Reaction to President Trump’s attempts to abolish USAID have mostly focused on the impact on the lives of intended beneficiaries and the agencies that contracted with the U.S. government to provide the aid. The catastrophic effects of his actions are being well documented, but there’s another way to look at this:
From a public policy standpoint, if a new administration is against foreign aid, the place to start changing policy is with the budget process. Trump might have asked Congress to refuse future funding to USAID and to enter into no new contracts to deliver aid. The same would hold true for federal funding for academic research institutions; new grants for projects not in line with administration objectives could be refused, reimbursement rates for overhead at academic institutions could be renegotiated.
The effects of these policy changes might still be catastrophic, but at least they would be done in an orderly and legal fashion.
The Trump administration, however, has decided to cancel payments on thousands of existing contracts for which services have already been provided. Agencies that contracted with the federal government and their advocates have gone to court to enforce payment on these contracts and have received judgments demanding payment, which the Trump administration is ignoring.
On Wednesday, Supreme Court Chief Justice Roberts issued an “administrative stay” allowing the government to continue ignoring demands for payment. Given the makeup of the court and its previous accommodations to this president, it seems likely that the court will decide to allow him to pick and choose which government obligations can be ignored.
Up to now, the U.S. government has enjoyed a reputation for paying its obligations in full and without question. As a result, people and governments all over the world have been eager to loan the government money and invest in our economy. If payment of obligations becomes dependent on the whims of who happens to be in charge, this is going to change very quickly.
Why would any organization sign a contract with the U.S. government if it can be so easily abrogated?
Then one might ask, is there a difference between deciding not to honor a contract to provide a service and not to honor a government bond? In his business career, Trump often used legal maneuvers including bankruptcy to avoid paying debts. Are the repudiation of these thousands of contracts a prelude to the repudiation of our national debt? The potential consequences are hard to imagine.
One would think the conservative lawyers on the Supreme Court would value the sanctity of contracts. They are now the last line of defense against Trump’s lawless behavior. Are they up to the task?
Joseph Blumenthal lives in Northampton.