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The Debate over Foreign Aid

Author: Laurie Garrett, Senior Fellow for Global Health
May 6, 2010

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Debate over the FY 2011 federal budget has heightened in the Senate, as the Budget Committee voted on April 23 to cut foreign assistance spending by $4 billion--a 7 percent reduction in the already frugal White House proposed budget of $58.8 billion. Most of the budget is for nonmilitary programs in the frontline states, with less than a quarter--$14.6 billion--for global challenges like health, food security, climate change, and humanitarian assistance.

The White House, correctly, wants to maintain a strong commitment to overseas assistance and global health. Its budget request includes strategic and structural shifts to reach those goals, including aligning foreign assistance more closely with foreign policy objectives, demanding greater accountability from recipient governments, and delivering more "bang for the buck" by increasing cross-agency cooperation, streamlining delivery of goods and services, and reducing U.S. government redundancies.

But while it's important to evaluate programs--and while questions of accountability and value loom large in the public's mind, especially at a time of concern about the economy--there are no sound indications that cuts or reductions in foreign assistance support are merited. These programs are saving and enhancing lives all over the world. Reductions in Account 150 spending (all spending on international programs by various departments and agencies) cannot possibly have a discernible impact on the federal budget deficit or the national debt, as the discretionary sums allotted to Account 150 are comparatively trivial. In fact, $14.6 billion for the abovementioned global challenges amounts to a mere .38 percent of the $3.8 trillion federal budget.

Here are some of the questions Congress is likely to look at as it considers the White House foreign assistance request.

1. What do American taxpayers and voters want the U.S. government to do in terms of foreign assistance?

Americans want to be magnanimous in helping poor nations but also want to reduce spending. The problem is that polls show that Americans actually believe that spending on overseas health, development, and humanitarian and anti-poverty programs is 15 to 20 percent of the national budget. In fact, spending has never exceeded 0.5 percent.

Very little of the government's budget is discretionary and easily cut, yet human aid and development programs are discretionary and also lack the strong constituency backing of other government programs. So these programs are vulnerable at a time when the global financial crisis, coming on the heels of the 2008 food and seed inflation, has greatly increased the need for agricultural, poverty, and health programs. Worse, World Bank estimates show backward movement on key health and development targets since the onset of the economic crisis.

2. Will the Obama administration's structural reorganization of foreign assistance achieve the administration's, or Congress', goals?

Foreign assistance is governed by several different programs and initiatives that make accountability and coordination a headache.

The White House Global Health Initiative, released in May 2009, can be viewed as a budgetary and coordination platform aimed at setting all health-related overseas activities on a common path. The National Security Council's Presidential Special Directive Number 7--which is awaiting draft completion--is a kind of strategic guide to development rationale and policy. And the Quadrennial Diplomacy and Development Review--also awaiting draft completion--is an operational, structural, and resources scheme intended to guide all aspects of U.S. aid overseas. It involves a whopping thirteen task forces, some of which have two or three sub-task forces, Run by the State Department, it's a combined effort of hundreds of people.

Although only the GHI document has been made public, leaks of the PSD-7 and portions of the QDDR indicate some common features. They all seek to improve U.S. relations in parts of the world troubled by humanitarian need; all emphasize accountability; all seem to have arisen from the sorts of principles described as soft power. But all three also dodge the question of leadership, offering trifectas of shared responsibilities, committees, †"operational management," and "whole of government" responses.

The logical response to this is: Where does the buck stop? Senators John Kerry (D-MA) and Richard Lugar (R-IN) have introduced legislation that would seek clearer leadership in the form of an independent Council on Research and Evaluation of Foreign Assistance (CORE). A joint House/Senate foreign relations proposal calls for the creation of a committee inside the National Security Council to coordinate crisis interventions, such as the ongoing one in Haiti. In the recent issue of Foreign Affairs, Secretary of Defense Robert Gates supports the notion that peaceful interventions and crisis responses merit civilian control, probably from within the NSC. And the influential Modernizing Foreign Assistance Network (MFAN) insists that leadership must come from within the White House, independent of both the State and Defense Departments.

3. Has increased American generosity over the last nine years made a difference?

Yes. Globally, funding for malaria control and treatment programs soared from $0.3 billion in 2003 to $1.7 billion in 2009, with the U.S. responsible for the lion's share of the effort. Worldwide, 1 million people died of malaria in 2000, while 860,000 died of the disease in 2008, according to the World Health Organization (WHO). About a third of the people in poor countries that need daily medicine to control HIV/AIDS are now receiving antiretroviral drugs with the President's Emergency Plan for AIDS Relief (PEPFAR), the major provider of treatment. Mother and neonatal child survival has increased; more than a half million women died of childbirth related causes in 1980, while by 2008 that number was down to 343,000. The Bill and Melinda Gates Foundation, USAID, UNICEF, and the Global Alliance for Vaccines and Immunisation (GAVI) have pushed back mortality and sickness caused by diseases like polio, measles, diphtheria, rotaviruses, mumps, meningitis and the like. The WHO estimates that 4 million children were spared death from three diseases (Hepatitis B, Haemophilus influenzae type b and Pertussis) from 2001 to 2009, thanks to these vaccine efforts.

Still, there are real challenges ahead. The world economic crisis has forced millions of people into subsistence-level poverty and pushed back MDG achievements. A World Bank report estimates, "An additional 55,000 infants might die in 2015. And 260,000 more children under five could have been prevented from dying in 2015 in the absence of the crisis. The cumulative total from 2009 to 2015 could reach 265,000 [infants] and 1.2 million [children under five]" due to economic setbacks in key countries.

Recipient governments and multilateral organizations are not prepared to take over management and financing of any major global health effort on their own. If support from the United States disappears or suffers a significant cutback, most health achievements face reversal, and "reversal" means deaths.

A major concern of the Obama administration's GHI is sustainability and exit strategies: Can programs be redesigned so that eventually countries and multilateral agencies will no longer be dependent on U.S. taxpayer support?

There is no evidence that the U.S. or other major donors will be able to decrease financial support of global health programs, in particular, without witnessing swift reversal of these achievements, because programs have lacked exit strategies and countries have insufficient resources and infrastructure to take on the projects. Even countries with extraordinary GDP growth, such as China, India, and Brazil, remain dependent on aid for health, and skew their priorities to reflect donor interests. Worse, many poor countries have decreased their contributions to government costs, writ large, and health specifically as they have absorbed greater quantities of donor support.

As the Obama administration tries to reform the coherence of U.S. aid programs, it should also look to improve their efficiency and lower administrative and contractor costs.

4. Will America's partners in giving continue to carry their financial weight, both bilaterally and multilaterally?

Despite the world economic crisis, development aid rose in 2009, and most of the world's donors are on track to meet their basic 2010 commitments, according to OECD. In 2009, total donor support, including debt relief, hit $119.6 billion, a 0.7 percent increase over the previous year. Moreover, OECD says, "In 2009, net bilateral ODA to Africa was USD 27 billion, representing an increase of 3 percent in real terms over 2008. USD 24 billion of this aid went to sub-Saharan Africa, an increase of 5.1 percent over 2008."

Many aid-dependent organizations and governments are experiencing shortfalls and budgetary woes, particularly in sectors related to the Millennium Development Goals, or MDGs. Overall, this appears to reflect failures to attain projected increases in support, rather than reductions in prior support levels. The most consistently cited example of this is PEPFAR.

5. Are the funding requests from the White House too large, or not large enough, in general or specifically?

Success breeds demand.

The Partnership for Maternal Newborn and Child Health says that G8 support must double this year, reaching $8 billion a year until 2015 in order to achieve the relevant MDGs, and then plateau in order to sustain the gains in lives saved.

GAVI desperately needs $4 billion in order to meet its 2010-2011 vaccination targets.

The Global Fund to Fight AIDS, Tuberculosis, and Malaria has committed billions more to needy countries than it actually has in the bank.

OXFAM is urging Congress to appropriate the White House-requested $3.5 billion for the Global Hunger and Food Security Initiative. The World Bank increased agricultural development investment from $4.1 billion in 2006 to $7.3 billion last year, but it needs more.

The Center for Strategic and International Studies convened a bipartisan Commission on Smart Global Health Policy that recently concluded that the United States should, from 2010 to 2025, aim to spend $25 billion per year by 2025 for global health efforts.

Conclusion

America embarked on a set of bold initiatives under President George W. Bush, aimed at reducing poverty and disease, especially in Africa. By the second Bush term these efforts, such as PEPFAR, the Millennium Challenge Corporation, and the President's Malaria Initiative, enjoyed strong bipartisan support. The Obama administration foreign assistance proposals should be viewed as a continuum in that arc of American diplomacy, generosity and strategic thinking: Abandoning it, for the sake of sparing less than 1/100th of the federal budget, makes no sense.

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