Foreign Aid in the Trump Administration: Probably Different, but Not Necessarily Smaller?

Foreign aid is often mentioned as the first and easiest thing to cut, particularly in a Republican administration with a Republican Congress. But maybe not. It is likely to look different, but may not be smaller. Consider five points.

First, foreign aid is less partisan than assumed. Some readers may recall when George W. Bush’s Treasury Secretary Paul O’Neill visited Africa with Bono, and in the past year alone, a Republican-led House and Senate passed three foreign aid bills. Moreover, over many decades, US foreign aid spending has been higher when a single party controlled both the White House and Congress, and in that situation higher with the Republican party—as set out here.

Second, a Republican Congress may not want to undo major foreign aid initiatives of the George W Bush Administration meant to save lives—reflecting the values of evangelical and other faith-based traditional Republican party constituencies. The Bush Administration created PEPFAR and was a leading donor in support for the multilateral Global Fund to Fight Aids, TB and Malaria; both have had sustained bipartisan support from Congress for the last 15 years. Indeed, US spending on aid for health, including the Global Fund and bilateral health programs has far exceeded US contributions to the World Bank’s concessional IDA window for the last 10 years, with over $10 billion (about 20 percent of the total US international affairs budget) being spent on global health in FY 2015.

Third, on how aid may be administered differently, there could be a shift of resources to the provision of aid through partnerships with the private sector. This could mean more attention to OPIC. It would imply at the least that its “authorization” will not be cut, and perhaps it will even rise. (OPIC does not rely on a federal appropriation but on returns to its loans and guarantees to private investors in developing countries; it does need Congress to authorize how much it can lend and guarantee.) Perhaps OPIC will finally be allowed to co-invest with private players as is the case for the British, French, German, Dutch and other state-sponsored development finance corporations. (Co-investing would require that OPIC have skin-in-the-game equity as an instrument, as we at CGD have long advocated). Perhaps in the same spirit, the Millennium Challenge Account (MCA) will not only survive, but be used as a model for broader aid operations. Its support goes only to relatively poor countries with governments that are business-friendly and have minimum levels of corruption. The MCA is managed by the Millennium Challenge Corporation—a quasi-independent corporation with a bi-partisan board—that signs “compacts” (in effect performance contracts) with recipient governments that are freed from many of the strictures associated with the large US Government USAID bureaucracy.

Fourth, on differences in allocation, a Trump presidency will want to shape foreign aid programs with a view towards domestic interests. All countries do this of course, but maybe it would become a more explicit element of policy. That suggests a greater emphasis on private sector partnerships as above, and, to deal with Americans’ concerns about terrorism, a (further) increase in spending in countries that are security hot spots coping with terrorist movements: Nigeria, the Horn of Africa, Afghanistan for example. In fact the use of aid to address security issues is also not new, and has over time driven increases and declines in the aid budget. It was under a Democratic administration that aid declined in the 1990s, with the end of the Cold War, and during a Republican administration that aid rose, in the 2000s following 9/11.

Finally, even on climate and other global public goods, which may not seem like an obvious area of support, the case looks stronger because these issues directly affect US national security. Support to better anticipate and fight global pandemics (consider the federal support for the fight against Ebola in West Africa in 2015) or to efforts to head off the rising tide of antimicrobial resistance might survive in some form; these relate as directly to the security and prosperity of the US as to any nation. Climate change might seem an especially hard sell, but the US military has been clear on the risks it poses to US security.

Of course the real issue for development advocates is as much about the “quality” of US foreign aid as about its “quantity”. And other policies matter too – migration, trade, climate and more. The CGD Commitment to Development Index includes aid (quantity and quality) as one of seven rich country policies that matter for developing countries. In the coming years, the CDI will tell the tale: How aid quality and quantity fare in the Trump Administration, and how the US overall fares on its overall commitment to development.