How is the United States able to give billions to other countries when we are trillions in debt and how does it get approved?
In: Economics
It gets approved by Congress, like any other appropriations.
As to how we are able to, there are a few reasons for it:
1. The numbers you see in the news are the value of such aid. It’s rarely cold hard cash, although in some circumstances it is.
2. We are able to because we often have surplus inventory that gets less effective due to age, deterioration, etc. over time. It’s best to give them to countries that can use them to advance our interests. In the case of military aid, sometimes it’s to allies, but not always (i.e. the enemy of my enemy is my friend).
3. Inventory that is given away through such aid program needs to get replenish. Depending on what it is, American companies have to do the manufacturing to replenish it, creating more economic activity and jobs in those Congressional districts which helps to get the votes to help pass the aid in the first place.
4. We can afford to because the amount of aid we give is an extremely small part of our budget and the return on that aid can be tremendous in terms of expending actual blood and treasure.
5. We also control the world reserve currency which makes it easier to run a deficit. Almost all developed countries run a deficit. It’s easier when you can also print the currency everyone else wants.
Latest Answers