The Lead Untangles: USAID, where the funding was going and what comes next
Donald Trump and Elon Musk have acted quickly - and it's not clear if they have done so legally - over what they deem to be a waste of taxpayer money
At a glance facts
The future of the United States government’s main overseas aid agency USAID is in doubt after Elon Musk, acting with consent from Donald Trump, vowed to put the agency ‘into the wood chipper’.
An email to staff on February 7 said that ‘all USAID direct hire personnel will be placed on administrative globally’ with plans under the so-called DOGE to terminate all non-essential contracts.
The plan is that it will continue to function in a much-reduced role. It currently employs around 10,000 people, two-thirds of which are based abroad.
Nobody spends more - or even close - to the US when it comes to international aid. Around $68bn was spent by the US in 2023 with USAID accounting for around $40bn of that total.
The UK is the world’s fourth-largest aid spending at around £15.3bn.
US President Donald Trump and one of his closest allies, the billionaire Elon Musk, have been very critical of USAID.
Any plans to shut USAID down entirely would likely be met with challenges in Congress - or legal challenges - but merging it with a branch of the US State Department could avoid a lot of that.
Context:
Overseas spending has become low-hanging fruit for the right. With living standards stalling in the US, Trump has taken aim at the $40bn spent overseas by the US in a move that likely has voter support.
The rhetoric is the money should instead be spent on investment in the US - or to help lower taxes - and lines up with the standard approach of the right to blame a nation’s shortcomings on people from different demographics or countries.
It also comes from a place where the beliefs of how much is spent on foreign aid vs how much should be spent vs how much is actually spent do not line up.
The Brookings Institution, a non-profit organisation, states that Americans believe foreign aid makes up 25% of the budget, but it should only make up 10%. Clearly those stats would vary if purely Trump supporters were quizzed, but the reality is that it makes up less than 1% of the US federal budget.
While that money is very important around the world, which we’ll assess later, there is a belief that others don’t do their fair share compared to the US. That doesn’t stand up to much scrutiny either.
The US provides the largest amount of foreign aid, but as a percentage of GNP (or GDP in UK terms), the US spends 0.2% which is close to the bottom of any international league table. The broad international commitment to foreign aid is at about 0.7% and Norway, Sweden, Luxembourg, Denmark and the UK sit above that.
The counterargument to the idea that this doesn’t support US citizens, crucial for Trump and Musk, would be that it helps national security by promoting global security and that advancing other economies and markets actually has a positive impact for the US economy.
Whether successful or not, expect to see Reform crib heavily from this playbook sooner rather than later.
What does USAID actually do:
It was established in the 1960s to lead humanitarian aid programmes around the world. It does employ over 10,000 people, but a lot of the work is actually carried out through other organisations funded by USAID.
It provides food in countries which are starving, has a famine detection system that helps predict food shortages, carries out vaccination in countries where diseases like polio are still in circulation, and through that helps prevent wider global pandemics).
One popular ‘gotcha’ tweet on X suggests that USAID is spent on helping the BBC, seen as left-wing is some circles, continue to function. The reality is that this £2.6m goes to the BBC’s international charity BBC Media Action which itself is funded by external grants and contributions.
The BBC as a broad entity will likely be unaffected by that, BBC Media Action operates separately from the BBC, but fewer countries in the world will have access to a free press unless that funding stays in place or the impact is otherwise managed.
What the left is saying:
“USAID isn't charity. It's a foreign policy tool with bipartisan origins that is critical in this dangerous global environment.
“Gutting it means gutting our ability to compete and keep America safe.” - Senator Andy Kim
“This is a five alarm fire.
“The people elected Donald Trump to be President - not Elon Musk.
“Having an unelected billionaire, with his own foreign debts and motives, raiding US classified information is a grave threat to national security.
“This should not be a partisan issue.” - Alexandria Ocasio-Cortez
What the right is saying:
“By going after USAID the very first week, the White House has done what they say to do in prison: find the biggest, baddest meanest guy on your cell block, and sock him square in the jaw on Day 1.” - Mike Benz, executive director FFO Freedom
“From now on, money laundering will be called Foreign Aid” - Elon Musk
What happens next?
In the first instance, thousands of employees are being placed on leave as of today (7 February).
While Trump may claim USAID is a waste of money that needs to align with his priorities, over 100 countries previously receiving humanitarian aid may feel differently.
USAID works in active conflict zones, so there will be concerns about how employees working there will be withdrawn.
$40.7m of foreign assistance for Haiti's national police and the UN-backed international security support mission will continue.
Notably, there will be an urgent and immediate threat to energy security in Ukraine, which has had its energy network targeted by Russia. USAID has played a key role in helping the country rebuild its grid - contributing at least $800m to deliver things like power cables and generators.
That will only strengthen Russia’s position in any potential peace negotiations.
Domestically, it’s expected that legal and political challenges, from democrats or elsewhere, will follow.
But the situation is unprecedented to the point where even senior Republican figures speaking up cannot be confidently predicted to have any impact.
About The Lead Untangles: In an era where misinformation is actively and deliberately used by elected politicians and where advocates and opposers of beliefs state their point of view as fact, sometimes the most useful tool reporters have is to help readers make sense of the world.
The Lead Untangles is delivered each Friday by The Lead and focuses on a different complex, divisive issue with each edition.