THE BLOG
07/02/2013 11:23 am ET | Updated Sep 01, 2013

America, the Kid With No Lunch Money

Throughout the history of our (formerly?) great country, we have taken pride in assisting other burgeoning democracies throughout the world. As the quintessential example of that "shining city on a hill," we provide money, arms, and other assets to fledgling nations in order to further the cause of freedom. Apparently, the grand design was that someday we would be able to look at the map and realize that the good old U.S. of A. was now the patron saint of a slew of democratic states. After that, I guess the entire globe would then join hands and sing a song of peace, freedom, and love, with one glorious voice. Huzzah! Three cheers for the United States, mother of the world and father of free citizens everywhere!

Or, at least, that's how this whole foreign aid thing started, way back around World War I. High minded idealists like Herbert Hoover used the cover of WWI reconstruction to create organizations such as the Commission for Relief in Belgium, and the American Relief Administration. No one argued back then that it was a good thing to help war-torn countries get back on their feet, especially when we needed their assistance to win World War I. The total monies spent on both of these organizations from 1920-1943 was around $400 million, with 98 percent of that money going to Belgium in the form of loans. Of course, when you hear loans, you think "payback." Unfortunately, most of the loans the U.S. made to Belgium were eventually forgiven. Not only that, but we had also forgiven Belgium's pre-armistice debt and agreed to seek the money from Germany. Germany -- the country that had just been decimated when they lost the war.

Interestingly enough, when the terms were laid out in the treaty of Versailles, it was decided that Belgium would be able to offer its creditors a small percentage of its debts repaid in Bonds. Well, the United States Congress failed to ratify the treaty while Britain and France did. Hoover put the question to congress a few days before his administration ended, but the question never reached a vote. It seems the average U.S. citizen at that time was just a bit smarter than the average Joe today -- they knew that Belgium was trying to welch on its debts, and they told their representatives they wanted no part of it. Of course, even though Belgium knew the U.S. was under no "legal obligation" to agree to the terms of the Versailles Treaty, they apparently considered it a "breach of faith" on the part of the U.S., and felt there was a moral obligation for America to forgive these debts. You can read all about it yourself.

So, as you can see, the foreign aid habit of the United States started off on the wrong foot altogether. Why no one in power saw this as a harbinger of what was to come is certainly a question for the ages. One only had to ask the very obvious question: "What do we do if other countries don't pay us back?" in order to see how flawed the entire concept of foreign aid was. The only choices we had to punish a deadbeat payer were to invade the country, which we would never do, or smile and shake hands while we take it right up Route 66.

After World War II ended, the United States really upped the foreign aid ante. We started the Lend-Lease program, which resulted in billions of outgoing dollars, supplies, food, and other goods to war-torn European countries. The final tally was around $50 billion spent, which has a value of around $750 billion today. Of course, when it was time to repay what the U.S. had made clear were "loans," the recipient countries began to come up with every single excuse in the book. Claiming things like "men sacrificed count monetarily," and "land lost is common loss," the countries we freely gave to decided that paying us back was a very low-priority issue. In fact, Britain just finished paying its lend-lease debt of about $89 million in December, 2006. That's $89 million out of about $4 billion, and it took them 50 years to do it. The United States, once again, becomes the patsy on the world lending stage. Is anyone beginning to see a pattern here?

When the Cold War hit and the United States was "fighting communism" around the world, we finally wised up. Of course, that doesn't mean we stopped lending money -- oh, no -- it simply means we stopped expecting anyone to pay us back. Under the Truman Doctrine and the subsequent Marshall Plan, the United States gave out billions of dollars in foreign aid. In 1961, we finally formalized our handouts to the world and formed the USAID (U.S. Agency for International Development) when President Kennedy was in office.

During the 1970s and 1980s, the USAID began to include Middle Eastern countries in the foreign aid packages. Israel was one of the recipients, as was Saudi Arabia. Now, Israel receives so much aid that its aid report spans 30 pages. So, here we are now, today, where the U.S. is in such a bad recession that some claim it is equivalent to the great depression, and we are shoveling money out of the country as fast as we can print it. In 2012, we spent about $30 billion in aid, the most in several years. You'd think that this wanton spending, in and of itself, was the worst part of our foreign aid policy, but you'd be wrong. The icing on this cake of woe is that we give money to countries that are actively working against us, including a country with a president who was caught red-handed calling us his "enemy."

A few days after Secretary of State Kerry renewed our $1.3 billion aid package to Egypt, a country that is now governed by the Muslim brotherhood, the Egyptian president was caught speaking about the U.S. on an open microphone. Mohammed Morsi, head of Egypt, gathered with a group of politicians who thought they were speaking privately in a parliamentary meeting. For some reason, none of them realized that they were, in actuality, being broadcast on Egypt's version of CSPAN. The discussion, broadcast on live TV, centered around coming up with ways to secretly stop Ethiopia's Nile River dam project, which threatens water flowing into Egypt. As they continued to talk, many of the politicians claimed that the dam was a secret American and Israeli plot to undermine Egypt, and demanded that it be stopped at all costs. As if that wasn't bad enough, Morsi went on to say, "I'm very fond of battles. With enemies, of course -- with America and Israel, but this battle must be waged with maximum judiciousness and calm." In other words, we need to keep it secret how much we hate America so they keep giving us money, ha ha those idiots. (Literary license taken judiciously.)

You might think that the above incident would make us step back from our money giving ways, and seriously examine the countries we give money to before we give it. Unfortunately, the opposite is happening. Obama has just announced a $7 billion dollar initiative for sub-Saharan Africa. The money is supposedly to help bring electricity to villages throughout the arid region, but chances are, just like every other U.S. aid package, it will end up helping our enemies just as much, if not more, than our allies. It's time to take a hard look at how much money we are spending on countries that would wipe us off the face of the Earth if they could. We need the money much more here at home. I'm not naïve enough to believe that American can exist in a bubble in this global neighborhood that now exists. Being the kid that pays off his bullies before they can steal his lunch money, and then thanking them for the privilege, makes us the laughing stock of the world.

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