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Foreign Aid Spending Is Crippling Our Budget…NOT

So I wrote a post yesterday about government waste in which I dared to suggest that some Americans may be confused about just what exactly our federal government spends its money on and in what amounts. I still cannot find any survey results in which Americans are asked to apply actual percentages to actual spending categories. But I have dug up some other, related findings.

Before proceeding, let’s establish some general baselines of actual federal government spending against which to compare what we do know about American perceptions. The above pie chart, taken from Wikipedia, breaks down spending into more than two dozen programs or cabinet agencies. But we can simplify this a bit by collapsing the eight largest chunks/wedges into three main categories:

  1. Welfare for seniors, 34 percent: Social Security and Medicare wedges.
  2. Defense, 22 percent (Defense and Homeland Security).
  3. Welfare for everyone else, 20 percent ( Medicaid, Unemployment Insurance and Health & Human Services.)
  4. Interest, 9 percent (Interest).

First of all, Americans tend to think we spend too much on what they call “welfare,” but which in fact limited mostly to category 3 above–welfare for non-seniors. A Kaiser survey conducted a while back (1995) clearly indicates a high level of suspicion toward “welfare” spending, but when asked to clarify respondents clearly meant programs like food stamps, TANF programs (formerly AFDC), Medicaid and public housing. Indeed, although about 90 percent of Americans viewed housing, AFDC and food stamps as welfare, only 30 percent defined Medicare and just 15 percent deemed Social Security “welfare.”

Of course, citizens pay into SSI and Medicare with their payroll taxes, but there is still a redistributive effect of spending by the government on these programs. Unemployment insurance apparently didn’t even make the list, even though today it’s about one dollar in every nine the feds spend. In any event, these definitions have meaning when it comes to budget-cutting. According to a Bloomberg poll two months ago, fewer than one in four Americans thinks we should cut Social Security or Medicare, despite the fact that more than a third of the US budget is spent on these two programs alone.

The Kaiser results further confirm the apparently longstanding belief among Americans that we spend more than we actually do not only on foreign aid, but interest and defense. Though we can’t get to actual percentages the way the Kaiser poll asked it, it’s clear which parts of the budget Americans think constitute the largest or second-largest spending commitments. About 40 percent of Americans cited two of the following four items as being one of the government’s top two expenditures: foreign aid (41%), welfare (40%), interest (40%) and defense (37%). Only if Americans defined welfare as inclusive of Social Security and Medicare would these views be accurate–with welfare thusly combined and defined easily ranking #1, and in which case defense would rank #2.

But again, that’s clearly not how Americans define “welfare,” and even if they did it’s difficult to explain how foreign aid ranks first. And it’s clear that “foreign aid” isn’t viewed as the effective function of our defense expenditures, or else defense would rank a lot lower.

In any case, given the anxiety we hear about constantly in terms of government spending and deficits, how could all that “waste” be eliminated. Remember, with almost no public support for tinkering with Social Security or Medicare–heck, even Republicans are scare-mongering about cuts to Medicare, the fastest-growing federal program–we start with just two-thirds of the budget in play politically. Of that, clearly there is ample political will to cut welfare that’s viewed as going to the so-called “undeserving” poor people. (If you want to understand why Americans hate such kinds of welfare, I suggest reading Martin Gilens book that addresses this question squarely: Why Americans Hate Welfare.) But since unemployment insurance (to which workers also contribute) did not make the list of referents respondents cited when asked by Kaiser to identify welfare in terms of specific programs, 12 percent of that 20 percent should also be taken out of play, leaving just 8 percent of the budget as the “dastardly” kind of welfare.

OK, so for the sake of argument, let’s say the government immediately ceased payment of all that remaining 8 percent in “welfare” spending. According to the Bloomberg poll, there also seems to be growing frustration with Iraq and Afghanistan war spending, but that only accounts for about $130 billion right now–and that money is “off-budget” anyway. And while we might wish not to pay interest on our outstanding debts, that’s simply not an option–and interest payments couldn’t be categorized as “waste” anyway because they’re simply debt-service. (I suppose there are some administrative costs to paying those debts–what I classified in the previous post as Type 2 waste–but there’s basically zero efficiency savings to be found there.)

So where’s the rest of the “waste” that, in Americans’ minds, adds up to half of what the government spends? You tell me, because I have no idea. But I do know this much: Given the perception that so much money goes to the so-called “undeserving poor” here at home as well as to foreigners through foreign aid, it’s not surprising that people think government spending is wasteful. If half the budget–instead about one-seventh–actually went to such things, I could understand the sentiment.