Comment on US foreign aid package: how is it financed?
BlameThePeacock@lemmy.ca 6 months ago
There are three ways governments obtain money.
The US government does all three. In this particular case, it’s likely just borrowing money.
The biggest thing people don’t understand about this is that governments don’t borrow money like people do. Borrowing money today has the potential to increase tax revenue tomorrow if spent on the right things, which covers part (or all) of the cost.
The US government isn’t just shipping $100 billion in cash to these countries. They’re mostly paying American companies to send products or provide services to Ukraine and Israel. Those spent dollars have an economic effect inside the country, stimulating the economy.
Will that make up for the cost? Probably not, but it’s also not as bad as the number sounds and it keeps certain industries well stocked and ready in case the US government needs them if a global conflict escalates to where the US needs to get directly involved.
There are three ways governments obtain money.
- Taxes
- Borrow Money (issuing government bonds)
- Print Money (Called Quantitative Easing in the USA, the last time this was used ended March 9th, 2022)
Added clarity and more money sources:
For 2, If you want to get technical it’s not just bonds. The government also issues Treasury Bills and Notes.
For 4 and 5, I would classify both of those as “taxes” but they’re such a small amount individually that they get grouped into a giant “Other” bucket in the general summaries the US government puts out about their revenue.
xmunk@sh.itjust.works 6 months ago
I think you’re being a bit too conservative here, especially with your finishing point about direct US involvement there is a compelling argument that 60B today would quite a steal if it avoided the cost of waging a direct war against Russia in military expenses alone. If we start considering lost productivity due to a draft and especially economic damage on US soil and especially especially the damage if nukes were involved… then it’s hugely profitable. All that, of course, depends on the likelihood of direct conflict.
In addition, Ukraine is a valuable economic partner and investing in their future stability might also be a fair justification.
The TL;DR is that I don’t really disagree with anything you said but I think you’re under valuing how good of an RoI this grant is.
BlameThePeacock@lemmy.ca 6 months ago
You could be right, it really depends on what you assume it’s buying. I was more referring to the direct economic stimulation paying itself off.
Jimmyeatsausage@lemmy.world 6 months ago
I mean, 60B isn’t an outrageous amount for just the grain. 5% of the world’s grain comes from Ukraine, and Russia already has a rich history of using their resource exports to extort Western governments.