Daily Austerty Watch (4/1/11) — Social Security

Below is 24/7 Wall St.’s daily take on important fiscal news.

US Budget — As the U.S. Congress comes ever-closer to striking the budget deal that many in Washington,  bureaucrats are starting to ratchet up the rhetoric of their pleas to support their funding at existing levels.  The Agency for International Development is a case in point.

In testimony before the House Appropriations State and Foreign Ops subcommittee, AID Administrator Rajiv Shah estimated that 70,000 children would die because of cutbacks in foreign aid proposed in the Republican budget. He even broke down the figure for members of the subcommittee.

“Of that 70,000, 30,000 would come from malaria control programs that would have to be scaled back specifically. The other 40,000 is broken out as 24,000 would die because of a lack of support for immunizations and other investments and 16,000 would be because of a lack of skilled attendants at birth,” he said.

Those figures — horrendous as they may be — are based on hypothetical assumptions of hypothetical assumptions.   It is not clear when the 70,000 children would meet their demise.   Would it be as soon as the ink dries on the GOP budget?   How about a year from then or five years? How many of these children would have died anyway without American aid?  Of course, it’s impossible to know.

Shah, of course, is in the middle of a huge fight and he is using inflammatory rhetoric to won support for his agency in tough fiscal times.  It’s like a school superintendent responding to calls to cut his budget by eliminating a popular program like the football team in the hopes that parents will rally to his defense. That tactic may not work any longer.

The Republicans, who scored a huge victory in last year’s Midterm Elections, want to cut foreign aid like everything else. According to Foreign Polcy,  the GOP plan slashes the International Disaster Assistance account 50 percent below the president’s 2011 budget request and 67 percent below fiscal 2010 levels.

Unfortunately,  throwing money at seemingly intractable problems such as Third World poverty does not guarantee success.   For instance, Uncle Sam has given Haiti  billions over the years and it still remains the poorest and probably among the most corrupt in the Western Hemisphere.  Same thing for desperately poor countries such as Ethiopia and Liberia.

Though billions is spent annually helping other countries, there is a fair amount that is wasted.   Arnold Fields, special inspector general for Afghanistan reconstruction , recently noted that huge amounts of money had been squandered in that notoriously corrupt country.  Similar claims have been made about the reconstruction of Iraq.

The U.S. can’t afford to turn its back on the world, but at the same time there have to be limits on its generosity.   President Obama, for instance, is resisting calls to arm the rebels in Libya.  The U.S. just can’t afford to fight three wars.

If the U.S. is serious about cutting the  $1.6 trillion deficit,  than everything has to be on the table, even  helping poor children and others in foreign countries who otherwise deserve our help.

–Jonathan Berr