About that deficit...

Reader comment on: Israel's Growth Rate

Submitted by Patrick (United States), Feb 17, 2011 18:44

You aren't arguing against a continuation of US foreign aid to Israel, but I suspect you support it strongly. Do we get more benefit, dollar for dollar, from the Israel subsidy than we get from, to pick a recent FOC whipping boy, the NPR subsidy? Do we need to spend three billion annually (give or take a few hundred million) on a country with a growth rate that is, transparently, equivalent to China's reported but suspect economic growth rate?

I'd eliminate Israeli aid, Egyptian aid, the NPR subsidy, etc. But I'd appreciate your thoughts.

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The Future of Capitalism replies:

Near as I can tell from here http://www.census.gov/compendia/statab/cats/foreign_commerce_aid/foreign_aid.html Israel is down to less than $2 billion a year, almost all of which is military aid that is basically required to be spent on American-made military equipment, so the money basically ends up supporting American workers at Boeing, Northrop, General Dynamics, etc. If some of it is used to kill terrorists over there before they come get us over there it's probably money well spent — the latest Obama budget just extended for another 10 years the "liberty bonds" that were supposed to rebuild lower manhattan after September 11.

I think the argument for phasing out the aid, which is happening, is less the growth rate than the per capita GDP, which in Israel is still lower than the US, though getting closer. On the other hand, Germany and Japan and South Korea and some of the Arab gulf states are probably richer than Israel and we have American bases and troops over there to protect them, which we don't in Israel. So in the realm of excess federal spending the military aid to Israel isn't something I spend a lot of time worrying about. Eventually though, if Israeli incomes surpass those of Americans, it will and should probably go away. I hope eventually peace breaks out there so Israelis can stop spending such a high percentage of their GDP on defense, much much higher than America's, and so Israelis don't have to do manadatory military service, which Americans dont have to do.

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