An excerpt about the creation of PEPFAR, from “Days of Fire” by Peter Baker. I found this moving.
Another major initiative was shaping up around the same time. Since taking office, Bush had developed an interest in fighting AIDS in Africa. He had agreed to contribute to an international fund battling the disease and later started a program aimed at providing drugs to HIV-infected pregnant women to reduce the chances of transmitting the virus to their babies. But it had only whetted his appetite to do more. “When we did it, it revealed how unbelievably pathetic the U.S. effort was,” Michael Gerson said.
So Bush asked Bolten to come up with something more sweeping. Gerson was already thought of as “the custodian of compassionate conservatism within the White House,” as Bolten called him, and he took special interest in AIDS, which had killed his college roommate. Bolten assembled key White House policy aides Gary Edson, Jay Lefkowitz, and Kristen Silverberg in his office. In seeking something transformative, the only outsider they called in was Anthony Fauci, the renowned AIDS researcher and director of the National Institute of Allergy and Infectious Diseases.
“What if money were no object?” Bolten asked. “What would you do?”
Bolten and the others expected him to talk about research for a vaccine because that was what he worked on.
“I’d love to have a few billion more dollars for vaccine research,” Fauci said, “but we’re putting a lot of money into it, and I could not give you any assurance that another single dollar spent on vaccine research is going to get us to a vaccine any faster than we are now.”
Instead, he added, “The thing you can do now is treatment.”
The development of low-cost drugs meant for the first time the world could get a grip on the disease and stop it from being a death sentence for millions of people. “They need the money now,” Fauci said. “They don’t need a vaccine ten years from now.”
The aides crafted a plan in secret, keeping it even from Colin Powell and Tommy Thompson, the secretary of health and human services. They were ready for a final presentation to Bush on December 4. Just before heading into the meeting, Bush stopped by the Roosevelt Room to visit with Jewish leaders in town for the annual White House Hanukkah party later that day. The visitors were supportive of Bush’s confrontation with Iraq and showered him with praise. One of them, George Klein, founder of the Republican Jewish Coalition, recalled that his father had been among the Jewish leaders who tried to get Franklin Roosevelt to do more to stop the Holocaust. “I speak for everyone in this room when I say that if you had been president in the forties, there could have been millions of Jews saved,” the younger Klein said.
Bush choked up at the thought—“You could see his eyes well up,” Klein remembered—and went straight from that meeting to the AIDS meeting, the words ringing in his ears. Lefkowitz, who walked with the president from the Roosevelt Room to the Oval Office, was convinced that sense of moral imperative emboldened Bush as he listened to the arguments about what had shaped up as a $15 billion, five-year program. Daniels and other budget-minded aides “were kind of gasping” about spending so much money, especially with all the costs of the struggle against terrorism and the looming invasion of Iraq. But Bush steered the conversation to aides he knew favored the program, and they argued forcefully for it.
“Gerson, what do you think?” Bush asked.
“If we can do this and we don’t, it will be a source of shame,” Gerson said.
Bush thought so too. So while he mostly wrestled with the coming war, he quietly set in motion one of the most expansive lifesaving programs ever attempted. Somewhere deep inside, the notion of helping the hopeless appealed to a former drinker’s sense of redemption, the belief that nobody was beyond saving.
“Look, this is one of those moments when we can actually change the lives of millions of people, a whole continent,” he told Lefkowitz after the meeting broke up. “How can we not take this step?”
Economists’ standard optimization framework is to start with a fixed budget and allocate money across competing alternatives. At a high-level, this is also how the global development community (specifically OECD donors) tends to operate: foreign aid commitments are made as a proportion of national income, entirely divorced from specific policy goals. PEPFAR started with the goal instead: Set it, persuade key players it can be done, and ask for the money to do it.
Bush didn’t think like an economist. He was apparently allergic to measuring foreign aid in terms of dollars spent. Instead, the White House would start with health targets and solve for a budget, not vice versa. “In the government, it’s usually — here is how much money we think we can find, figure out what you can do with it,” recalled Mark Dybul, a physician who helped design PEPFAR, and later went on to lead it. “We tried that the first time and they came back and said, ‘That’s not what we want...Tell us how much it will cost and we’ll figure out if we can pay for it or not, but don’t start with a cost.’”
Economists are trained to look for trade-offs. This is good intellectual discipline. Pursuing “Investment A” means forgoing “Investment B.” But in many real-world cases, it’s not at all obvious that the realistic alternative to big new spending proposals is similar levels of big new spending on some better program. The realistic counterfactual might be nothing at all.
In retrospect, it seems clear that economists were far too quick to accept the total foreign aid budget envelope as a fixed constraint. The size of that budget, as PEPFAR would demonstrate, was very much up for debate.
When Bush pitched $15 billion over five years in his State of the Union, he noted that $10 billion would be funded by money that had not yet been promised. And indeed, 2003 marked a clear breaking point in the history of American foreign aid. In real-dollar terms, aid spending had been essentially flat for half a century at around $20 billion a year. By the end of Bush’s presidency, between PEPFAR and massive contracts for Iraq reconstruction, that number hovered around $35 billion. And it has stayed there since. (See Figure 2)
Compared to normal development spending, $15 billion may have sounded like a lot, but exactly one sentence after announcing that number in his State of the Union address, Bush pivoted to the case for invading Iraq, a war that would eventually cost America something in the region of $3 trillion — not to mention thousands of American and hundreds of thousands of Iraqi lives. Money was not a real constraint.
A broader lesson here, perhaps, is about getting counterfactuals right. In comparative cost-effectiveness analysis, the counterfactual to AIDS treatment is the best possible alternative use of that money to save lives. In practice, the actual alternative might simply be the status quo, no PEPFAR, and a 0.1% reduction in the fiscal year 2004 federal budget. Economists are often pessimistic about the prospects of big additional spending, not out of any deep knowledge of the budgeting process, but because holding that variable fixed makes analyzing the problem more tractable. In reality, there are lots of free variables.
An excerpt about the creation of PEPFAR, from “Days of Fire” by Peter Baker. I found this moving.
The part about “what if money were no object?” reminds me of Justin Sandefur’s point in his essay PEPFAR and the Costs of Cost-Benefit Analysis that (emphasis mine)