Foreign Aid Cuts Draw Blood at Home : Pending reductions would cost California enormously in business and jobs

Californians can expect to lose plenty of business and jobs if Congress, as expected, downgrades foreign aid as a component of government policy. It’s a little known fact, but nearly 80% of U.S. foreign aid is spent on American food, supplies and services that are shipped overseas.

The foreign-aid bill approved by the House and Senate would hack $1.5 billion from current spending levels and result in the lowest level of U.S. foreign aid in a decade, about $12 billion. Some reductions are justified, though Washington trimmed the most glaring excesses long ago. However, the depth of the cuts currently proposed could hurt the Administration’s global influence and punish many American firms.

House and Senate conferees are working toward a compromise on the legislation. The major political obstacle, funding for abortions under family planning programs, remains a problem for the conference committee. House Republicans remain firm in their opposition; the Senate--and the Clinton Administration--would allow limited funding.

As it now stands, if the bill under consideration clears Congress and is accepted by the White House, California could lose millions. Farmers supplied $23.9 million in vegetables, rice and wheat to the Agency for International Development last year. State ports and shippers raked in more than $40 million distributing the food around the globe. The state’s computer expertise has spread, via government contract, around the world.

Southern California enjoys a healthy share of foreign-aid business. A Pasadena contractor is building 2,500 housing units in Russia for demobilized soldiers back from the Baltic states. A North Hollywood contractor is providing health and education training in El Salvador. A Van Nuys electric car maker is building special taxis that don’t contribute further to the terrible air pollution in Bangkok.

Other local firms and professionals are improving water and waste-water facilities in Egypt and supplying emergency health care in Rwanda, Sudan, Somalia and Bosnia. While they are bettering lives in other parts of the world, they are also creating jobs for Americans.

Foreign aid translates into 200,000 jobs for Americans at home and abroad. The investment also creates new markets for American businesses--all this for little more than a tenth of 1% of the gross domestic product.

Foreign aid is not intended to help U.S. businesses or create jobs, but it does. Washington should be aware of the unintended consequences of cutting “foreign” aid.