The Gutting of USAID
The Indicator from Planet Money, Hosted by Waylon Wong and Darian Woods
Release Date: February 13, 2025
Introduction
In the February 13, 2025 episode of The Indicator from Planet Money, hosts Waylon Wong and Darian Woods delve into the sudden dismantling of the United States Agency for International Development (USAID). This significant move by the Trump administration has far-reaching implications for global development, American foreign policy, and international relations.
Background on USAID
USAID, established in 1961, has been a cornerstone of America's international development efforts. With a 2023 budget of $40 billion—representing less than 1% of the total federal budget—the agency has played a pivotal role in areas such as food assistance, education, public health, and HIV/AIDS prevention.
Charles Kenney, a senior fellow at the Center for Global Development, underscores USAID's impact:
"We are talking tens of millions of people who are alive because of USAID rather than dead, and we do it for this teeny amount of money." (03:36)
Despite being the largest economy globally, the U.S. contributes the largest absolute amount of foreign aid, making USAID's funds indispensable for numerous international initiatives.
Closure of USAID by the Trump Administration
Last month, the Trump administration imposed a 90-day freeze on foreign aid, effectively shutting down USAID. This abrupt closure resulted in thousands of employees losing their jobs and halted critical operations. The agency's website has been offline since the freeze was enacted.
Darian Woods explains the swift dismantling:
"It was a rapid dismantling of an agency that has historically received bipartisan support." (01:27)
The State Department has initiated a review of USAID's activities, stating that the agency is no longer advancing American interests abroad. Marco Rubio, former Republican Senator and current Secretary of State under President Trump, has indicated that parts of USAID might continue under the State Department's umbrella.
Impact of Closure
The shutdown of USAID has immediate and tangible effects on the ground. Initiatives that were crucial for public health, education, and economic stability are now stalled.
Kristen Tisho, Lemsanya's wife, recounts the presence of USAID in their Tanzanian village:
"There's a massive sign that says, you know water is being brought to you through USAID and the American people." (00:39)
With projects like clean water systems suddenly halted, communities are left vulnerable. An unnamed staffer involved in educational projects in West Africa highlighted the disruptions:
"The entire field is gone, Waylon. I mean, it's not even just like someone losing their job. It's the entire field." (06:51)
One poignant example is the shelving of 11,000 tablets equipped with training materials for teachers. These devices are now at risk of damage due to lack of maintenance:
"If the power goes out and the air, is it going to physically ruin these pieces of technology?" (07:30)
Arguments for USAID
Economic Rationale: USAID's activities are not merely acts of charity but strategic investments. Marco Rubio articulated this perspective in 2017:
"People can't be consumers if they're starving. They can't be consumers if they're dying of malaria. They can't be consumers if they live in an unstable country... we're helping people to emerge from poverty and ultimately become members of a global consumer class." (04:05)
As recipient countries develop economically, they become more robust markets for American goods and services, fostering beneficial trade relationships.
National Security: Charles Kenney emphasizes the security aspect:
"If you know that your life has been saved by US Assistance, it's a lot less likely you're going to turn around and protest against the United States or, you know, join a terror group or whatever." (04:40)
Building trust and fostering stability through aid can prevent the rise of anti-American sentiments and extremist groups.
Criticism and Challenges Facing USAID
Despite its successes, USAID has faced longstanding criticisms regarding inefficiency and the tangible impact of its programs. The Trump administration cited instances of waste and abuse, though many were minor projects under $5 million.
Darian Woods points out:
"Most of the examples were smaller in price tag, less than $5 million... some of them, like a quote, DEI musical Ireland, weren't even USAID projects." (05:28)
Moreover, logistical challenges persist, such as the prolonged time (four to six months) required to ship American crops overseas for food emergencies, highlighting areas needing improvement.
Responses and Reactions
Charles Kenney advocates for reform rather than annihilation:
"The reform agenda is really important... It's to make it even better." (06:11)
However, Marco Rubio characterizes the closure as a result of "rank insubordination" within USAID:
"We have now, quote, rank insubordination at USAID." (06:21)
On the ground, those reliant on USAID's programs express despair. Kristen Tisho fears negative sentiments towards the U.S. as essential services and jobs vanish.
Potential Consequences and Future Implications
With USAID's shutdown, there arises a significant power vacuum in international development, potentially opening doors for other global players, notably China.
Darian Woods highlights China's Belt and Road Initiative:
"China is seeking to recruit allies and build goodwill not through humanitarian assistance but through economic partnerships." (08:35)
In Tanzania, increased Chinese investment in mining projects is already noticeable, with mixed local reception.
Legal Actions Against Closure
Two lawsuits aim to halt USAID's closure: one from unions representing agency workers and another from contractors and small businesses. These legal battles underscore the contentious nature of the agency's shutdown and the widespread impact on various stakeholders.
Conclusion and Upcoming Topics
The episode closes by teasing a forthcoming discussion on how USAID's closure affects American farmers engaged in government contracts, indicating the multifaceted repercussions of dismantling the agency.
Waylon Wong wraps up:
"By the way, next week we'll have more on how the closure of USAID also affects American farmers who sell crops to the government." (10:01)
Production Credits
This episode was produced by Julia Ricci, engineered by Sina Lofredo, fact-checked by Sierra Juarez, edited by Katie Kenan, and produced by NPR's The Indicator team.
For more insights and updates on economic and business trends, tune in to The Indicator from Planet Money weekday afternoons.