US Foreign Aid Analysis Report

This report examines the history and current state of US foreign aid, citing data from the Congressional Research Service (CRS) showing spending levels and their fluctuations over time. It highlights the dual motivations behind aid: national security concerns (e.g., countering communism, stabilizing conflict zones) and humanitarian/development goals (e.g., poverty reduction, healthcare). The report then delves into criticisms of the aid system, referencing prominent economists like William Easterly and Dambisa Moyo who argue that aid can be ineffective, counterproductive, or even bolster corrupt regimes. The report concludes by summarizing the debate surrounding the effectiveness and allocation of US foreign aid, noting concerns about waste and the potential for aid to inadvertently support repressive governments.

Given the many agencies, funding methods, and categories of aid associated with
U.S. foreign assistance efforts, estimates can differ. According to the nonpartisan
Congressional Research Service (CRS), which uses the broadest definition of aid, including
military and security assistance, total spending was nearly $49 billion in 2015. This
accounts for roughly 1.3 percent of the federal budget. Aid funding levels are at their
highest since the period immediately following World War II, when the United States
invested heavily in rebuilding European economies. In the 1990s, in the wake of the
collapse of the Soviet Union, aid levels were cut to barely half of what they are today,
falling to less than $20 billion in 1997, or 0.8 percent of the overall budget. Aid rose again
in the wake of the 9/11 attacks, surpassing 1.4 percent of the budget by 2007, which analysts
say was driven largely by assistance to Iraq and Afghanistan as well as President George W.
Bush’s global health programs.
As former State Department official and aid expert Carol Lancaster pointed out in
her book, Foreign Aid: Diplomacy, Development, Domestic Politics, modern U.S. aid
originated in Cold War geopolitics: the Marshall Plan to rebuild Europe was designed to
blunt the influence of rising Communist political forces on the continent. National security
concerns have continued to drive U.S. assistance policy, aiming to provide stability in
conflicted regions, bolster allies, promote democracy, or contribute to counterterrorism and
law enforcement efforts abroad. Other objectives, related to but separate from U.S. national
security, also drive assistance. These include most notably humanitarian relief efforts to
respond directly to acute disasters, poverty reduction, health care, and other development
programs.

U.S. aid policy seeks to achieve its aims through a diverse array of programs, which
can be organized into several major categories. According to CRS calculations, foreign aid
spending in 2015 broke down as follows:
A number of economists have criticized various aspects of the global foreign aid
system as ineffective or counterproductive. New York University professor and former
World Bank economist William Easterly made the case in his 2006 book, The White Man’s
Burden, that development aid is dominated by top-down planners and bureaucrats with little
accountability, and that there is scant evidence that aid boosts a country’s long-term growth.
Easterly is also highly critical of linking aid to counterterrorism efforts, and he and other
analysts have warned about the potential for military aid to bolster repressive regimes. To
combat that, Congress has passed legislation barring U.S. aid to military units that were
found to have violated human rights. Military aid in particular has come under fire for its
potential to bolster repressive regimes. Nobel laureate Sir Angus Deaton argues that aid
gives a lifeline to corrupt governments, insulating them from the political pressures that
would create a better functioning state. Zambian economist Dambisa Moyo writes that more
than $1 trillion in aid has flowed to Africa in past decades, but real per capital income on
the continent has not improved since the 1970s. Some analysts, and many in Congress, have
criticized U.S. aid as wasteful spending.