The gutting of USAID

Summary

The Gutting of USAID

The Indicator from Planet Money, Hosted by Waylon Wong and Darian Woods

Release Date: February 13, 2025

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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.

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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.

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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.

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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)

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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.

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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.

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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.

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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.

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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.

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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)

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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.

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For more insights and updates on economic and business trends, tune in to The Indicator from Planet Money weekday afternoons.

Transcript

[NPR]

Npr.

[Waylon Wong]

This is the Indicator from Planet Money. I'm Waylon Wong.

[Darian Woods]

And I'm Darian Woods. Insania Tisho grew up in Tanzania, thousands of miles from the U.S. and yet the U.S. was a tangible presence. There was one American agency in particular that he knew was electrifying villages and distributing Malari.

[Lemsanya]

I remember my parents, my family receiving a lot of nets and they used to say, sponsored by USAID.

[Waylon Wong]

USAID or USAID, the U.S. agency for International Development. This arm of the government was created in 1961 to distribute foreign aid. And for Lamsanya, USAID wasn't just part of his childhood. About three years ago, it set up clean water in the village where he and his family live today.

[Darian Woods]

Them Sonia's wife Kristen says you can't miss who sponsored the project.

[NPR]

There's a massive sign that says, you know water is being brought to you through USAID and the American people.

[Waylon Wong]

This kind of work came to a crashing halt last month when the Trump administration put a 90 day freeze on foreign aid. It also effectively closed USAID, throwing thousands of people out of work. The website even went dark and remains so today.

[Darian Woods]

It was a rapid dismantling of an agency that has historically received bipartisan support. The agency isn't just about American largesse, but about bolstering American national security and economic interests.

[Waylon Wong]

Today on the show, we look at how the US has wielded this form of soft power and who might fill that power vacuum if USAID goes away.

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[Darian Woods]

In 2023, USAID had a budget of $40 billion. That accounted for less than 1% of the total federal budget for that year. The program spends money on things like food assistance, education, and public health, including HIV AIDS prevention.

[Waylon Wong]

When you look at foreign aid as a percentage of gross national income, the US Is less generous than many other countries. But the US Is the largest economy in the world. So when it comes to the absolute number of dollars spent on foreign, the US Is the largest donor. That means the money which flows through agencies like USAID is indispensable. That's according to Charles Kenney. He's a senior fellow at the center for Global Development. It's a think tank that conducts economic research on global poverty.

[Charles Kenney]

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.

[Darian Woods]

Charles says that studies show that foreign aid can help promote economic growth and trade relationships between countries.

[Waylon Wong]

But don't just take it from Charles. Here's Marco Rubio, former Republican Senator and President Trump's current Secretary of State, making this argument to Congress in 2017.

[Lemsanya]

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. So there is an economic rationale for our investment around the world. We are helping people to emerge from poverty and ultimately become members of a global consumer class.

[Darian Woods]

In other words, as people in countries receiving foreign aid get richer, they're more likely to buy stuff from the US and elsewhere. That's part of the economic argument for USAID programs. Charles says there's also a related national security rationale.

[Charles Kenney]

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.

[Waylon Wong]

Marco Rubio, who defended USAID during his time in the Senate, is now presiding over the dismantling of the agency. Last week, the State Department said that USAID was no longer advancing American interests abroad and that a review of the agency's activities is underway. Rubio has said that parts of USAID might continue to run under the State Department.

[Darian Woods]

USAID has faced criticism over the years about inefficient, wasteful spending and whether foreign aid actually sparks economic growth. Last week, the White House circulated a list of projects that considered examples of waste and abuse at usaid.

[Waylon Wong]

Most of the examples were smaller in price tag, less than $5 million. Take an initiative to promote clean Energy in Vietnam. And some of them, like a quote, DEI musical Ireland, weren't even USAID projects.

[Darian Woods]

Charles says there are many ways the agency needed improvement. For example, shipping American crops overseas to help with food emergencies can be a long and costly process. It can take four to six months.

[Waylon Wong]

But he doesn't see the chaotic closure as the answer to the agency's problems. The 90 day freeze has stopped operations like emergency medical care and an early warning system for detecting famines. Charles wants to see evolution, not revolution.

[Charles Kenney]

The reform agenda is really important. It's not a destroy agenda, if you will. It's not an agenda to rip this thing down. It's to make it even better.

[Darian Woods]

Marco Rubio told Fox News last week that while the goal was reform, there is now, quote, rank insubordination at usaid. He said that forced his office to take dramatic steps. We reached out to the State Department via email, phone and couriered letter. We did not get a response.

[Waylon Wong]

We did talk to someone who works for an organization that gets USAID funding. She focuses on education and she asked that we not use her name because she's worried about reprisal against her employer.

[Unnamed Staffer]

The past couple weeks have been heartbreaking. I can't even begin to describe it. The entire field is gone, Waylon. I mean, it's not even just like someone losing their job. It's the entire field.

[Darian Woods]

This staffer was working on an educational project in West Africa. USAID was helping fund things like children's books and radio programming that could be used for remote learning.

[Waylon Wong]

Before the foreign aid freeze, her organization had received 11,000 tablets with solar chargers. Those tablets were supposed to be loaded with training material for teachers and distributed to schools. Now they're just sitting in an office.

[Unnamed Staffer]

The generator needs to run because these tablets are in the office. And if the power goes out and the air, is it going to physically ruin these pieces of technology? If the air conditioners aren't running, for instance, and then if the funding doesn't come back, what's going to happen to these tablets?

[Darian Woods]

The staffer told us her career choice was inspired by her uncle, an agricultural economist who worked for usaid. She herself was in the Peace Corps and she's married to a veteran who served in Iraq.

[Unnamed Staffer]

I'm no fool when it comes to American interests. And the work that I am doing to forward American values and American security, prosperity I get really is partnerships with other countries and soft power and building trusting relationships, you know. And right now we are abandoning people right and left and we're not going to be the partner of choice if this is how we're treating people.

[Darian Woods]

China, however, might step into this void. For over a decade, the Chinese government has been investing massively in infrastructure projects around the world, including in Africa. It's called the Belt and Road Initiative. China is seeking to recruit allies and build goodwill not through humanitarian assistance but through economic partnerships. Marco Rubio, for his part, told Fox News last week that he wasn't concerned about China. China filling this vacuum.

[Waylon Wong]

In Tanzania, where Lemsanya and Kristin Tishau live, they've seen Chinese funded mining projects spring up near them. They say the local reception to the increased Chinese presence has been mixed.

[Darian Woods]

But Kristin Tisho says she expects sentiment to start turning against the US People have come to count on USAID for life saving drugs or they were employed through USAID and now they're out of a job.

[NPR]

But I'm sure the hospitals will be quick to say it's not our fault you don't have your medication. The Americans who are funding it are no longer sending it. And we have about 1.7 million people in Tanzania with HIV. So it affects a huge number of families. They're not going to be thinking very kindly of Americans at this point.

[Darian Woods]

Meanwhile, two lawsuits seeking to stop the closure of USAID are moving through federal court. One is from unions representing agency workers and the second from a group that includes contractors and small businesses.

[Waylon Wong]

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. This episode was produced by Julia Ricci with engineering by Sina Lofredo. It was fact checked by Sierra Juarez. Katie Kenan edits the show and the indicators of production of npr.

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