The Poverty Summit

Washington Post, Editorial: Friday, July 20, 2001

THE BUSH administration declares that the theme of the G-7 summit beginning today is poverty alleviation. This theme,

National Security Adviser Condoleezza Rice explains, is "an extension in many ways of the president's own compassionate

conservatism." President Bush himself has delivered a speech on the antipoverty agenda, calling for the World Bank to convert

part of its lending into outright grants and emphasizing the importance of freer trade to devThe Poverty Summit

Friday, July 20, 2001; Page A30

THE BUSH administration declares that the theme of the G-7 summit beginning today is poverty alleviation. This theme,

National Security Adviser Condoleezza Rice explains, is "an extension in many ways of the president's own compassionate

conservatism." President Bush himself has delivered a speech on the antipoverty agenda, calling for the World Bank to convert

part of its lending into outright grants and emphasizing the importance of freer trade to development. This new focus is

admirable: As the president rightly says, "A world where some live in comfort and plenty while half of the human race lives on

less than $2 a day is neither just nor stable." Mr. Bush must now back his words with action.

A renewed fight against poverty will cost money -- not much relative to other categories of government spending, but a lot

relative to what the United States has been willing to provide recently. The nation's aid budget stands at 0.1 percent of GDP,

the lowest share of any country in the 22-member Organization for Economic Cooperation and Development, and much lower

than the 0.8 percent of GDP that the United States gave in 1960. In this year's budget proposal, the Bush administration did

nothing to address this failure. To the contrary, it recommended a cut in development spending of $380 million after adjusting

for inflation.

This tight-fisted approach undermines many of the administration's better policy instincts. Mr. Bush may be correct, for

example, that the World Bank should switch partially from loans to grants, since past lending has mired poor countries in debt.

But if the bank is to boost grants, it will need more money from rich nations such as the United States -- and the administration

will have to spend political capital on getting Congress to deliver.

Likewise, the administration made the right decision in announcing a contribution to an international AIDS fund that will be

launched at the summit. But the contribution amounts to a mere $200 million, or 70 cents per American. True, the United States gives nearly $1 billion a year in AIDS assistance through other channels, more than any other country. But the global effort against AIDS is reckoned to need between $7 billion and $10 billion a year. If the United States, accounting for nearly a

quarter of world output, were to give its proper share, it would double current spending.

To be fair, the administration has made trade liberalization a big part of its antipoverty agenda, and here the aid budget is less

vital. But despite the importance of launching a new global trade round, trade cannot eliminate the need for aid. The World

Bank estimates that scrapping all rich-country tariffs on goods from sub-Saharan Africa would boost the region's income by

$2.5 billion a year -- a very real gain but by no means a cure to poverty. Moreover, a global trade round probably can't get off

the ground unless the administration is open to softening U.S. anti-dumping laws. So far it has proved too fearful of the steel

lobby to suggest this.

"We have, today, the opportunity to include all the world's poor in an expanding circle of development," Mr. Bush declared this week. "This is a great moral challenge. . . . This cause is a priority of the United States foreign policy, because we do recognize our responsibilities, and because having strong and stable nations as neighbors in the world is in our own best interests." Mr. Bush has laid down a yardstick by which to judge his administration.