Global Economics

The Price Tag for Obama's Antipoverty Moonshot


President Obama delivers the State of the Union address to a joint session of Congress at the Capitol in Washington, D.C. on Feb. 12, 2013

Photograph by Joshua Roberts/Bloomberg

President Obama delivers the State of the Union address to a joint session of Congress at the Capitol in Washington, D.C. on Feb. 12, 2013

If there was a moonshot moment in President Obama’s State of the Union speech, it involved global development. The U.S., Obama pledged, “will join with our allies to eradicate extreme poverty in the next two decades.”  Part of that effort would involve saving the world’s children from preventable deaths and “realizing the promise of an AIDS-free generation.”

In one short paragraph, Obama committed the U.S. and its partners to ending absolute poverty planetwide and saving millions of lives each year. Even more astounding is that the goal is plausible—if, that is, the U.S. is willing to spend the same as we did on the original moonshot and ask the rest of the world to do the same.

The goal of eliminating $1.25-a-day poverty over the next 20 years may be the most straightforward part of the president’s package. It also demands the least of the American taxpayer. Forecasts of poverty rates from Martin Ravallion of the World Bank and the Center for Global Development suggest that economic growth in developing countries alone will be rapid enough to reduce the number of people in the developing world living below the $1.25-a-day line from 20 percent to 3 percent. Even a slight “bending of the curve” through more rapid growth, lower inequality, or (even) transfers from richer countries would get us to zero. This can be accomplished with minimal assistance from the West, if the record of the past 20 years is anything to go by. The decline in the proportion of people in absolute poverty from 43 percent to 21 percent worldwide between 1990 and 2010 was led by China and India, both countries that receive aid worth a fraction of a percent of their GDP.

The health goals pose bigger challenges. We’ve seen immense progress in the fight against child mortality over the past 50 years, for example—and particularly heartening improvement in Africa over the past 10. But we’re still a long way from the level considered necessary to avoid easily preventable deaths. The child mortality rate in developing countries today averages close to 5 percent. In Africa it averages 12 percent. The United Nations forecasts that Africa is likely to continue to see child mortality of 8.5 percent in 2030. Forecasts I created with colleagues at the Center for Global Development last year were more optimistic: We suggested Africa might see a rate of 6.6 percent in 2030. Either way, Obama has called for Africa to reach a rate less than one-third the predicted level within two decades.

That’s not to say it’s impossible—just very, very difficult. We have the technology to keep nearly all kids healthy. Vaccines already prevent 2 million to 3 million deaths a year, and 1.5 million more children could be protected if everyone worldwide got their shots, according to the WHO. Add in a few other techniques, such as breastfeeding, hand washing, access to antibiotics, providing zinc and micronutrient pills, and mixing oral rehydration salts alongside bed nets, and you are close to declaring success. The problem is that all of the above rely on overburdened, underskilled, poorly run health systems in the developing world to provide, regularly and universally, the basic package of care that’s also required. Outside finance is only one small part of the story.

Still, more money would surely help save more kids. A recent study in the medical journal The Lancet suggested that for each $1 million invested in equity-focused national health programs, 81 deaths of children under age five could be prevented. That implies that reducing the current 7 million child deaths worldwide by two-thirds might cost as much as $86 billion a year. Much of that money will come from parents and national governments, but aid accounts for nearly a fifth of health spending in low income countries—a share that would have to rise were such ambitious health targets to be met.

If the U.S. takes on just 10 percent of the likely full additional costs of reducing child mortality by two-thirds, that’s $8.6 billion a year. And as a first step toward an AIDS free-generation, UNAIDS estimates we need a little more than $7 billion in additional annual spending in low and middle-income countries by 2015. If the U.S. were to keep its current share of overall spending in those countries, budget allocations would need to rise by about $1.7 billion—or about 26 percent. Add the two together, and that’s $10.4 billion in additional spending on health aid.

So to return to the moonshot analogy: How would the costs of substantially ending deaths from AIDS and preventable childhood diseases stack up against what the U.S. spent to put a dozen men on a lifeless orbiting rock? In total, the Apollo Program amounted to $98 billion over 14 years. If the president is serious about his State of the Union pledges, this year’s White House budget proposal should show a commitment on a similar scale—perhaps $7 billion in additional health spending this year, rising something more than $10 billion (less than 0.3 percent of the federal budget) in the near future.

Anything less, and it might be hard to take his soaring rhetoric seriously.

Kenny is a senior fellow at the Center for Global Development and author of The Upside of Down: Why the Rise of the Rest is Great for the West.

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