Gutting the USAID-Industrial Complex
Created to fight Marxist subversion, it became a slush fund for Marxist cadre-building. An in-depth look at USAID’s history, and how it became one of the most corrupt parts of the U.S. government.
by J. Michael Waller
February 28, 2025
“The strategy is to delay, postpone, obfuscate, derail.”
That was the U.S. Agency for International Development’s approach to protect its autonomy from the president. It had nothing to do with resisting Donald Trump and DOGE — this line was written three decades ago to resist reforms by Warren Christopher, Bill Clinton’s mild-mannered secretary of state.
The career bureaucrats and their aid-industrial complex won out. That marked the last shovelful of dirt on the grave of attempts to rein in USAID.
Until Trump and his DOGE team.
Recent revelations go beyond the imaginations of what many knew but could seldom prove. USAID has become an out-of-control agency spending billions a year in bloated crony contracts, rotten from top to bottom with systemic fraud, corruption, and politicization. USAID has a budget roughly triple the official budget of the CIA, and has become an unaccountable slush fund for a left-wing political machine. For decades, that slush fund paid the salaries and projects of activist consultants, policymakers, lawyers, journalists, entertainers, organizers, think tanks, universities, and NGOs.
The real scandal—like the wails of protest against exposing USAID fraud and abuse — isn’t about profiteering and kickbacks. The real scandal, as my colleague Kyle Shideler has observed, is that USAID has become a cash cow with near-infinite udders to recruit, train, fund, and credential the next generation of woke social warrior cadres whose goal is not only to transform other countries — but to transform our own.
An Instrument of Serious Statecraft
Over its 64-year history, USAID has provided humanitarian and development aid to improve the lives of millions, arguably billions, of less fortunate people worldwide. Many Americans support that mission. Others oppose it as a giveaway.
All Americans paid to build USAID into a noble institution. Despite problems over the years and relentless social media criticism in 2024, it stood almost untouchable until this month. That’s when DOGE gained access to agency computer systems. That access revealed USAID to be as wasteful and crooked as the countries it was entrusted to help.
Foreign aid is useful only when it secures or advances American vital interests abroad. Employed wisely, it can be an essential instrument of soft power.
But foreign aid is not charity. Americans are the world’s most charitable people. Charity is the voluntary work of private citizens funded with private contributions. Charity is not government institutions funded through compulsory taxation. Confusion about charity, combined with the smug superiority of administrative state bureaucrats and social justice warriors, defeats the purpose of foreign aid.
Properly exercised, foreign aid is a controlled instrument of United States national security strategy. It serves under the president through the diplomatic machinery that executes his policies. It can have an America First purpose without military adventurism.
That’s how it was intended from the start. Presidents Harry Truman and Dwight Eisenhower presided over post-World War II reconstruction aid and early Cold War containment of Communism aid to rebuild Europe and Asia. They integrated humanitarian and redevelopment aid, plus multilateral banking and financing, into a network of security alliances that served their purpose.
That explicit purpose was to protect the U.S. and its interests as Communism spread and, after the Korean War, to ensure a world of American supremacy without military intervention.
John F. Kennedy learned a tough lesson after the failed CIA-led Bay of Pigs operation in the first months of his presidency. Eisenhower had covertly built a Cuban exile army which, with U.S. backing, would topple the Communist Fidel Castro regime in Cuba.
Stung by that failure and committed to building up the American hemisphere to resist the incoming Communist onslaught, Kennedy created the U.S. Agency for International Development in the fall of 1961. JFK’s executive order narrowly defined USAID as “an agency in the Department of State.” It consolidated the existing Cold War foreign aid programs and sought to counter the expanding spread of Communism.
Kennedy voiced his concern about how Communist “subversion, infiltration, and a host of other tactics steadily advance, picking off vulnerable areas one by one in situations which do not permit our own armed intervention.” He vowed to resist it: “We intend to intensify our efforts for a struggle in many ways more difficult than war, where disappointment will often accompany us.”
As part of that effort, USAID would be a diplomatic instrument to neutralize, with material support and human engagement, the relentless Communist narrative that appealed to the impoverished and oppressed. Congress was clear about goals, specifying that no aid could go to any country in the “international Communist conspiracy.”
From the start, USAID was designed to operate in the gray battlespace between hard military power and no power at all. It sought to augment covert CIA political action abroad without military intervention. Before long, it augmented overt military power projection. That interventionism gradually became a years-long, unpopular war without victory in Vietnam. But USAID maintained its purpose and public support.
Searching for a Post-Cold War Mission
With the end of the Cold War, USAID found itself without a primary mission. It searched for a new purpose, with the support of both parties.
The surprise and euphoria of the Soviet collapse in late 1991 brought optimism and idealism amid the confusion. President Bill Clinton integrated USAID into a lavishly funded interagency program to rebuild the New Independent States, as the former USSR was called at the time. USAID would be the core element to remake post-Soviet societies into free-market democracies, or so the thinking went.
But the agency bureaucracy became more resistant than ever to accept presidential control through the secretary of state.
Things became so bad in this geostrategic transition period that President Clinton’s Secretary of State Warren Christopher tried to rein in USAID and consolidate it and other agencies back under State Department control. Christopher’s plan won support from a political foe of the Clinton Administration: Senate Foreign Relations Committee Chairman Jesse Helms. USAID, Helms wrote in a 1995 Washington Post op-ed, had become “an entrenched bureaucracy” that had failed to function “as part of a coherent, coordinated approach.”
But the agency would have none of it. USAID Assistant Administrator Sally Shelton sent an email to all posts worldwide to fight the Christopher-Helms plan. The memo, leaked to the Washington Post and published in the Congressional Record, exposed the bureaucratic mentality that USAID was accountable to no one. Shelton said in her message, “The strategy is to delay, postpone, obfuscate, derail—if we derail, we can kill the merger.”
That bureaucratic resistance saved USAID while other Cold War-era agencies melted into the State Department proper.
Autonomy + Mission Creep = Aid-Industrial Complex
Along with its post-Cold War search for new purposes, USAID brought new demands of Congress to dish out more money. USAID’s budget for Fiscal Year 1992, passed in the last year of the Cold War, was about $7.3 billion. Its annual budget passed in 2024 had ballooned to a morbidly obese $58.8 billion. Adjusted for inflation, that’s a 275% increase.
Even after discounting the huge outlays for Ukraine since 2022, the USAID budget has more than doubled since the end of the Cold War.
There are three basic reasons that account for the massive increase. USAID had developed a life of its own and an attitude to match, with a mindset of autonomy from the secretary of state and Congress. Its Cold War mission now gone, USAID developed mission creep. And by the 1990s, it had spun off into a gigantic aid-industrial complex of private contractors.
Following the Soviet collapse under eight years of the Clintons, USAID became a get-rich scheme for contracting companies and agency employees who quit to cash in and become Beltway bandits themselves. The administration literally said that most foreign aid dollars should stay at home. It turned a foreign policy tool into a racket.
The trend accelerated after 2001, during what President George W. Bush called the Global War on Terror. USAID pushed hard for what became a disastrous nation-building strategy in Afghanistan, Iraq, and beyond. The aid contracting industry, a combination of for-profit companies and “non-profit” NGOs, thrived as part of the Forever Wars. USAID contractors in Iraq and Afghanistan earned $80,000 to $250,000 a year, plus benefits, sometimes tax-free. The companies billed USAID with add-ons for administration, overhead, and profits, sometimes doubling what the people in the field were paid.
Executive salaries among contractors shot up so high that Congress imposed a cap in 2014. A decade later, the cap allowed contractor executives to make up to $646,000 a year, plus benefits and bonuses. A permitted profit margin of about 10% allows USAID contractors to make millions, year after year. Some of the largest contractors strike USAID deals worth billions. Logically, a career-minded USAID official aspires to prosper as a USAID contractor with a USAID pension.
Private contractors can add value in providing immediate and short-term skill sets and capabilities, especially in times of war or disaster. They can leverage the work of privately funded charities toward a common, focused goal.
But mission creep robs an organization of its focus and makes it lose its way. Scaling up to implement that mission creep requires more and more contractors, and with diminishing returns.
When the do-gooder side takes over stewarding American dollars for foreign countries, foreign aid ceases to serve as a national instrument of statecraft. Existing increasingly for itself and the whims of popular culture, foreign aid becomes unresponsive to the executive branch of which it is part. And it becomes unaccountable to the legislative branch, which appropriates and authorizes public funds.
The Real Prize
An institution that loses direction becomes a target for hostile takeover, which started in USAID’s case after the post-Vietnam and post-Watergate ferment. USAID had ever-increasing cash, almost no accountability, and global reach. For the Marxists in their long march through the institutions, USAID turned from archenemy to takeover target. Inhabiting the agency from below, the long marchers brought critical theory and wokeness into every capillary of USAID.
Bureaucracies tend to develop their own cultures, and USAID is no different. Personnel recruitment lowered USAID to being one of the most hyper-politicized government agencies—which were already overwhelmingly liberal. Of USAID personnel who made political contributions in the 2024 election, 97% gave to Kamala Harris.
To the extremists and their fellow travelers embedded throughout the agency, the election of Barack Obama in 2008 saw a friendly revolution from above. With Obama, the social justice warriors of USAID had found their vozhd. The agency willingly became the presidential foreign policy instrument that it had resisted for a generation or more.
USAID boasts armies of talented and devoted professionals. But the imposition of DEI artificially employed the unemployable and promoted the unpromotable. Obama transformed the agency, founded the year of his birth to battle Marxist subversion, into the world’s hipster vanguard of globalist, cultural Marxist revolution against American values.
That long march processioned without interruption in the 16 years between Obama’s first inauguration and the second inauguration of Donald Trump. USAID all but ignored the first Trump presidency, functioning autonomously as if Obama had never left office. Biden brought key parts of the old team back, with Obama’s United Nations Ambassador Samantha Power running the agency as a political powerhouse for fundamental transformation abroad and at home.
All that came to an end when the group of young DOGE computer geniuses, with President Trump’s authorization, got into the USAID computer systems. Trump and Secretary of State Marco Rubio ordered all agency personnel to stay home and locked down headquarters. The DOGE team cut off computer access to all but the authorized few. The president shut off the money.
Then the truth started pouring out. News organizations suddenly missed payroll. NGOs began shutdowns. Angry cadres took to the streets. And USAID’s biggest advocates in Congress, mainly Maryland and Virginia politicians who represent the Beltway bandits, helplessly protested as the Trump team pulled out the wiring, telling 10,000 USAID employees they were no longer needed.
Trump then had Secretary Rubio bring the bleeding stump of USAID to heel by naming him interim agency director.
Something new is in the works to replace USAID — something modernized and efficient to defend American supremacy for the golden age ahead.
— J. Michael Waller is Senior Analyst for Strategy at the Center for Security Policy and author of Big Intel: How the CIA and FBI Went from Cold War Heroes to Deep State Villains (Regnery, 2024). He was a USAID subcontractor in the 1980s and 1990s. This article originally appeared at The American Mind.
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Thanks for the history lesson. The details of this long march through this institution deserve more publicity. Glad that the sheer magnitude of the “fraud, waste and abuse” as well as the unaccountability. cronyism and misplaced political agenda are now seeing the daylight in which they cannot survive!
Very interesting! Thank you. After reading I believe Obama was the worst president we have ever had because he wanted to fundamentally transform this country into a Marxist society, thereby, negating what the founders intended. Also, it was not what Americans wanted America to be. Biden was really a puppet managed by Obama or his like-minded people. It makes me furious! Thank God Trump and Musk discovered it!!