Foreign economic assistance is one of the most difficult subjects of debate between the US congress and president. Few other issues have generated the number of hearings or levels of praise and anguish as this government component. From assistance to Israel and Egypt to the economic support of South Africa and the former Zaire, myriad opinions have been expressed with regard to the proper direction for such American foreign policy. This study will first address the general changes in the direction of foreign economic assistance from the Reagan administration to through the second George W. Bush administration. It will then argue that the same direction of change to the overall budget and direction of foreign economic assistance are closely related to the overall budget and direction of the Peace Corps under the same administrations. The research begins with one of the most influential presidents in recent history-someone who stood behind the Peace Corps throughout his presidency.
Ronald Reagan: One individual in recent history stands out for his ability to institute positive change that not only produced national effects, but a global impact over nearly 2.5 decades-Ronald Reagan. The major turning point with regard to the direction of the US aid budget began with Carter. During the final year of his presidency, Afghanistan was invaded by the former Soviet Union. The Carter administration's increase in military assistance came too late and he was criticized as "soft" on defense spending. Stubbing (20) stated, "As a candidate in 1980, Ronald Reagan campaigned hard on the perception of a vastly weakened America. He scored well with blanket assertions of US military inadequacy, caused by conciliatory detente policies and underfunded defense budgets of the 1970s. He portrayed President Carter as 'soft on defense" (851).
Reagan was elected partially due to the "window of opportunity" presented by the Soviet military threat left unaddressed by the Carter administration with massive cuts in the defense budget. One of many Reagan goals was a safer world through facilitating defeat of what he considered Soviet expansionism. Foreign assistance played an important role toward this end. The Reagan administration introduced an increase in military and economic assistance via the US Agency for International Development (USAID) that would continue until the introduction of the Gramm-Rudman-Hollings Deficit Reduction Act (GRHDRA) during 1985. As Fig. 1 shows, this equated to a large increase in the aid budget when Reagan entered office (21).
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From 1981 through 1985, the Reagan administration transformed the focus of aid from a humanitarian grounding to a "pawn" of national security (18). Figure 2 shows the changes that took place during this period. Specifically, the dramatic rise in assistance to other countries is clearly evident in the mean per capita spending on foreign aid. The graph not only depicts the dramatic rise in assistance, but also the many changes during four government administrations.
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What subsequently transpired, however, from 1981 forward, was a series of actions that can be best described as a "tug-of-war" between Reagan and the US congress that included a gradual takeover of the foreign aid budget via "earmarks." Earmarking can be described as a form of direct allocation, which allows members of Congress to set aside specific funds solely for designated purposes. This process of earmarking became increasingly prevalent with each passing year.
The problem of the US budget deficit became a clear reality after the concurrently increased military budget and tax cuts. Reagan (15) strongly supported major increases in defense spending, noting, "I believe another reason the American people voted me in was to rebuild our nation's military, which was in a state of disrepair and neglect. For too long, our leaders had thought we could have a strong military on the cheap and so it was the military budget that was always cut" (127). In response to criticism of his tax cuts, Reagan (16) stated, "The reality is that the effect of the tax cuts enacted in 1981 was mainly to hold tax rates even, to keep the hard-pressed American taxpayer from being bled even drier through further hikes and the bracket creep caused by inflation" (216). The final collective outcome of both scenarios was a markedly increased national debt, which spurred budget constraints forcing the attention of both congress and future administrations. The national debt continued to be a major problem of concern for future administrations (Fig. 3) (22), (23); however, Reagan was the first president to institute a possible solution through the GRHDRA.
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The GRHDRA was mandated during 1985 and proposed a balanced budget over a six-year period, which was a major priority for Reagan and subsequent administrations. During 1987, Reagan (14) argued that, if only Congress had instituted the budget cuts he had proposed earlier, the problem would not have reached such a magnitude. He explained:
To reduce the national debt, of course, requires balancing the budget and stopping the deficit spending that is going on. We have been trying to do that with the budgets that we've submitted over these last few years. When I hear some of our opponents complaining that I am responsible for the present deficits, I get a little annoyed, because if we had been given the budget that I asked for in 1982, the cumulative deficits through 1986 would be $207 billion less than they turned out to be (14).
Throughout his term in office, Reagan (16) argued that cuts...