164 trillion as of June. Romney’s campaign often compares President Barack Obama’s policies to those of Europe. He criticizes the Obama administration’s foreign assistance efforts as largely squandered by a fragmented Washington bureaucracy.
Foreign aid is a minute part of the US budget as Obama has correctly argued “[it is wrong to] suggest that we can somehow close our entire deficit by eliminating things like foreign aid, even though foreign aid makes up about 1% of our entire budget.” So very little of the money the US is borrowing is being spent on foreign aid.
It is also wrong to assert that the US government debt is borrowing money from China as most government borrowing comes from the US private sector. China owns a mere 9.3% of US government debt with the majority being owed either to US individuals and institutions (41.7%) or to the Social Security Trust Fund (17.1%).
Governor Romney does not prioritize encouraging good governance and stability abroad through foreign aid, and there have been no mentions of any plans to reduce global poverty, improve healthcare and engage in sustainable development. While foreign aid is not specifically mentioned in any campaign materials, “Mitt’s Plan” regarding Africa, for instance, declares, “a Romney administration will encourage and assist African nations to adopt policies that create business-friendly environments and combat governmental corruption.” Despite wanting to cut economic aid and contributions to the United Nations, World Bank and IMF, his campaign further argues, “greater market access across the continent for U.S. businesses will bolster job creation in Africa as well as in the United States.” It is notable that the countries that have been most successful in reducing poverty have been those that have focused on trade to create economic growth rather than relying on aid; China has succeeded in bring its poverty down from 84% thirty years ago to 16% today through economic growth. In spite of Romney’s calls for cutting foreign aid spending, his foreign policy is going to focus on international trade and job creation both domestically and abroad, which will benefit both the United States and international economies.
Yes trade can help lift people out of poverty. But in order to do so there needs to be the right conditions; there needs to be infrastructure, an educated and healthy population, and of course the country must be able to feed itself. No country is going to be able to trade its way to growth if its goods cannot reach international markets. Freer trade has not obviously been a driver of growth; poverty has fallen while the Doha round of trade liberalisation has got nowhere. Instead the policies that have succeeded for China have been mercantilist policies, China may rely on trade to export its goods but it succeeded in creating its manufacturing capacity because of currency manipulation and government subsidies, things that anyone for free trade would be against.
Romney believes that the United States should be focusing more on national security; however this in turn does benefit other nations so could be considered aid. Governor Romney was quoted as saying “foreign aid has several elements. One of those elements is defense, is to make sure that we are able to have the defense resources we want in certain places of the world. That probably ought to fall under the Department of Defense budget rather than a foreign aid budget.” When it focuses on its own national security the United States is providing public goods for the rest of the world. These include reducing the incentives for others to engage in the use of force – ‘the global policeman’, maintaining open global markets, maintaining a virtual commons in cyberspace, preventing weapons proliferation and maintaining freedom of navigation just as the United States is doing in the South China Sea. All of these to a greater or lesser extent need US military forces to maintain them.
The Romney campaign rejects the notion that the United States has an obligation to rely on foreign aid in its international development efforts, wanting to “[cut] the ongoing foreign aid commitments” and “[you] start everything from zero”. Vice Presidential candidate Paul Ryan, has proposed a budget that includes cutting international affairs and foreign assistance by 29 percent in 2012 and 44 percent by 2016, which would dramatically cut funds for USAID and their foreign aid programs. The Republican party believes that cutting down all sorts of government spending, including international spending, would help bring the economy out of the deficit and back towards a balanced budget.
The Obama administration accepts the need to maintain these global public goods. Secretary of State Hillary Clinton has written “Strategically, maintaining peace and security across the Asia-Pacific is increasingly crucial to global progress, whether through defending freedom of navigation in the South China Sea, countering the proliferation efforts of North Korea, or ensuring transparency in the military activities of the region's key players.” However it is wrong to maintain that this should be considered as a part of foreign aid instead the U.S. maintains the global commons because it gains most out of them, the U.S. military is the biggest beneficiary of freedom of navigation and of the maintenance of space as a global commons as they allow the military’s global reach to be maintained.
The United States may not be legally obligated to provide foreign aid and international development efforts but there are moral obligations as President Kennedy recognised when creating USAID: "There is no escaping our obligations: our moral obligations as a wise leader and good neighbor in the interdependent community of free nations – our economic obligations as the wealthiest people in a world of largely poor people, as a nation no longer dependent upon the loans from abroad that once helped us develop our own economy – and our political obligations as the single largest counter to the adversaries of freedom." Today this is just as true as it was then; the United States is still one of the richest states on earth. Moreover there is an international target of 0.7% of GDP being spent overseas development assistance which the United States has signed up to and has been repeatedly re-endorsed since it was first adopted in 1970.
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