SYNOPSIS: Citing high cost, the administration has refused to increase foreign aid by $10 billion, which could have saved 8 million lives. If they had raised the estate tax exemption to $5 million rather than repealing the whole tax, they could have saved $20 billion in revenue. Only 3,300 families have estates over $5 million. Lowering the taxes of 3300 wealthy families versus saving 8 million lives: The administration chose the former
Poor Bono. He got stuck in a moment, and he couldn't get out of it.
In one of the oddest enterprises in the history of development economics, Bono — the lead singer for the rock band U2 — has been touring Africa with Paul O'Neill, secretary of the treasury. For a while, the latent tensions between the two men were masked by Bono's courtesy; but on Monday he lost his cool.
The pair were visiting a village in Uganda, where a new well yielding clean water has radically improved the villagers' health. Mr. O'Neill's conclusion from this, as from the other development projects he saw, was that big improvements in people's lives don't require much money — and therefore that no big increase in foreign aid is required. By the way, the United States currently spends 0.11 percent of G.D.P. on foreign aid; Canada and major European countries are about three times as generous. The Bush administration's proposed "Millennium Fund" will increase our aid share, but only to 0.13 percent.
Bono was furious, declaring that the projects demonstrated just the opposite, that the well was "an example of why we need big money for development. And it is absolutely not an example of why we don't. And if the secretary can't see that, we're going to have to get him a pair of glasses and a new set of ears."
Maybe the easiest way to refute Mr. O'Neill is to recall last year's proposal by the World Health Organization, which wants to provide poor countries with such basic items as antibiotics and insecticide-treated mosquito nets. If the U.S. had backed the proposed program, which the W.H.O. estimated would save eight million lives each year, America's contribution would have been about $10 billion annually — a dime a day per American, but nonetheless a doubling of our current spending on foreign aid. Saving lives — even African lives — costs money.
But is Mr. O'Neill really blind and deaf to Africa's needs? Probably not. He is caught between a rock star and a hard place: he wants to show concern about global poverty, but Washington has other priorities.
A striking demonstration of those priorities is the contrast between the Bush administration's curt dismissal of the W.H.O. proposal and the bipartisan drive to make permanent the recent repeal of the estate tax. What's notable about that drive is that opponents of the estate tax didn't even try to make a trickle-down argument, to assert that reducing taxes on wealthy heirs is good for all of us. Instead, they made an emotional appeal — they wanted us to feel the pain of those who pay the "death tax." And the sob stories worked; Congress brushed aside proposals to retain the tax, even proposals that would raise the exemption — the share of any estate that is free from tax — to $5 million.
Let's do the math here. An estate tax with an exemption of $5 million would affect only a handful of very wealthy families: in 1999 only 3,300 estates had a taxable value of more than $5 million. The average value of those estates was $16 million. If the excess over $5 million were taxed at pre-2001 rates, the average taxed family would be left with $10 million — which doesn't sound like hardship to me — and the government would collect $20 billion in revenue each year. But no; the whole tax must go.
So here are our priorities. Faced with a proposal that would save the lives of eight million people every year, many of them children, we balk at the cost. But when asked to give up revenue equal to twice that cost, in order to allow each of 3,300 lucky families to collect its full $16 million inheritance rather than a mere $10 million, we don't hesitate. Leave no heir behind!
Which brings us back to the Bono-O'Neill tour. The rock star must have hoped that top American officials are ignorant rather than callous — that they just don't realize what conditions are like in poor countries, and how foreign aid can make a difference. By showing Mr. O'Neill the realities of poverty and the benefits aid can bring, Bono hoped to find and kindle the spark of compassion that surely must lurk in the hearts of those who claim to be compassionate conservatives.
But he still hasn't found what he's looking for.
Originally published in The New York Times, 5.31.02