HON. RON PAUL OF TEXAS
BEFORE THE US HOUSE OF REPRESENTATIVES
May 19, 2004
Reject the Millennium Challenge Act
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Mr. Chairman, though the ill-conceived Millennium Challenge Act has already
become law and therefore we are only talking about its implementation
today, it
is nevertheless important to again address some very fundamental
problems with
this new foreign aid program.
2004 Ron Paul 35:2
I believe that the Millennium Challenge Account (MCA) may
be one of the worst foreign policy blunders yet - and among the most
costly. It
is advertised as a whole new kind of foreign aid - apparently an honest
admission that the old system of foreign aid does not work. But rather
than get
rid of the old, bad system of foreign aid in favor of this “new and
improved” system, we are keeping both systems and thereby doubling our
foreign
aid. I guess it is easy to be generous with other people’s money. In
reality,
this “new and improved” method of sending US taxpayer dollars overseas
will
likely work no better than the old system, and may in fact do more
damage to the
countries that it purports to help.
2004 Ron Paul 35:3
The MCA budget request for fiscal year 2005 is $2.5
billion. We have been told that somewhere between 12 and 16 countries
have met
the following criteria for inclusion in the program: “ruling justly,
investing
in people, and pursuing sound economic policies.”
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It is a good idea to pay close attention to these criteria,
as they tell the real tale of this new program. First, what does
“investing in
people” mean? It is probably safe to assume that “investing in people”
does not mean keeping taxes low and government interference to a
minimum so that
individuals can create wealth through private economic activity. So, in
short,
this program will reward socialist-style governance.
2004 Ron Paul 35:6
MCA will hurt recipient country
economies. Sending US aid
money into countries that are pursuing sound economic policies will not
help
these economies. On the contrary, an external infusion of money to
governments
meeting the economic criteria will actually obscure areas where an
economy is
inefficient and unproductive. This assistance will slow down necessary
reform by
providing a hidden subsidy to unproductive sectors of the economy. We
thus do no
favors for the recipient country in the long term with this harmful
approach.
2004 Ron Paul 35:7
MCA is a waste of taxpayer money. Countries that pursue
sound economic policies will find that international financial markets
provide
many times the investment capital necessary for economic growth. MCA
funds will
not even be a drop in the bucket compared to what private capital can
bring to
bear in an economy with promise and potential. And this capital will be
invested
according to sound investment strategies - designed to make a profit -
rather
than allocated according to the whim of government bureaucrats.
2004 Ron Paul 35:8
MCA is corporate welfare for politically-connected US
firms. These companies will directly benefit from this purported aid to
foreign
countries, as the money collected from US taxpayers can under the
program be
transferred directly to US companies to complete programs in the
recipient
countries. As bad as it is for US tax dollars to be sent overseas to
help poor
countries, what is worse is for it to be sent abroad to help rich and
politically-connected US and multi-national companies.
2004 Ron Paul 35:9
MCA encourages socialism and statism. Because it is
entirely geared toward foreign governments, it will force economically
devastating “public-private partnerships” in developing nations: if the
private sector is to see any of the money it will have to be in
partnership with
government. There should be no doubt that these foreign governments
will place
additional requirements on the private firms in order to qualify for
funding.
Who knows how much of this money will be wasted on those companies with
the best
political connections to the foreign governments in power. The MCA
invites
political corruption by creating a slush fund at the control of foreign
governments.
2004 Ron Paul 35:10
MCA encourages a socialist approach to health care in
recipient countries. In rewarding a top-down government-controlled
approach to
health care, the program ignores the fact that this model has failed
miserably
wherever it has been applied. Ask anyone in the former communist
countries how
they liked their government healthcare system.
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Finally, MCA is another tool to meddle in the internal
affairs of sovereign nations. Already we see that one of the countries
slated to
receive funds is the Republic of Georgia, where former cronies of
dictator
Eduard Shevardnadze staged a coup against him last year and have since
then
conducted massive purges of the media and state institutions, have
jailed
thousands in phony “anti-corruption” campaigns, and have even adopted
their
own political party flag as the new flag of the country. The current
government
in Georgia does not deserve a dime of aid from the United States.
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Though the Millennium Challenge Account is advertised as a
brand new approach to foreign aid - foreign aid that really works - it
is in
fact expensive and counter-productive, and will be very unlikely to
affect real
change in the countries it purports to help. The wisest approach to
international economic development is for the United States to lead by
example,
to re-embrace the kind of economic policies that led us to become
wealthy in the
first place. This means less government, less taxation, no foreign
meddling.
Demonstrating the effectiveness of limited government in creating
wealth would
be the greatest gift we could send overseas.
Note:
This chapter was posted in Ron Paul’s Congressional website, perhaps intended for inclusion in the Extensions of Remarks section of Congressional Record, but was not found in Congressional Record.
