--- title: How Reagan's USAID Reforms Compared to Trump's description: The road to the elimination of USAID was paved with decades-long efforts to "fix" the foreign aid program. canonical: https://time.com/7277037/usaid-reform-history/ author: TIME article:opinion: false article:content_tier: free article:published_time: 2025-05-12T10:15:00.000Z article:modified_time: 2026-05-11T04:51:28.083Z article:section: History og:title: How Reagan's USAID Reforms Compared to Trump's og:description: The road to the elimination of USAID was paved with decades-long efforts to "fix" the foreign aid program. og:url: https://time.com/7277037/usaid-reform-history/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blte604bfcc179d69b9/6998c689e2d64b270ac5f53a/USAID-Protest.jpg?branch=production&width=1024&quality=75&auto=webp&crop=16:9 og:image:width: 1024 og:image:height: 576 og:image:alt: US-POLITICS-USAID-MUSK og:type: article twitter:card: summary_large_image twitter:title: How Reagan's USAID Reforms Compared to Trump's twitter:description: The road to the elimination of USAID was paved with decades-long efforts to "fix" the foreign aid program. twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blte604bfcc179d69b9/6998c689e2d64b270ac5f53a/USAID-Protest.jpg?branch=production&width=1024&quality=75&auto=webp&crop=16:9 ---  # How Reagan's USAID Reforms Compared to Trump's > Sponsored content. 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They are at time.com/newsletters and are separate from a paid subscription. by [Christian Ruth / Made by History](https://time.com/author/made-by-history/) ## Christian Ruth / Made by History May 12, 2025 10:15 AM UTC  People protest outside of the headquarters for United States Agency for International Development (USAID), in Washington, DC, on February 3, 2025. People protest outside of the headquarters for United States Agency for International Development (USAID), in Washington, DC, on February 3, 2025. Mandel NGAN—AFP/Getty Images by [Christian Ruth / Made by History](https://time.com/author/made-by-history/) ## Christian Ruth / Made by History May 12, 2025 10:15 AM UTC In late March, [a federal appeals court](https://www.nytimes.com/2025/03/28/us/politics/trump-musk-usaid.html) allowed the effort by Elon Musk and his Department of Government Efficiency (DOGE) team to shut down the U.S. Agency for International Development (USAID) to continue. Secretary of State Marco Rubio recently [posted](https://x.com/marcorubio/status/1899021361797816325) on social media that he had canceled 83% of the agency’s programs. The effects of these cuts have been [felt around the world](https://time.com/7258248/us-foreign-aid-burundi-patients-essay/), as people’s access to food, medicine, and disaster relief previously supplied by USAID has been severely curtailed. Over the first months of the second Trump Administration, Musk and Rubio have unleashed a flurry of [attacks on USAID,](https://www.nytimes.com/2025/02/08/us/politics/usaid-funding-trump-fact-check.html) baselessly accusing the agency of neglecting its foreign aid mission in favor of useless pet projects, and of widescale waste and corruption, despite [little evidence](https://www.nytimes.com/2025/02/07/business/usaid-conspiracy-theories-disinformation.html) to support such accusations. Dissolving the agency paves the way, the administration claims, for a [reformation](https://time.com/7274435/trump-usaid-cuts-development-aid/) of America’s foreign aid program. This is not the first time a Republican administration has sought to transform USAID, nor is it the first time an administration has exerted itself to “fix” the foreign aid program. Considering the near destruction of USAID that has recently unfolded, this might be the final time the agency is overhauled, but we did not arrive at this moment out of a vacuum. The last great reformation of USAID started in 1981, when the newly elected Ronald Reagan took office. His administration, too, sought to transform USAID by addressing what it perceived as waste and inefficiency. Reagan’s administration molded the agency to fit what he and others saw as the real spirit of international development: embracing free market capitalism. **_Read More:_** [Trump’s Dismantling of USAID is Anarchy Masquerading as Efficiency](https://time.com/7225290/trumps-dismantling-of-usaid/) Even before Reagan stepped into the Oval Office, complaints about the efficacy of foreign aid had been steadily growing since USAID’s creation in 1961 under John F. Kennedy’s administration, and the agency had already gone through waves of change. Modernization theory advocates like economist Walt Rostow in the 1950s and 60s had pushed U.S. technology and funds into countries like Vietnam, with the goal of modernizing and “Americanizing” the economies of the Global South. By cultivating successful capitalist economies in Africa, Latin America, and Asia, the United States would tether them to the global free market and, by extension, the international systems of commerce and exchange that would warm them to other essential American ideas. Projects like [dams](https://iupress.org/9780253059956/a-dam-for-africa/) and [modern farming techniques](https://www.hup.harvard.edu/books/9780674725812) would also lead, the theory went, to economic and cultural [modernization](https://uncpress.org/book/9780807848449/modernization-as-ideology/), which would in turn insulate countries against communist influence in the global Cold War. It proved [difficult](https://www.hup.harvard.edu/books/9780674984127) to quickly convert economies in the Global South to modern, Western standards, however. By the 1970s, when those early aid efforts had failed to yield the sweeping increases in sustainable GDP growth that advocates like Rostow had expected, development experts within USAID and [non-governmental organizations,](https://press.uchicago.edu/ucp/books/book/chicago/M/bo60921587.html) alongside Congress, pushed for [reforms](https://www.cornellpress.cornell.edu/book/9781501763915/global-inequality-and-american-foreign-policy-in-the-1970s/). Dubbed “New Directions,” the 1973 congressional initiative reorganized USAID to focus on the new hallmarks of development: basic human needs like water, food, shelter, and education. With these needs satisfied, people in poverty-stricken countries would be better able to obtain jobs and organically grow their country’s economies from the ground up. President Jimmy Carter, especially, lionized the basic needs initiative and made it part of his administration’s human rights crusade, pairing socioeconomic rights with [political and legal rights](https://www.hup.harvard.edu/books/9780674241398) in foreign aid. Human rights had become a flashpoint in the Cold War in the 1970s, and had mostly focused on political protections from governments like the Soviet Union abusing their citizens, When Carter extended his human rights conceptions to embrace socioeconomic rights, it expanded the discussion on what constituted violations of human dignity. It also painted an even larger target on the Soviet Union’s back. In 1981, when Reagan became president, the tumultuous landscape of foreign aid underwent further change. Budget hawks and an emergent wave of neoliberal politicians and economists had, for years, decried wasteful spending of taxpayer dollars in foreign nations that were often working with or were friendly toward the Soviet Union and communism. Ed Feulner, then head of the new Heritage Foundation, which provided key guidance and dozens of staff for Reagan’s administration, thought foreign aid needed trimming. “Let them try their little experiments in so-called social progress,” Feulner [said](https://www.nytimes.com/1981/03/01/weekinreview/foreign-aid-debating-the-uses-and-abuses.html), referencing several African countries’ efforts to create socialist-aligned farming practices. “But I don't think they ought to ask American taxpayers, directly or indirectly, to subsidize their utopianism.” Such complaints proliferated across the domestic political landscape, and within the White House. Reagan’s choice to head USAID was M. Peter McPherson, a moderate Republican whose experience in the Peace Corps had warmed him to foreign aid. Under his direction, USAID kept some of the basic needs initiatives but reformed them under private enterprise guises. In McPherson’s words, USAID’s basic needs goals remained, and the poor majority of the world would be the agency’s target, it would [“just do it differently.”](https://www.jstor.org/stable/4191843) **_Read More:_** [_The U.N. World Food Program Calls Aid Cuts a 'Death Sentence'_](https://time.com/7275664/un-food-program-aid-cuts-trump/) USAID created a new [Private Enterprise Bureau,](https://www.csmonitor.com/1982/0114/011436.html) which spread “free market” ideas throughout the Global South, working with American businesses to develop connections and deals. The emergent debt crises of the 1980s in Latin America and Africa put dozens of countries in a vulnerable economic position, which the Reagan administration used as leverage to push free market reform. Indebted countries, which had often gone into debt seeking loans and programs for international development, were forced to adopt economic liberalization and privatization initiatives for debt relief. Fiscal austerity was married to foreign aid as well, and while the World Bank and the International Monetary Fund are often regarded as the drivers of the [“Washington Consensus”](https://academic.oup.com/book/34854) suite of programs that dominated global economics in the 1980s, USAID, too, was part of this drive. They sent a clear message: Countries that bent to American economic reforms would be rewarded with sustained funding through USAID, and those that did not would face slashed budgets.  By the end of the 1980s, USAID had partnered with organizations like the Center for Privatization, a consortium of American private sector businesses and consulting groups, that helped the agency promote liberal economic reform in indebted countries. Projects that USAID would have funded purely through loans or technical assistance in prior decades became increasingly married to greater engagement with U.S. businesses. The combined efforts of these economic reforms ushered in pro-capitalist reforms to the Global South, or [a “lost decade”](https://press.princeton.edu/books/hardcover/9780691634272/debt-and-crisis-in-latin-america) of economic turmoil and [heavy-handed policies](https://www.citizen.org/wp-content/uploads/waterlandlabor.pdf) coming out of Washington D.C. The Trump Administration’s complaints about USAID echo the same frustrations with foreign aid that have always existed. Feulner’s disdain for American taxpayer funds being shunted toward pro-socialist governments mirror today’s accusations that USAID was funding, from the conservative point of view, frivolous and wasteful spending on pet projects or [diversity, equity, and inclusion programs](https://apnews.com/article/usaid-funding-trump-musk-misinformation-c544a5fa1fe788da10ec714f462883d1) when the agency ought to have been focusing on economic growth. The reforms of the Reagan era pale in comparison to the [near total eradication](https://www.nytimes.com/2025/03/28/us/politics/usaid-trump-doge-cuts.html) of the foreign aid program that has occurred under Trump. What will become of America’s foreign aid program and the effects on communities around the world remains to be seen. More broadly, the dissolution of the foreign aid program is a significant example of a broader trend the administration is [pursuing](https://www.whitehouse.gov/presidential-actions/2025/03/continuing-the-reduction-of-the-federal-bureaucracy/): sacrificing soft power for hard power. USAID has often been a quintessential example of American soft power and positive economic influence. But the slow pace of international development, and its uneven results, have always made it an easy target for critics. The consequences of this reorientation, however, are likely to be felt far and wide. _Christian Ruth is a diplomatic historian and postdoctoral fellow at the University of Florida whose first book, One-Third Rich and Two-Thirds Hungry: Development and Neoliberalism in the Late Cold War (Cambridge University Press) will be released this year._ _Made by History takes readers beyond the headlines with articles written and edited by professional historians._ [_Learn more about Made by History at TIME here_](https://time.com/6317798/introducing-made-by-history-for-time/)_. 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