How to Understand the U.S. Foreign Aid Budget

In these tough economic times, the U.S. foreign aid budget is among the first parts of the federal budget to get slated for cuts. Many think we should spend significantly less than we currently are, and as a result it is often among the first programs scrutinized when balancing the budget. However, it is not well understood by most Americans, 

Step 1: Perceptions Vs. Reality

How much do you think the U.S. spends on foreign aid budget? According to a recent poll, most Americans think approximately 25% of the federal budget goes to foreign aid, but that only 10% of the budget should be spent in that manner. In actuality, approximately 1% of the federal budget is allocated to foreign aid. 

Step 2: Anatomy of the Federal Budget

So what is the federal budget comprised of? The budget is broken down into mandatory and discretionary spending, with the biggest six shares being (in 2010) Social Security at $695 billion (19.6% of the total budget), Department of Defense at $663.7 billion (18.7% of the total budget), unemployment/welfare/other mandatory spending at $571 billion (16% of the total budget), Medicare at $453 billion (12.7% of the total budget), Medicaid at $290 billion (8% of the total budget), and interest on the national debt at $164 billion (4.6% of the total budget). Only $51.7 billion was spent on the Department of State and other international programs (1.4% of the total budget), of which a great deal of that goes to embassy costs and other non-aid expenses. 

Step 3: The 0.7% Pledge

In 1970, the developed nations of the world committed to spending 0.7% of their gross national income on official development assistance. Today, only five nations have met or exceeded this goal, and the U.S. is not one of them. Our current levels of official development assistance are at approximately 0.2% of our GNI, among the lowest in the world. It cannot be denied that in terms of sheer amounts given, the U.S. leads the world. However, in terms of how much is given in comparison with how much could be given, the U.S. falls woefully short. With a 0.7% commitment on the part of all nations, extreme poverty could be eradicated and developing nations could be furnished with a strong foundation to rise out of poverty. 

Step 4: What Is Needed to End Global Poverty

The Food and Agricultural Organization estimates that only $30 billion of annual targeted aid could end global hunger. But, our foreign aid budget is not targeted and is not having the impact it could. That’s 4% of our Defense budget, the equivalent of the cost of 13 B-2 bombers. Although many people are calling for decreasing foreign aid as part of overall budget cuts, in reality, there isn’t much left to cut. 

Step 5: Next Steps

Research. The Borgen Project (www.borgenproject.org) has great resources for learning more about foreign aid and what the U.S. is and is not doing. Additionally, looking on sites like opencongress.org and searching the U.S. State Department website will give excellent information about what is actually happening with foreign aid.