PEPFAR and the Marshall Plan, When Conservatives Defended Foreign Aid

Two checks, two Republicans, two skeptical Congresses. In 1948 a Republican-led Congress voted billions to rebuild the economies of countries that had been America's enemies and allies, and in 2003 a Republican president asked for billions more to fight a plague on another continent. Both programs were accused, in their day, of wasting the taxpayer's money on foreigners. Both worked.

That history should make every conservative pause before saying that foreign aid is always waste. It should make every conservative pause just as long before saying that foreign aid is always wise. The honest position sits between them, and the way to find it is to compare the programs that succeeded with the ones that did not, and ask what separated them. This post does that. I will lay out the two flagship programs in a table, give the skeptics their full case, and draw the line where the evidence draws it.

Defining the debate

Two camps divide conservatives on this subject, and I will state each at its best.

The first camp sees targeted aid as cheap strategy. Aid that stabilizes an ally, defeats an enemy's ideology, or stops a disease before it spreads is a bargain compared with war. The second camp sees any aid as charity with other people's money. The government has no authority to take a taxpayer's earnings and give them away, and the foreign poor have no claim on the American family's paycheck. The first camp points to history. The second points to principle and to the long record of aid that did nothing.

The two camps are not as far apart as they seem. The strategic camp agrees that most aid is wasted. The principled camp can, and often does, support the narrow category of spending that serves American security and interests directly. The question that decides it is not whether aid is good in the abstract. It is which aid, for what purpose, and under what test.

The Marshall Plan

In a speech at Harvard on June 5, 1947, Secretary of State George Marshall proposed that the United States help Europe recover from the war, provided the European countries drew up a joint plan. The reasoning was strategic as much as humanitarian. Western Europe was hungry, its industry shattered, its governments weak, and its Communist parties strong. A Europe that failed economically was a Europe that might turn to Moscow.

The Soviet Union refused to take part and pressed its satellites to refuse. Western European countries joined, and the plan's benefits went to some seventeen of them in all. Congress took up the plan in 1948. It was contested. Isolationist sentiment was real, and many Americans thought the country had done enough. The Republican chairman of the Senate Foreign Relations Committee, Arthur Vandenberg of Michigan, who had been an isolationist before the war, became the plan's most important Republican advocate and carried it through the Senate. The Senate passed it 69 to 17 in March 1948, and President Truman signed the Economic Cooperation Act on April 3, 1948. The program ran for about four years and provided roughly thirteen billion dollars in grants and loans, administered by a new agency, the Economic Cooperation Administration, headed by Paul Hoffman, a businessman who had run the Studebaker Corporation.

Hold on to that last detail, because it is the first clue to why it worked. The plan was administered by an executive from the private sector, with the explicit aim of getting European economies to stand on their own feet and then ending.

PEPFAR

The President's Emergency Plan for AIDS Relief began with a few sentences in the State of the Union address of January 28, 2003. President George W. Bush proposed fifteen billion dollars over five years to fight HIV and AIDS, most of it for the countries of Africa and the Caribbean hardest hit. At that point, only about 50,000 Africans with HIV, by the president's own count, were receiving the antiretroviral drugs that could keep them alive, in places where an infection was a death sentence. Congress passed the authorizing law, the United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003, and Bush signed it on May 27, 2003. It was reauthorized in 2008, with a larger authorization.

The program had features that made it unusual. It had a single, specific goal, which was to put people on treatment and prevent new infections. It was run by a coordinator at the State Department who reported on numbers, such as patients on treatment. It worked largely through clinics, faith-based groups and local organizations, and not by writing checks to finance ministries. It had a measure of success that could be counted, the number of people on treatment, and the numbers were published.

Conservatives had a hand in it, and not only the president. Evangelical Christians supported it as a moral cause, and a number of members who were known for skepticism about foreign aid voted for it, with Senator Jesse Helms, a longtime critic of foreign aid, publicly changing his position on AIDS in 2002. The program's defenders have described it as the largest commitment by any nation to fight a single disease. I would add that it is among the most credible examples of the principle that aid with a clear target works.

The table

Read the columns, not the rows. The two successes share a clear and limited goal, outside accountability, an agent who answers for the result and, in the case of the Marshall Plan, a built-in end. The failures share the opposite traits.

I will give a caution on the PEPFAR results column. I have described them as the program itself reports them, and independent evaluations have broadly agreed that the program greatly expanded treatment. But the specific figures on lives saved are estimates built on models, and a careful reader should check the program's annual reports and independent assessments for the current numbers, not take mine.

The skeptics' case, in full

A post that praised these two programs and ignored the objections would be a sales pitch. Here is the skeptics' case, stated as its holders would state it.

One. The Marshall Plan's success was partly luck and partly Europe. Western Europe was a developed region with skilled workers, working legal systems and a business culture. It needed capital and a push, not a transformation. The same money in a poor country with weak institutions would have bought far less. The plan's lesson is that aid can help a recovery that is already possible, not that it can create a recovery that is not.

Two. Some economists argue that the Marshall Plan was less decisive than the legend, and that the policy reforms of the period, including monetary stabilization and the removal of price controls in West Germany in 1948, did much of the work. Ludwig Erhard's currency and price reforms are told in Ludwig Erhard ended price controls on a Sunday and launched a miracle. Aid made the reforms easier to carry out, but the reforms were the engine.

Three. PEPFAR creates a dependency. A country whose AIDS treatment depends on American money is a country whose health system is tied to the American budget, and a change in Washington could end the treatment of millions. Critics also note that the program focused on one disease, and that a clinic built for HIV does not automatically treat other illnesses. Four. The tradition of Peter Bauer, William Easterly and others holds that aid to governments props up the officials who receive it, delays reform, and displaces private enterprise. On that view, even good programs risk teaching the wrong lesson.

Five. The principled objection. Even if a program works, is it the federal government's job? The Constitution gives Congress the power to tax and spend for "the common Defence and general Welfare of the United States," in Article I, Section 8, Clause 1, and the argument has been had for two centuries about how broadly to read it. James Madison and Alexander Hamilton disagreed. A strict reading would limit spending to the nation's own defense and welfare, which for the Marshall Plan is an easy case, since the security reason is plain, and for PEPFAR is harder.

These are not silly objections. The first, third and fourth are partly right, and a conservative who ignores them will fund the next failure.

The answers

Here are the replies, and where I think the skeptics are wrong.

One. On the claim that Europe was special: yes, and that is why the lesson is not "spend more everywhere" but "match the tool to the conditions." PEPFAR succeeded in countries without Europe's institutions because it did not rely on those institutions. It went around them to clinics and local organizations. The Marshall Plan teaches how to help the willing; PEPFAR teaches how to help where the state is weak.

Two. On the reforms: agreed that they mattered, and the plan required them. The Europeans had to agree to cooperate, to remove trade barriers, and to draw up recovery plans. Aid was the incentive that made the reforms attractive. That is the point of conditionality.

Three. On dependency: it is a real risk, and the right answer is to build in transitions. A program should state what its end looks like, and Congress should ask. A transition plan is exactly the sort of accountability that conservatives should demand from every aid program. That a program must eventually end is not an argument against beginning it.

Four. On the Bauer-Easterly tradition: I accept it for aid to governments with no conditions, and the table above is my answer. The principle that aid should be tied to results, conditioned on reform and aimed at a measurable target is the same principle the critics urge. The programs that follow it do not belong in the category they condemn.

Five. On the constitutional point: the Marshall Plan was justified as an instrument of national security at the start of the Cold War, and the general-welfare question is better answered for programs that have a plain link to the nation's own safety. Disease that crosses borders and unstable regions that breed extremism are security matters, whatever else they are. A conservative can hold that the federal government should not be a global charity and still support a program that serves a clear national interest at a modest cost, so long as Congress, and not the executive alone, votes the money. For how Congress does that, see Follow the Defense Bill From Markup to Signing, a Citizen's Guide.

What the comparison teaches

I will put the lessons as a short list that a legislator could carry into any aid debate.

1. State the goal in a sentence. If it cannot be stated, it cannot be measured.
2. Count the results and publish them, and end the programs that miss.
3. Route the money to those who deliver, not only to those who govern.
4. Condition continued aid on reform, and write down what the exit looks like.
5. Have Congress decide, in an appropriations act, not a press release.

The myths that surround the whole subject, including the common belief that aid is a quarter of the budget, are addressed in Foreign Aid Is Not a Quarter of the Budget, and Other Myths Tested. And the larger question of how America's strength relates to its commitments is explored in NSC-68 and the 1950 Memo That Told America the Price of Staying Free, which tells the story of a memo that argued, as Marshall's plan did, that freedom has a price and that paying it early is cheaper than paying it late.

The conservative tradition here

There is a long history behind the idea that conservatives, of all people, should be able to defend good aid. The Founders were cautious about foreign entanglements, and Washington's Farewell Address, discussed in What Washington's Farewell Address Really Said About Foreign Entanglements, urged commerce with all and political connection with none. But the same generation that wrote those warnings also built a navy to protect American trade and sent a fleet to the Mediterranean. A cautious foreign policy is not a policy of doing nothing.

What the Marshall Plan and PEPFAR show is that when conservatives apply their own principles, clear goals, accountability, results, limits and an exit, to foreign aid, they can build programs that work, and that history will remember. And when those principles are ignored, aid becomes what the skeptics say it is. The best answer to the argument over foreign aid is to practice the discipline, not to pick a side.

The case in brief

1. The Marshall Plan of 1948 and PEPFAR of 2003 were conservative-backed programs that succeeded because each had a clear goal, outside accountability, local delivery and, in the Marshall Plan's case, a planned end.
2. Aid to governments with vague goals and few conditions has a poor record, as the skeptics in the tradition of Peter Bauer and William Easterly argue.
3. The skeptics are right that Europe was a special case, that reforms did much of the work, and that dependency is a risk, and the right response is conditionality, measurement and a planned exit.
4. The constitutional question is best settled by tying aid to a plain national interest and by having Congress, not the executive alone, vote the money.
5. The conservative position on aid is neither "never" nor "always," but "show the result."

What you can do: Choose one American aid program, look up its goal and its latest published results on the agency's website or in a Government Accountability Office report, and send your representative the one question the report leaves unanswered.