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The Cost of Israel to U.S. Taxpayers

U.S. Spending More On Aid to Israel Than On War on Drugs

By Ruth E. Steele

Washington Report on Middle East Affairs

FEBRUARY/MARCH 1996, Page 46


The United States spends $6 billion annually on domestic drug enforcement. It's a lot of money but few Americans begrudge it. Most feel there is a direct connection between increased drug use and the explosion of crime that has so degraded the quality of life in America.

If it takes $6 billion a year to begin addressing a problem that many see as a cancer eating at the heart of the country, so be it, so long as statistics show, despite ups and downs, a gradual reduction both in the use of hard drugs and in violent crimes.

Harder to understand, however, is the resignation demonstrated by Americans over the staggering annual cost of Israel to U.S. taxpayers. People can differ over the total cost of Israel. Do you just count the more than $60 billion that has flowed from the United States to Israel since 1949 in outright grants, forgiven loans, and loan guarantees? Do you turn those simple annual totals into inflation-adjusted 1996 dollars, in which case they might start to approach $100 billion? Do you also count the interest that those outlays have cost American taxpayers, since the U.S. government has had to borrow every cent of them? In that case the amount soars past $100 billion and starts climbing toward $200 billion.

Friends of Israel would argue that America's financial mismanagement is not the fault of its Israeli client state. They even go so far as to say that federal loan guarantees to Israel cost the American taxpayer nothing, since Israel "has never defaulted on a loan." The truth, however, is that Israel has never repaid a U.S. government loan because Congress eventually forgives them all.

Until it does, the "Cranston Amendment," named after one of Israel's greatest Senate friends, the late California Democrat Alan Cranston, and attached to every foreign aid appropriation bill since 1984, mandates that the annual level of U.S. economic aid to Israel cannot sink below the level of interest Israel must pay on outstanding (not yet forgiven) U.S. government loans for that year.

There is no reason to believe that the Israelis are about to renounce their practice of successfully lobbying Congress to forgive loans to Israel, and to have the U.S. taxpayer bear the costs of such loans until they are forgiven. It is certain, therefore, that they will repeat this pattern when it is time to begin repaying the principal and interest on the $10 billion in loan guarantees they currently are collecting at the rate of $2 billion annually. (Repayment of principal and interest begins only 10 years after the Israeli government borrows the money.)

Therefore, whatever legitimate differences may exist about how the cumulative total of U.S. aid to Israel should be compiled, there is no question as to the total in 1996 dollars of current annual American aid to Israel. It is approximately the same as the $6.321 billion in grants and loan guarantees Israel received from the U.S. in the 1993 fiscal year (see chart below).

Each year since then, President Clinton has promised Israel to maintain that level. He has kept that promise scrupulously, despite legislation that mandated that Israel's annual $2 billion in loan guarantees be reduced by the amount that the Israeli government spent on Jewish settlements in the West Bank and Gaza during the previous fiscal year.

The Clinton administration has made such reductions annually since FY 1993 as required by law. But President Clinton then has made an additional gift of funds or equipment to Israel over and above the total deducted, bringing the actual U.S. aid to Israel back to at least the $6.321 billion figure. So, from FY 1993 through FY 1995 U.S. aid to Israel has totaled $17,317,808 a day, seven days a week, 52 weeks a year.

At this writing the foreign aid total for FY 1996 (which began on Oct. 1, 1995) has not yet been approved because of the ongoing battle between the Democratic administration and the Republican-controlled Congress over the manner in which the budget is to be balanced, and the wording of some of the bills submitted by Congress to the president.

Since Congress has agreed to keep foreign aid to Israel (which is more than one- third of the U.S. world-wide total) "off the table" in the current negotiations, however, there is no reason to believe the FY 1996 total will differ significantly from the total of the previous three years.

Indeed, the Israeli media have begun surfacing "leaks" or "trial balloons" indicating that the Israelis are planning to ask the United States for an additional $l2.5 billion as compensation for their withdrawal from the Golan Heights as part of a land-for-peace agreement with Syria. This Israeli estimate has nothing to do with whatever additional sums Syria might also seek from the United States.

Rather, the estimate has more to do with Israeli hopes to replace the annual $2 billion in loan guarantees when they end, as scheduled, in FY 1997. Although the loans originally were supposed to be used to help settle Jews from the former Soviet Union and Ethiopia in Israel, the drop in immigration from both areas has enabled the Israeli government to use the U.S. loan guarantees in a variety of creative ways. In the period Israel has been receiving this tremendously enhanced aid figure, its per capita gross domestic product has climbed to an estimated $14,000 to $16,000, putting it well above that of Ireland and making it comparable to that of Britain or Spain.

None of these are considered needy countries. All, in fact, have foreign aid programs of their own. Why does only Israel, of all the "developed" countries, shamelessly use a percentage of its U.S. aid to fund lawyers, consultants and "membership groups" like the American Israel Public Affairs Committee, the Israeli government's principal Washington, DC lobby, to importune, browbeat and intimidate U.S. presidents and Congress into appropriating ever larger sums to a country that should be giving, not receiving, foreign aid?

Perhaps the way to change that is for readers of this magazine to mail a copy of this page not only to other taxpayers, but also to their two senators and one representative in Congress, the publishers and the editorial page editors of whatever newspapers and other magazines they read, and to talk show hosts--not just to Rush Limbaugh or Mario Cuomo, both of whom are petrified with fear of the Israel lobby and of the advertisers on radio stations that broadcast their syndicated programs--but also to local talk show hosts. Some of them are quite fearless. Perhaps in the real America some radio stations and independent newspapers don't have to worry about major advertisers with a special agenda. If Israel's outrageous annual raid on the U.S. treasury is ever to be stopped, it has to start somewhere.

Ruth E. Steele covers West Coast affairs for U.S. and foreign publications.

© Copyright 1997 American Educational Trust
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