Billions for War, Pennies for the Poor: Moving the President's FY2008 Budget from Hard Power to Smart Power

March 16, 2007

Although the Bush administration has devoted substantial attention and resources to global development--including the biggest percentage increase in U.S. foreign assistance in decades--a careful look at the FY2008 budget shows that the United States continues to devote a relatively small share of its national wealth to alleviate poverty and promote self-sustaining growth in the developing world. This CGD essay examines the administration’s foreign assistance priorities as they are reflected in the budget. The authors find that, although the new budget framework of matching country characteristics with objectives represents a good first attempt at rationalizing U.S. foreign aid, at this point it is mostly just new and improved bookkeeping. They suggest five critical steps to reform U.S. development assistance:

  • A comprehensive national strategy for development to ensure that increases in development aid take into account the long-term obstacles to growth and poverty reduction.
  • A coherent approach to weak and failing states.
  • A hard look at the top recipients of overall foreign aid and development aid to ensure the right aid, in the right amounts, is going to the right countries. Almost 50% of U.S. international assistance goes to just six countries that are allies in the global war on terror or the war on drugs.
  • An integrated impact evaluation function built into the budgeting process from the beginning, to maximize the impact of U.S. development interventions.
  • A rewriting of the Foreign Assistance Act of 1961 and consideration of a Cabinet-level development agency.

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