Tag: USAID

Econ 101: Government Budgets

Newspapers are full of articles about the deaths or other losses that will result from proposed budget cuts. Today’s Washington Post, for example, headlined a story on USAID cuts “USAID cuts may cause 14 million more deaths in next five years, study says”  “Washington post /2025/07/01/”

If the government’s spending on X is reduced (aside from any improvement in efficiency) the benefits of that spending will be lost. But our resources are limited. If we spend more on X we have less to spend on Y.  So when we lament the losses from reduced spending on X we should take account of the gain from the increased spending on other things.

To put a bit of flesh on this issue, consider the following: “The administration has cut more than a hundred contracts and grants from the President’s Emergency Plan for AIDS Relief, the HIV and AIDS program credited with saving millions of lives in poor countries. President Donald Trump has shut down the agency that signed off on most PEPFAR spending and fired other staffers who supported it.”  “Rubio-pepfar-aids”

Evaluating whether this cut is “good or bad” is not easy because determining the likely alternative use of the money saved is not easy. If we stick to a fixed government budget total, the alternative use by the government of the money saved might save even more lives (or maybe not). But the saving could also be given to tax payers whose use of that money would reflect their own personal needs and priorities.  

The process used by Elon Musk’s DOGE to arrive at the spending and/or personnel cuts they proposed was not transparent thus is largely unknown to us. But I have serious doubts that it was appropriate. Semafor offers the following advice:

“A lot of US government work is highly inefficient, says the science reformer Stuart Buck. Federally funded scientists say they spend 44% of their research time on bureaucracy, federal procurement is “broken” and often results in the government buying products that don’t work, and “the Paperwork Reduction Act paradoxically results in endless paperwork.” “Many such cases,” says Buck. “We should have an official effort to address these issues… We could even call it a ‘Department of Government Efficiency.’” As you might be aware, there is one: It is “widely viewed as a failure,” but the basic idea is sound. How could we make it good?

“The first step, says Buck, would be taking a long time to deeply understand how each government agency works, so you don’t mistake routine human error or some statistical artifact for fraud. Second, it should focus on high-value reforms, like outdated data systems or software. Third, it should learn from previous attempts to cut red tape — because there have been many, not all of which worked. And importantly, a good DOGE would not mistake things we don’t use for “waste” — like an insurance policy, we hope pandemic preparedness infrastructure and fire departments are never used, but they’re in place in case we need them. The real-world DOGE is a failure, says Buck, because it ignored all of these strictures.”  “Semafor.com/newsletter/06/30/2025/”

I think some, if not many, government programs or activities should be reformed or eliminated. But those the public really want must be paid for by the public paying additional taxes or lending to the government (buying US bonds). U.S. debt is dangerously high (123% of US GDP) and continuing to grow.  So to the extend spending is not reduced, taxes should be raised.   

U.S. occupation of Iraq

The following blog is 100% true. I did meet with Erik Prince in his Tyson’s Corner office and the U.S. Army’s killing of an old Iraqi man in Baghdad and the related events are 100% true. Unfortunately, my confrontation of Prince with his security teams damaging behavior in Iraq only occurred in my dreams last night.

In the late 2000s (probably 07 or 08) I met with Erik Prince in his Blackwater headquarters at Tyson’s Corner Virginia to discuss a prospective project in Jordan. At the end of our meeting I confronting him with the bad reputation of his Blackwater team in Bagdad (sadly this was only in my dream but the events are 100% true).

Following the U.S. and British invasion of Iraq, Blackwater provided security in Bagdad to US Embassy staff and foreign contractors such as me. While reporting to the U.S. Treasury, I was paid by USAID and housed and protected as part of the BearingPoint team under the USAID contract. Because of Blackwater’s reputation for a high profile, roughshod approach to security (driving their armored cars wherever—including sidewalks and wrong way streets), BearingPoint had hired a British security firm.

Even when countries are “liberated” their citizens never like the invading army to hang around long. Iraq was no exception. And the U.S. has proved no better (to say the least) than other colonial powers at administering the lands they conquered. The following story from early 2004 of an illustrative incident in Bagdad was told to me by a US Embassy friend, Michael Cole, who was in the middle of it:

“On a residential street between the Green Zone and our destination in Kadhimiya – possibly Mansour, Karkh, or Hurriyah – I heard the young soldier in the gun turret above me yell extremely loudly at someone in the street. I often spent rides like this reading notes or emails I’d printed to prepare for meetings, glancing up frequently to become familiar with routes and landmarks in case I needed to return to the Green Zone alone. I saw the old man the soldier was yelling at as he walked directly into the road. The Humvee was going extremely fast, driving in formation with 2 or 3 others, swerving across the road in formation to prevent civilian vehicles from riding alongside us where they could block our route or gain a clear line of fire to assassinate me. The driver never could have stopped once the man walked into the road. Just as I saw him and realized why the soldier was yelling, I heard and felt each tire on the passenger side where I sat roll over him. I’ve never run over a deer, but I expect the sound is similar. The vehicle was too fast, loud, and heavy for me to hear a scream or bones break, but I heard a crowd behind us scream, and cars honk. I looked around for landmarks so I could file a report and return to the site someday to make amends. The man appeared to have left a small yellow house with a date palm beside a four-lane road.

“I remember the soldiers cussed loudly when we hit the man. Most had Southern accents and sunburned faces. They started the mornings clean except for their gloves, but ended every day covered in dust, with black outlines left by tinted blast goggles. We talked about the incident when we arrived in Kadhimiya and were safe in a walled parking lot. Most of the soldiers were as distressed as I was. We all knew the man was dead, and we believed it was too dangerous to stop and try to help.

“One of the soldiers, possibly a young lieutenant who was my liaison with the security details, explained that the local Forward Operating Base had a process to compensate families of civilians killed by Coalition Forces. He explained that Iraqi tradition permitted compensation in lieu of prosecution even among local persons, and that this was an accepted form of justice. My later study of Arab tribal culture led me to believe Baghdadis could follow the same practice. I submitted my own brief statement to a local colonel or lieutenant colonel, who knew the case and assured me the family was well-compensated for the man’s death. I remember doubting anyone could be satisfied by this, but I was pleased I was not the only person who had submitted a statement. The soldiers did so before me. I tried to estimate what the man’s life could be worth between a Shiite Baghdadi family and the US military, but the normal actuarial items never equaled what I imagined anyone could call justice. 

“I asked Iraqi colleagues what to do. They shared my grief. Some shared my anger. Others were dismissive – possibly because I described the man as poor. Most advised me not to go back because there was nothing I could do to help. One lady said I could help in a small way by visiting the family, and that was the advice I decided to accept. 

“My interpreter thought it was a terrible, dangerous idea to visit the old man’s family. He said they would kill me. However, he drove me to the site I described to him. He parked a block away, and I walked to the yellow house. One of the man’s relatives spoke English and translated for me. They knew why I was there, and they invited me to sit at a table in their front yard where they drank tea and watched the traffic pass. I told them I did not drive the humvee, but I was a passenger, and that I saw their grandfather, and that I was sorry. One man yelled at me in Arabic about his anger about the conditions in the city during the occupation, of which his relative’s death was just one event among many injustices. I listened, and I agreed. I asked for the man’s name, and they told me. Maybe I wrote it in a notebook that’s now in a box somewhere. I apologized again and held the hands of two men for a moment. The lady who translated told me the man was old, and his death was quick, and it was good of me to come. She said “the officer” had already visited, and her gesture suggested everything was resolved. I was glad they didn’t kill me, but I didn’t believe everything was resolved to anyone’s satisfaction. However, I thanked them for talking to me, and I walked back to my interpreter’s car. I walked up a block and he followed me until we were out of the family’s eyesight from their yard.

“That was that. It was another week in Baghdad, and I didn’t think much of it until I returned home that summer. Sometimes I remember that day when I see a thin, old Arab man, or a man in a grey dishdash, or a deer eyeing the road, or a sandbag beside the road, or plaid cotton with yellow in it, or olive-colored hands, or the shade of a palm over a blacktop, or smell hot tar or dust caked in sweat, which is to say, I think of it often and at unexpected moments. I’m no longer consumed by rage and sadness like I was in 2005, the year following my return home, which I barely remember. Now I remember it as an example of what happens in war, which should be avoided at almost all costs, and with an exhalation of sadness few who I’ve ever met might understand. We all have instances and threads of sadness woven through our memories and consciousnesses, and this is one of mine.”

You can read more of my own experiences there in “Iraq-An American Tragedy-My Travels to Baghdad”

More on constructive competition

In contrasting our treatment of others as competitors or enemies in my blog on “What to do About China”  I am reminded of the 120 days I spent in Baghdad as an advisor to the Central Bank of Iraq paid for by the USAID and supervised by the US Treasury. Our occupation of Iraq included staff from the US Treasury, USAID, Commerce Dept, State Department, and, of course, the Dept. of Defense. Competition by each of them to do a better job than the others would clearly be win-win making our overall occupation more successful. But too often one agency treated the others as enemies diminishing and undermining their efforts rather than supporting them. My biggest fear with my dual association with USAID and Treasury was that each would see me as on the other side, which would have undermined my effectiveness. Luckily the each saw me as on their own side.  “Iraq-An American Tragedy-My Travels to Baghdad”

BearingPoint Afghans

Sometime around 2004 or 2005, the US Agency for International Development (USAID) contracted BearingPoint (now part of Deloitte Consulting) to recruit and mentor approximately 80 young Afghan college graduates into Afghanistan’s central bank (DAB) and Finance Ministry. These young Afghans worked in DAB and the Finance Ministry for two years while being trained and mentored by BearingPoint experts. Following these two years they were offered regular jobs in these two institutions. While some moved on to higher paying jobs elsewhere most of them stayed with DAB and the MOF. Over the years that followed they rose within these institutions, and in DAB headed many of the departments including the position of Second Deputy Governor. Working with and watching the progress of these young Afghans was one of the most enjoyable and gratifying assignments in my career with the International Monetary Fund. They were smart, honest, and dedicated to improving life in their country (including their own). They were, and I hope still are, the hope for a better future for Afghanistan.

The elected Afghan government under which these BearingPoint Afghans worked has now been toppled by the Taliban, a group that harshly ruled Afghanistan from 1996 until displaced by an American-British invasion in November 2001.  Back in 1996: “Gaining control over most of the country, the Taliban impose their rule, forbidding most women from working, banning girls from education, and carrying out punishments including beatings, amputations and public executions. Only three countries officially recognize the Taliban regime: Pakistan, Saudi Arabia and the United Arab Emirates.”  “Afghanistan conflict timeline”

The Taliban in 1996 claimed to impose Sharia Law on Afghanistan. “Sharia” translates to ‘the way’ in Arabic and refers to a wide-ranging body of moral and ethical principles drawn from the Quran and from the sayings and practices of the Prophet Muhammad. The principles vary according to the interpretation of various scholars who established schools of thought followed by Muslims who use them to guide their day-to-day lives. Many Muslim-majority countries base their laws on their interpretation of the principles of Islamic law but, despite this, no two have identical laws.”  “Taliban and Sharia Law in Afghanistan”

The Taliban imposed a very severe version of Sharia that has not been embraced by very many Muslims. It was particularly restrictive on the activities and rights of women. Twenty years later Afghanistan is a different place, and the Taliban sounds like a different organization.

“KABUL, Afghanistan (AP) — The Taliban vowed Tuesday to respect women’s rights, forgive those who fought them and ensure Afghanistan does not become a haven for terrorists as part of a publicity blitz aimed at reassuring world powers and a fearful population.

“Following a lightning offensive across Afghanistan that saw many cities fall to the insurgents without a fight, the Taliban have sought to portray themselves as more moderate than when they imposed a strict form of Islamic rule in the late 1990s. But many Afghans remain skeptical — and thousands have raced to the airport, desperate to flee the country.

“Older generations remember the Taliban’s previous rule, when they largely confined women to their homes, banned television and music, and held public executions. A U.S.-led invasion drove them from power months after the 9/11 attacks, which al-Qaida had orchestrated from Afghanistan while being sheltered by the Taliban.”  “Afghanistan Taliban Kabul”

So, what should American policy be toward the forthcoming Taliban or Taliban lead government? What does the Taliban pledge to “respect women’s rights consistent with their version of Sharia Law actually mean? We should deploy every diplomatic tool possible to encourage/pressure the new government to live up to its promises. Former President Karzai, current CEO Abdullah Abdullah and others are currently in discussions with the Taliban leadership over terms for an inclusive government.

The alternative of nonrecognition, once there is a government to recognize, is to encourage and even support civil war. Or, God forbid, to send our troops back (there is not much chance that our NATO allies would be conned a second time into join us there again). And how did that work out for us last time? Our over used weapon of economic sanctions harms the public we should be trying to help. Our inhuman sanctions on Cuba and Venezuela are imposing horrible pain on the their citizens with little impact on their governments. “Evidence-costs and benefits of economic sanctions”

In a recent Washington Post oped Nikki Haley argued that we should not recognize the Taliban government no matter what. “Nikki Haley-America must not recognize Taliban” I respected Ms. Haley when she was Governor of South Carolina but I eventually got over her when she embarrassed us while Ambassador to the UN. “The future of Israel and Palestine” Her unqualified attack on the Taliban firmly ties her to those who were responsible for our Afghan disaster in the first place. The new Afghan government may turn out to be as bad as the previous Taliban government, but we should do everything possible to prevent that.

The U.S. has suspended currency shipments purchased by Afghanistan’s central bank. Afghan assets (foreign exchange reserves, etc.) deposited abroad have been frozen including “its” access to reserves at the IMF. These may appear to be rejections of a new government, but they are not. There is no new government yet and those holding Afghan assets must keep them safe until their new owners are clearly and properly identified. The situation is much like the bank in which you have deposited money, freezing your deposits when you die until the new lawful owner is determined. There is an unavoidable, awkward period of uncertainty. It is not too late to reverse our mistake in closing our Embassy and running out while at the same time accusing the Afghan Army of behaving the same way.

It is also not true that nothing was accomplished these past 20 years. Our military leaders may have failed in their task of building a reliable Afghan Army, but many others, myself included, did not waste our time by helping Afghans build better institutions (see the story of the BearingPoint Afghans I started this article with above). See the discussion of this issue by Jonathan Rauch: “The  Afghanistan war was a partial success”

No one knows what the Afghan government will look like or which way it will go, but we all (except for the war mongers) have an interest in promoting its success, especially the hopeful, new generation of Afghans. “Can US work with Taliban”    “What do Taliban’s really want?”

And we must resist the siren calls of those who think that we can and should impose our vision and institutions on the rest of the world. We must keep our Army home to defend our homeland rather than messing with other people’s business. Our defense industries have profited enough.