How Much Did U.S. Aid Really Increase?

A few weeks ago, President Bush announced that the United States would budget an additional $5 billion for aid to developing countries over the next three years. This would bring total aid expenditures to $15 billion a year by 2006.

This proposed 50% increase has some commentators — always eager to win friends in the corridors of power — falling over each other in their use of dubious superlatives.

As one of them recently opined on the Washington Post’s op-ed page, the Bush “push for aid” will surely go down in history as a monumental policy shift.

Not content to leave it at that, Thomas Carothers of the Carnegie Endowment compared the Bush plan with two truly historic and significant aid programs:

“President Bush has proposed a huge increase in U.S. foreign aid, potentially reversing years of declining aid budgets. His new push for aid has only two parallels in modern U.S. history: President John F. Kennedy’s Alliance for Progress and President Harry S. Truman’s Marshall Plan.”

Is it a valid comparison — or just hot air? Like the Bush plan, Kennedy’s Alliance for Progress and Truman’s Marshall Plan both hoped to diminish unprecedented threats to security at home by alleviating poverty abroad.

But in terms of dollars and cents, the flattering comparisons of Mr. Bush’s plan to these earlier efforts do not add up. Clearly the President’s aid program is not in the same league as its monumental predecessors, which demonstrated a real commitment to countries in need.

How big is a 50% increase? Paltry — if you consider that even the fully implemented increase would amount to a total expenditure of 0.15% of U.S. GDP. Paltry also in comparison with the $48 billion increase in defense spending the Bush administration has proposed for the next year alone.

U.S. foreign aid in 2006, at $15 billion per annum, will equal 4% of the proposed FY 2003 U.S. defense budget. Never mind that 20% of that U.S. aid goes to only three countries — Israel, Egypt and Jordan — which account for only 100 million people. That’s only 1.7% of the world’s six billion people.

The budgetary priorities of the United States are substantially out of step with those of its European allies.

The European Union plans to increase its aid to developing nations by only 28% over the next three years. But this increase adds up to an increase that will bring Europe’s total aid budget to about $32 billion a year — more than twice the sum foreseen by the Bush proposal.

In fact, for the United States to match the EU’s 0.39% aid-to-GDP ratio, it would have to increase its aid budget by almost 300% — not just 50% — to a total aid expenditure of almost $40 billion a year.

An additional $5 billion for developing nations is a step in the right direction. However, it still represents a drop in the budgetary bucket. Despite what some pundits might like the public to believe, it’s not a ground-breaking recommitment to the world’s poor.