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Put Spending in Perspective

Click to see original imageBefore Congress creates or expands multi-bilIiondollar federal programs, especially when deficit spending is involved, it should consider such examples as foreign aid and its 36-year impact on the national debt. Months ago a constituent asked Republican Sen. Jesse A. Helms of North Carolina how much foreign aid has cost the American taxpayers, including interest on money borrowed to finance the program. After detailed research, mostly by the Library of Congress, Helms has reported to the Senate that the actual cumulative outlay in nominal dollars was $286.4 billion. But figuring in the interest since in Helms words the government “was running a deficit almost every year and therefore was in effect borrowing the money it was giving away to foreign countries,” the total came to an astounding $2,304,257.900,000. Helms spelled it out this way; “That’s 2 trillion. 304 billion 257 million, 900 thousand dollars of American taxpayers’ money.” Actually the budget has been balanced only eight times since the inception of the foreign aid program in 1946 – and for that matter, in the past 52 years. This is not intended as a discussion of the pros and cons of foreign aid; but rather to note the appalling impact of major programs, when red-ink spending is involved, on the national debt. For purposes of the study, Helms asked the Library of Congress to assume that expenditures in a given year were financed exclusively by borrowing – not entirely fair to foreign aid but indicative of the over-all cost impact. The hypothetical assumption was made that there would have been no changes in spending on other federal programs or in tax rates; and that in the few years when the deficit was less than the outlays on foreign aid, none of the relatively-small savings made would have been used to retire the national debt. Thus, as Helms pointed out. the actual cumulative foreign aid outlay plus interest totals more than twice the national debt of $1,060 trillion calculated as of May 11. It even distantly approaches the gross national product, annualized by the Treasury in the first tiuarter of 1982 at $2.985 tril ion. Evident in the figures is the burdensome cost to the taxpayers of the surging national debt. Interest alone will approximate $115 billion this year, one of the top items in the federal budget. This amoimt actually exceeds the entire federal budget of just 20 years ago. Were it not for this extra burden, we could alleviate most of the current financial woes and achieve a balanced budget. Incidentally, in Helms’ massive list of countries around the globe which have benefited from U.S. foreign aid, the following emerge as the 10 top recipients; Vietnam. $23.3 billion; Israel, $18.5 billion; South Korea, $13.6 billion; India, $10.2 billion; United Kingdom, $8.8 billion; France, $8.5 billion; Turkey, $8.3 billion; Egypt. $7.9 “billion; Taiwan, $6.5 billion; and Italy, $5.9 billion. Helms acknowledged that some countries have repaid a portion of their debt. “Something like $30 billion has been repaid since 1946, so we should allow for that.” The senator’s inquiry may unduly spotlight foreign aid as a culprit in the budget picture although that program as well as all others continually should be scrutinized. But his report certainly illustrates how a major perennial spending item gn contribute to huge deficits, spiral the national debt, help induce stiflinglyhigh interest rates, and snarl the federal budget. In recent decades, a period when the U.S. should have been balancing the budget if not building a surplus, Congresses and presidents of both parties have allowed deficit spending to get out of hand and many Americans have condoned this by their apathy or disinterest. Will we benefit from these lessons of the past? I