Ron Paul: Call It Foreign Aid or Corporate Welfare — It’s Still Money Out of Our Pockets

President Joe Biden is selling the latest proposal to send military aid to Israel and Ukraine as an economic stimulus plan. But this notion that spending money for somebody else’s war somehow boosts the American economy is rooted in a pervasive economic fallacy.

When you boil it all down, Biden is basically saying that the spending isn’t really foreign aid. It’s corporate welfare.

Ron Paul asks the operative question: should that make us feel better?

The following article was originally published by the Ron Paul Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

Faced with growing American frustration over more than $100 billion spent on a failed proxy war in Ukraine, President Biden’s handlers have hit on a gimmick to convince us that this foreign aid is actually an investment in our own economy! In his recent television address, Biden explained that as we transfer more weapons to Ukraine we then will build new weapons at home to replace them. That, explained Biden, means more American jobs and a stronger American economy.

So “Project Ukraine” is not really about foreign welfare, but rather domestic corporate welfare for the military-industrial complex. Should that make us feel any better?

There is no denying that this nearly two-year Ukraine/Russia war has been a boon for the US weapons industry. Profits at the military-industrial complex are back to record highs after a brief slump during the Covid scare. And the money that goes to the weapons manufacturers also saturates Washington, DC: a little of it goes to the think tanks promoting war, another little bit goes to the political campaigns of candidates who promote war, and so on.

As Connor O’Keeffe reminds us in a recent article at the Mises Institute, the arguments that more war spending is good for the economy ignore the “broken window fallacy” as first explained by French economist Frédéric Bastiat in his essay, “That Which Is Seen and That Which Is Not Seen.” In the tale, a shopkeeper has a window broken and must pay to have it replaced. The locals view the mishap favorably, as they see the $50 for a new window to be a benefit to the glazier which he will then spend, thus improving the economy as a whole. What is not seen, however, is what the shopkeeper might have done with that same $50 had he not been forced to replace a broken window. Perhaps he would have invested it in a way that created far more wealth and more jobs.

Unfortunately, Biden is not alone in coming up with new gimmicks to enable Washington to operate in a “business as usual” manner.

New House Speaker Mike Johnson has also been busy trying to convince us that sending money overseas is actually good for our own economy. Over the weekend he appeared on Fox News to tell us that sending another $14 billion to the wealthy nation of Israel is Republicans “trying to be good stewards of the taxpayer’s resources.” How is that? Well, he came up with the gimmick that they would cut $14 billion from the IRS and send it to Israel.

Said Johnson, “Instead of printing new dollars or borrowing it from another nation to send over to fulfill our obligations and help our ally, we want to pay for it, what a concept, we are trying to change how Washington works.”

See the trick here? They are not “paying for it” by sending the money overseas, and they are not “changing how Washington works” by doing the exact same thing they always do: stealing from the poor at home to send to the rich in foreign countries.

Instead of trying to trick Americans into thinking that foreign aid and corporate welfare are good for our economy, why not just stop breaking all of our windows? Just end all foreign aid and corporate welfare!