Friday, May 13, 2022

Ukraine Aid in Context

Congress is about to approve $40 billion in additional aid to Ukraine.


$40 billion is a lot of money.

It should be kept in mind that this amount is in addition to billions of dollars in previous aid.

$13.6 billion was previously approved by Congress and signed into law by Biden back in March.


That totals about $54 billion of aid for Ukraine in a little over two months.

Let's put that in context.

The entire military budget of Russia for 2022 according to the Russian news service Tass was budgeted at $51.3 billion.

MOSCOW, October 1. /TASS/. Federal budget expenditures on Russia’s national defense will total around 10 trillion rubles ($154.1 bln), according to the files to the draft budget for 2020 and the planned period of 2021-2022.

"Budgetary provisions for ‘National defense’ will total 3.1 trillion rubles ($47.7 bln) in 2020, 3.24 trillion rubles ($50 bln) in 2021, and 3.3 trillion rubles ($51.3 bln) in 2022. The share of expenditures on ‘National defense’ will stand at 2.4% of GDP in 2020, 2.7% of GDP in 2021, and 2.6% of GDP in 2022," the document said.

In other words, the United States Congress and Biden are about to approve more money to Ukraine within two months than the Russian military was budgeted to spend in 2022 for the entire Russia national defense budget.

Let's also consider that $54 billion in dollars goes a lot further in Ukraine than it does in the United States right now.

The median pay of a worker in Ukraine in 2021 was $775/month or $9,300/year. Median pay in the United States is approximately $52,000.

The entire GDP of Ukraine in 2021 was $195 billion in U.S. dollars.

Another way to look at this is that we are sending aid to Ukraine that is equal to about 28% of its entire annual GDP.

To provide further perspective to the Ukraine aid, consider that Congress approved $4.5 trillion in total Covid relief in 2020 and 2021.

That was equal to about 19% of the $24 trillion in U.S. GDP in 2021.

We know how costly the Covid spending intervention was in the United States. 

We are actually sending more aid to Ukraine relative to its GDP than was spent in the United States on Covid relief.

I think it is also interesting that Congress rebuffed Trump's requests for spending $18 billion to build a wall on the southern border in the 2018 budget, $5.7 billion in 2019 and $8.6 billion in 2020. All of these requests in total do not equal the $40 billion Congress is prepared to provide Ukraine for its national security.

Congress also refused to allocate $3 billion that President Trump requested in March and April , 2020 to fill the Strategic Petroleum Reserve up to its capacity limits in order to take advantage of the low prices of oil at the time.

The Democrats were opposed because they said it was too costly and would help the oil companies.

Of course, now Biden cannot pull oil out of the SPR fast enough now as he attempts to reduce the price of gasoline at the pump and increase his sinking approval rating.

Over the last year, Biden has already taken almost 100 million barrels of oil (630 million barrels in May, 2021 now reduced to 542 million barrels) out of the SPR.

Has it really made much of a difference? Gas at the pump reached an all-time high this week.

What happens if we have a situation that is not price-centered but involves the actual disruption of oil supplies? That is what the SPR was really intended for.

Another interesting factoid to put that $54 billion in Ukraine aid in context involves the investment of the U.S. in that Strategic Petroleum Reserve.

We are about to spend twice that amount in additional aid to Ukraine if the Biden request is approved by the Senate?

I am all for doing what we can to support Ukraine.

Russia's invasion of Ukraine was indefensible.

However, $40 billion (or $54 billion ), or whatever the amount of the aid will be, is a lot of money when there are so many people hurting in the United States right now.

Money does not grow on trees. Congress has not understood this for a long, long time.

However, trees are necessary to print the money that the Federal Reserve will need to in order to pay for all of this.

It is even more money when you put it in context with what that money would buy in Russia or Ukraine.

This might be a good time for some people in Washington to take a couple of deep breaths and really think about what they are doing.

One guy who thinks a few more people should be taking a deep breath right now is Senator Rand Paul (R-KY). Senator Paul stood up in the Senate yesterday and blocked the $40 billion Ukraine aid package from being steamrolled through Congress without much scrutiny.

"We cannot save Ukraine by dooming the U.S, economy."

It will be a short delay. Too many people in Washington, D.C. have Ukraine fever. Spending money we don't have to fight Putin seems to be the only cure.

Is all of that money really necessary to support Ukraine?

How about saving a little bit for some Americans?

In particular for the Millennials and the Gender Z generation which will end up paying the biggest price for all of this in the interest of that debt.

How much are those European countries contributing in aid?

This is the most recent update on that question since I last wrote on this topic.


The next update of this information will be provided May 18.

How about we pass a bill to match anything the Europeans agree to do?

You would think they would be good for at least $20 billion considering the threat Russia poses to all of them. That by itself would cut our cost by half.

Of course, that is a logical and practical approach. Why would that ever be considered?

No comments:

Post a Comment