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
Particularly in recent news (ukraine) a huge portion of the dollar amount is in the form of military aid. Say we give them 100 1 million dollar vehicles, that’s “100 million dollars” of aid, even though no money has changed hands. A lot of it is also stockpiled weaponry that is no longer considered good enough to be front line use by the us military so is earmarked for foreign sale or aid. We gave Ukraine a handful of himars, low double digits, and they are all over the news, but use the older and shorter range rockets (for the most part). Meanwhile, the us has over thousand of those same units in inventory with rockets that far outperform what we gave. They are like hand me downs for the poorer kid next door, that explode.
Some aid is purely monetary but usually comes with agreements. “We will give you this if you stop doing that.” Etc.
Most of it is voted on and in budgets just like any other government expenditure.
The US government gets money in mostly by taxes and by borrowing. How the money comes in doesn’t have much to do with how it’s spent…if they want to spend billions on foreign aid they do it the same way as if they want to spend billions on military hardware or domestic infrastructure or anything else they want to spend money on. Unless specifically restricted by legislation, all the revenue just goes into one bit “pot” to spend from.
It gets approved by Congress; the US constitution restricts, with a few very specific exceptions, budgeting to Congress. So they have to pass a law that says “We authorize the executive brand to spend $X on Y purpose.” Then the executive branch (President, Department of Y, etc.) actually spends it.
They print the money. The debt is just the amount of money in circulation. Modern Monetary Theory
Well, it’s not exactly cold hard cash that we’re giving them. The headline figure we see on the news is the value of the aid. That aid consists of a wide range of weaponry and equipment, training, long-term investments under Foreign Military Financing (FMF) for security assistance from NATO, and various forms of aid such as demining assistance. We are also providing cash for Ukraine to acquire a wide array of capabilities including counter-mortar radars, secure radios, vehicles, electronic equipment, small arms and light weapons, and medical supplies.
Percentage wise it’s very small it’s like a couple days of spending in America. We spend like 10 billion a day so given somebody 10 billion over a year is not that impactful.
Governments being in debt is not like an individual being in debt, debt is good particularly when taken on in beneficial scenarios, and necessary in modern economies.
Whenever you see someone talk about how we’re trillions in debt you can immediately brush off any opinion they have about how the government works, it’s similar to people who don’t know how tax brackets work and think if you make a dollar over your entire income is taxed at a higher rate.
The money is spent in the US, and would likely be spent anyway. You have to build tanks constantly whether you lose them or not because otherwise you forget how to build tanks. That means that in peacetime you just rack up piles of the things.
It’s wasteful but it’s necessary because if you just made as many as you need and then stop then you’ll have a really bad time if someone starts destroying them. The factory where you used to make them will be a craft brewery and the machinists will have become tiktok influencers. Better to just keep them employed making tanks you don’t need.
Then someone else needs some tanks and you’ve got thousands of the things you don’t need so you’re like “why don’t I give them the tanks”. But technically the tanks aren’t worthless, even if they’re strictly speaking worthless to you and actually have storage and disposal costs if you keep them. So technically giving the tanks away is aid, even though you’re happy to be rid of the things.
Industrial aggregate of america is partially determined by cash and carry salure of arms to individual nation states which generates cash for international arms support initiative. As well, maybe fortey times the value by cash asset of commodity resource are traded by america at warm and cold water ports in alaska and texas which output american crude industrial anglomerate to other nation states making this also commodity source of real cash a potential source of actual cash payments. As you have said, because the nations of america is under debt it is difficult for america to aquire loans on an international level and generally is a fiecant source of net resource especially with canadian oil sands and texas, colorado oil and net food commodity output from the heart belt of america generating exact cash and generally such aid given to other countries is largely military aid under NATO or other treaty which provide arms aquisition and requirement for the NATO Bloc country which receive support.
If you are asking about the foreign military, then the most short answer here is – in order to not get nuked in the future. If the US stopped helping their allies, those countries will make their own nuclear weapons. Their neighbors will make nuclear weapons. More nuclear weapons in already less stable countries means higher risk of it being used. Think of that money like of insurance.
It’s hard for human to have a sense of scale with this kind of numbers, it can all seem big and impressive. So I’ll ratio it to a scale easier to understand. The US Budget is 610 Billions while US debt is 34.47 Trillions. If we scale that down to the average salary in the US.
You are average Joe and you make 60 thousand per year. You have a mortgage on an house of 339 thousand dollars and you are helping your friend by sending him a couple a few thousand dollar.
Now, this example is not totally right, because the government doesn’t taxes their own income so Average Joe here would have access to their whole 60 thousand salary and not just 40ish thousand like a normal citizen. In addition, since the US is a government and a stable one, their debt have a low interest rate compared to anything a normal citizen would be able to get.
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