Why Foreign Arms Aid?

June 15, 1953

For the fiscal year beginning July 1 we face an estimated deficit under present tax laws of $6,600,000,000 and, even if Mr. Eisenhower gets all the tax extensions he wants, of $5,600,000,000. We profess not to know how to solve this problem. Yet we are planning to give away $6,500,000,000 to foreign countries.

Our foreign-aid program, once mainly “economic,” is now mainly for “defense.” Congressmen hesitate to criticize it because they think it involves primarily a “military” question. It still involves, in fact, primarily an economic question, for it rests on two invalid economic assumptions: (1) that Europe cannot afford to pay for its own defense and (2) that the amount we give for defense aid all goes to increase foreign defense.

Here are this fiscal year’s armament expenditures of ten of our aid beneficiaries stated as a percentage of (1) their total central governmental expenditures (TGE) and (2) their gross national product (GNP). The record of these European countries is compared with our own:

Defense Expenditures

The United States, in brief, is spending on national defense more than four times as much absolutely as these ten nations combined (some $53,200,000,000 against a total of $11,800,000,000). It is also spending much more relatively—15 percent of its gross national product against an average of 7 percent for the ten beneficiaries.

Many Europeans argue that this is just as it should be. They advocate a sort of international progressive income tax. This rests on the theory that the man or country that produces more and earns more somehow owes the difference to the man or country that produces less and earns less.

Yet the United States, which is giving the defense aid, is spending some 70 percent of its total budget on defense, whereas the countries receiving the aid are spending on the average only some 30 percent of their total budget on defense. This is another way of saying that while we in the United States can afford to spend only 30 percent of our total budget on nondefense items, the European beneficiaries of arms aid are lavishly spending some 70 percent of their total budgets on nondefense items. They are robbing their own defense at the cost of comparative luxuries (including deficits on their nationalized industries).

This relationship cannot be excused on the plea of poverty. On the contrary. In the foregoing table it is Greece and Turkey that have the highest relative defense budgets. Yugoslavia devotes some 80 percent of its total spending budget to defense, and Nationalist China about 57 percent. The ten countries in the table spend altogether a modest $11,800,000,000 on defense and some $34,200,000,000 on nondefense. Suppose we assume that we are contributing some $4,200,000,000 a year to their defense. Why can’t they, instead, take this out of their nondefense expenditures (which would still leave them some $30,000,000,000 for this purpose) and add it to their defense expenditures (which would still be only about half of their nondefense expenditures)?

It is relevant here to point out that whatever money or material we give to a European government for defense aid, however specifically earmarked, can simply release that much of that country’s own funds for additional nondefense expenditures. The only way we could make sure that this diversion is not taking place would be to dictate and supervise every item of that government’s budget. And no one would dare propose such dictation.