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U.S. Department of State
95/10/01: International Affairs Budget--Questions & Answers
Bureau of Public Affairs



                      The International Affairs Budget--
                    A Sound Investment in Global Leadership:
                              Questions and Answers


In order to protect "the security and prosperity of all our people," the 
President has said, "the tradition of American leadership must prevail." 
Effective U.S. world leadership is not just a question of will, but of 
funding. The international affairs budget crisis is one of the most 
urgent but least recognized challenges facing us today.

[BEGIN QUOTE]

With the end of the Cold War, our challenges abroad have become more 
complex. Our security depends upon fighting threats like terrorism and 
nuclear proliferation, threats that call for international cooperation. 
Our prosperity rests increasingly on foreign trade and investment that 
depends on open markets. Meeting these essential challenges demands 
American engagement, leadership and resources, as President Clinton has 
repeatedly stressed.

--Secretary Christopher  
  September 12, 1995

[END QUOTE]

During the last half-century, America's active engagement abroad has 
been the leading force for peace, progress, and human dignity. American 
leadership has sparked and nurtured the twin global revolutions of free 
market economies and political liberty now under way. The Cold War is 
over, but current domestic trends could keep us from enjoying the "peace 
dividend" we have earned. Slash-and-burn cuts to the international 
affairs budget suggest isolation and withdrawal, to the peril of the 
security and well-being of the American people. We invested trillions of 
dollars fighting the Cold War. It would be a tragic, costly mistake not 
to spend what amounts to a tiny annual insurance premium to safeguard 
that investment.


Blood From a Stone: Even the Most Drastic Cuts in International Affairs 
Won't Balance the Budget
 
Q. Isn't foreign assistance spending already consuming too much of the 
federal budget?

A. No. Foreign assistance is a real bargain for American taxpayers. 
Recent polls suggest that the American people think that up to 25% of 
federal spending goes to foreign assistance, and that 8% should be the 
maximum. In fact, we spend less than 1% of the total federal budget on 
foreign assistance--about 12 a day for each American citizen--in 
contrast to about 18% still spent on defense.

[BEGIN PIE CHART]

FY 1995 International Affairs Budget
(Small percentage of federal budget)

National Defense--18%
Direct Benefit Payments--48%
Net Interest--14%
Other Federal Operations--4%
International Affairs--1%
Grants to States and Localities--15%

[END PIE CHART]


Q. Why does foreign affairs spending keep going up?

A. It doesn't. President Clinton's international affairs budget request 
for FY 1996--including not only foreign assistance but funding for trade 
promotion, the State Department, and numerous other activities--amounts 
to only 1.3 out of every tax dollar. This figure actually represents a 
decline over a decade from about 2.3. Since 1984, U.S. international 
affairs spending has decreased by 45% in real terms.


Q. Now that the Cold War is over, why is it necessary to spend so much 
on foreign affairs?

A. American engagement in the world is, if anything, more important than 
ever. The U.S.-Soviet standoff that underpinned world order for much of 
the past 50 years is gone. With the end of the Cold War, we are the 
world's sole remaining superpower, with a new set of sole--and far more 
complex--responsibilities. Our security depends increasingly on 
combating threats like nuclear smuggling, terrorism, international 
crime, and narcotics trafficking. Our prosperity depends more and more 
on international trade and investment.


Q. Why does the U.S. Government have to shoulder this burden alone? 
Can't someone else take over? Can't our allies do more?

A. For much of the three decades following the end of World War II, the 
United States led developed countries in international affairs spending. 
Today, we rank last--ironically, well behind our principal World War II 
adversaries Germany and Japan--in terms of foreign assistance spending 
as a percentage of GNP. U.S. foreign assistance comes to 3/20 of 1% of 
our GNP. Other countries now pay 75% of all peacekeeping costs, provide 
two-thirds or more of the money for multilateral banks, and outspend us 
on foreign assistance by as much as seven to one as a percentage of GDP.

Amidst all the current debate about the responsibilities of the federal 
government versus those of the States, one thing stands out: In the case 
of our foreign affairs and our national security, there is no one to 
hand off to, no one to "block grant" to, no way to privatize. These are 
sole responsibilities of the federal government. We either meet them or 
we don't.


[BEGIN TABLE 1]

Foreign Development Assistance As a Percentage of GNP

Country            % of GNP

Denmark              1.03
Norway               1.01
Sweden               0.98
Netherlands          0.82
France               0.63
Canada               0.45
Finland              0.45
Belgium              0.39
Germany              0.37
Australia            0.35
Luxembourg           0.35
Switzerland          0.33
Italy                0.31
United Kingdom       0.31
Austria              0.30
Portugal             0.29
Japan                0.26
New Zealand          0.25
Spain                0.25
Ireland              0.20
UNITED STATES        0.15

[END OF TABLE 1]


Q. Why do we have such a large State Department?

A. We don't. The Department of State is smaller than 10 of the 14 U.S. 
Cabinet departments. Its work force constitutes a little more than one-
half of 1% of the federal total. State, in fact, employs fewer people 
than do local governments in Memphis, Tennessee, Baltimore, Maryland, or 
Alachua County, Florida. Only a little more than 4,000 diplomatic and 
consular service officers staff nearly 250 U.S. embassies and consulates 
abroad. In the United States, other employees run headquarters 
operations, and a few hundred Civil Service employees staff 14 passport 
offices around the country, providing services to the traveling American 
public.


[BEGIN TABLE 2]

Executive Branch Federal Employment

Agency                     Total Employment

Defense                        2,323,600
Veterans Affairs                 230,100
Treasury                         162,200
Justice                          109,200
Agriculture                      108,100
Interior                          76,200
Transportation                    64,400
Health and Human Services         61,800
Commerce                          35,700
STATE                             24,800
Energy                            20,600
Labor                             17,900
HUD                               12,600
Education                          5,100

[END OF TABLE 2]


Q.  Since most Americans favor reducing government spending to balance 
the federal budget, have the State Department and other foreign affairs 
agencies done anything to cut costs?

A. Yes, the Administration has done a great deal to cut costs. We have 
already:

-- Cut the foreign assistance budget request by 20%;
--Trimmed more than 1,100 jobs at the State Department and 600 jobs at 
the U.S. Information Agency (USIA);
--Identified, for elimination by 1997, about 2,000 jobs at the U.S. 
Agency for International Development (USAID);
--Decreased administrative and overhead costs by $100 million; and
--Closed, or scheduled for closing, 36 diplomatic or consular posts, 10 
USIA posts, and 28 USAID missions abroad.



American Leadership Protects Your Interests; Isolationism Is Bad for You

Q. Isn't the money we spend on foreign assistance just international 
welfare? What do we get for our money?

A. International affairs spending is not a giveaway. In fact, foreign 
assistance programs have ultimately put more dollars into the pockets of 
American taxpayers than they have ever taken out. For one thing, most 
foreign assistance dollars stay right here at home. Nearly 80% of USAID 
contracts and grants go to U.S. firms. Ninety-five percent of all food 
assistance purchases are made in the United States, and virtually all 
military assistance is spent on U.S. goods and services. Beyond that, we 
get a lot for our money; in short, prosperity, peace, and security at 
home.

American Exports--American Jobs. Our economy depends on exports like 
never before. The growth in the economy we have witnessed over the past 
three years is due heavily to increased exports.

Developing countries currently account  for well more than one-third--
nearly $200 billion  worth--of U.S. exports and now represent the 
fastest-growing markets for American goods. The Commerce Department 
estimates that every $1 billion worth of  these exports generates about 
20,000 U.S. jobs. With market growth rates 10 times those of our 
traditional markets in Europe and Japan, developing countries are 
particularly good customers for high-value and agricultural exports. 
More than one-half of America's farm exports go to the developing world.

U.S. assistance programs help get U.S. business in the door, much as our 
competitors' assistance programs leverage opportunities for their 
business communities. Since 1971, for example, the Overseas Private 
Investment Corporation (OPIC) has supported U.S. business investment in 
projects worth nearly $73 billion (primarily in developing countries), 
has generated $40 billion in U.S. exports, and has created hundreds of 
thousands of American jobs. Worldwide, 43 out of the 50 largest buyers 
of American farm goods today are former recipients of U.S. food 
assistance.

U.S. exports to the developing world are still surging. In the decade of 
the 1980s alone, U.S. market share in Latin America grew to 57%, and in 
the six countries where we concentrated our assistance, to 71%. Our 
exports to Latin America in 1993 alone were 2.5 times the $30.7 billion 
in economic assistance we provided between 1949 and 1993.

Global Diplomacy: Our Front Line of Defense. Americans share a deep 
commitment to our nation's defense readiness. We must be equally 
committed to our diplomatic readiness--in large part so as to avoid 
having to deploy our men and women in uniform in harm's way. Since World 
War II, many Foreign Service officers have died in our country's 
service. They are on the front lines of the post-Cold War world, 
protecting you and your interests.

In some 180 countries around the world, U.S. diplomatic and consular 
officers meet the challenges of the post-Cold War world on a daily 
basis. They play pivotal roles in advancing diplomatic initiatives--from 
peace in the Middle East to global trade agreements--and they protect 
American citizens abroad, promote American culture and values, support 
U.S. law enforcement personnel, and perform dozens of ordinary and 
essential services from notarials to emergency medical assistance to 
helping American families adopt foreign children. We issued 5 million 
passports to U.S. citizens in 1994. A total of 1.7 million times last 
year Americans sought help at our embassies and consulates. When you 
travel, your government is there to help you when you get in trouble.

Our diplomatic "field offices" abroad also constitute an invaluable 
early-warning intelligence system. Their rapid-fire political, military, 
and economic reporting is essential to the crisis-prevention work of 
Washington national security decision-makers.

A Global Fight Against Narcotics, Terrorism, Illegal Immigration, and 
Crime--at Bargain Prices. Ninety percent of the illegal drugs used in 
this country come from overseas. Our international affairs budget funds 
our efforts to stop that drug trafficking at its sources. Illegal drugs 
cost the American economy $76 billion per year. Domestically, we spend 
$12 billion a year to fight them. We are spending less than 2% of this 
to fight this problem internationally. Getting our Latin American 
partners to seize one ton of cocaine costs a fraction of what it costs 
for U.S. law enforcement agencies to do the same job.

This budget also funds our overseas counter-terrorism efforts, at a cost 
to each American of less than 10 a year. Compare this to the hundreds 
of millions of dollars that the World Trade Center bombing cost our 
country. We also take the lead in funding an international aviation 
security program that protects Americans from death and injury and 
promotes the security of U.S. air carriers. When you travel abroad, you 
want to get there safely. Americans now make up 40% of all international 
air travelers. Finally, the international affairs budget finances U.S. 
border security efforts abroad--from visa screening to the fight against 
alien smuggling.

National Security--International Defense Burden-Sharing. The 
international affairs budget underpins our effort to achieve peace in 
the Middle East. Everything we spend there, however, is a bargain 
compared to the cost of a generalized conflict, or to the loss of Middle 
East oil reserves. The oil crisis of 1973 alone cost the U.S. economy 
uncounted billions of dollars.

This budget also funds our non-proliferation efforts. Your life is safer 
today because of our nuclear non-proliferation and safety assistance 
programs. After four decades of the Cold War, for the first time no 
nuclear weapons are pointed at you. We are actively working to prevent 
future Chernobyls and to put an end to North Korea's nuclear program. 


Q. If most UN peacekeeping efforts are failures, why are we contributing 
so much money to the United Nations?

A. When our vital interests are at stake, we must be prepared to defend 
them alone. But sometimes, by leveraging our power and resources and by 
leading through alliances and institutions such as the UN, we can 
advance our interests in global stability without asking our soldiers to 
take all the risks or American taxpayers to foot all the bills.

International peacekeeping helps us maintain global leadership, prevent 
wars or keep them contained, minimize the involvement of U.S. troops, 
and get the rest of the world to pay three-quarters of the bills. 
Multilateral peacekeeping costs us just over $1 billion a year--about a 
penny a day for the average taxpayer--compared to the entire $265 
billion defense budget. Americans make up only 4% of UN forces, almost 
entirely as observers and border monitors.

Since the end of the Cold War, the UN has helped to resolve successfully 
conflicts in places like Cambodia, El Salvador, and Nicaragua. Everyone 
acknowledges that some UN missions have failed, but no one would deny 
that many missions have succeeded, even under the most difficult 
circumstances.

The UN is about far more than peacekeeping. It provides a mechanism for 
enforcing international sanctions and isolating rogue states. Its many 
programs and agencies care for refugees, inoculate children, fight 
epidemics, and promote nuclear safety. The UN does a lot with its 
resources, and our share is small. American families pay an average of 
$4 per family annually for our share of the cost of the entire UN 
system--from blue helmets for peacekeeping to polio vaccines for babies. 
That is a sound bargain for things the American people support.



Pay Now or Pay Later:  Crisis Prevention Is Cost-Effective

Q. After spending so much to contain the Soviet Union, our arch 
adversary during the Cold War, why are we now giving Russia and the 
other New Independent States so much assistance?

A. Our assistance to Russia and other New Independent States increases 
our security and expands our prosperity. It advances our strategic 
interest in dismantling nuclear weapons, especially those that were 
targeted on American cities. It bolsters the vital elements of 
democratic reform. It supports privatization--which, so far, has put 
more than half of Russia's economy in private hands--and opens new 
opportunities for U.S. companies.


Q. Why do we give so much development assistance to foreign countries 
when we can better use the money for our own needs?

A. Our international development programs are designed to prevent or 
counter international disorder, the current strategic threat. They are 
as much about serving America's interests as they are about helping 
others.

Foreign assistance is a hand up, not a hand out. By helping others, we 
help ourselves. U.S. security and prosperity depend a great deal on 
political stability and economic progress in the developing world. 
Foreign assistance helps prevent the outbreak of conflicts that 
otherwise would call for costly international intervention.  It promotes 
export opportunities for American companies, both large and small. It 
lays the groundwork for sustainable development and accountable 
government. It helps other nations deal with environmental degradation 
and health issues that have a global reach and a significant impact on 
our national well-being.

We spend billions on the environment to reduce greenhouse emissions here 
in the U.S. However, greenhouse gasses have the same effect on the 
American atmosphere and climate no matter where they are emitted--
whether in Brazil or Ohio. Each dollar in international environmental 
assistance will eliminate four times more gasses in the American 
atmosphere than each dollar spent domestically.


Q. Has our foreign assistance made any real difference in developing 
countries? What would happen if we just stopped giving it?

A. Yes. Over the past three decades, American foreign assistance has 
played a major role in raising the standard of living in developing 
countries. For example, child mortality has been reduced by one-third. 
Smallpox has been eliminated. The majority of children in developing 
countries now enter primary school. There also is widespread American 
support for the $1.7 billion we spend annually helping refugees and 
victims of famine and other disasters. Every $25 million in our food 
assistance budget feeds half a million people for a year.

If we stopped providing assistance to our friends and allies, both we 
and they would suffer. Our foreign assistance programs are intended to 
promote the kind of economic growth and political stability that are 
critical to U.S. national security and economic well-being. Failing to 
provide aid to developing countries would therefore jeopardize our 
national security. It also would have a detrimental effect on developing 
nations' growth rates. That would lead to the loss of potential export 
markets and would cost many Americans their jobs.

It costs a hundred times as much to deal with humanitarian crises as it 
does to prevent them. It cost us more than $2 billion, for example, to 
deal with Somalia, and is costing us $1 billion to address the problems 
in Rwanda.


Q. How does our support for the World Bank help America?

A. The World Bank and other multilateral development banks (MDBs) are a 
first-rate investment for America. They play a vital role in supporting 
growth-oriented free market economic reform in developing countries, 
bolstering their capacities to--among other things--import from the 
United States. From a budgetary perspective, the MDBs are a bargain. 
Annually, the U.S. contributes, on the average, less than $2 to every $7 
contributed by other countries. Last year, our capital leveraged more 
than $40 billion in lending. Put another way, for every dollar we 
contributed to the MDBs last year, the banks were able to provide $20 in 
assistance. There is no way we can duplicate that kind of impact on our 
own. 

------------------------------------------------

Public Information Series -- Published by the United States Department 
of State -- Bureau of Public Affairs Office of Public Communication -- 
Washington, DC -- October 1995 -- This material is in the public domain 
and may be reproduced without permission; citation of this source is 
appreciated. 

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