At the top of this page, you’ll see what a tiny fraction of the entire federal budget is devoted to foreign assistance — just about 1 percent. As we pointed out in the previous post, most Americans vastly overestimate this number in surveys. In a Kaiser Family Foundation study published in early 2015, the average respondent thought that 26 percent of the federal budget went to foreign aid. Unsurprisingly, more than half the respondents thought the United States was spending too much on foreign aid.

In the breakdown above, we have laid out where the $42.4 billion will go in 2017. The money comes from the State and Defense departments and a slew of other agencies. But it would be wrong to think that “security assistance” comes entirely from the DoD. Security assistance is a broader term than so-called military aid because this financial support is often extended to other types of security forces such as anti-narcotic or trafficking units.

Actually, only about half the security assistance budget is provided by the DoD. That mostly derives from programs directly tied to military operations in Afghanistan and Iraq, such as the Afghan Security Forces Fund and the Iraq Train and Equip Fund. Deals like last month’s with Israel, on the other hand, come from the State Department. In that case, the U.S. government is essentially financing Israel’s military purchases. Under the current agreement, Israel can spend 26 percent of that money on military equipment produced in Israel, but the new deal, which starts in 2019, gradually phases out that stipulation. Then, like every other country, Israel will have to spend all the assistance money on American defense contractors. In other words, U.S. foreign military financing is essentially a way of subsidizing its domestic defense industry while strengthening the military capabilities of its strategic allies.

Economic and development assistance is almost entirely provided through the State Department’s budget. This includes the budgets for the U.S. Agency for International Development (USAID) and Peace Corps, reserve funds for disaster relief, funds geared toward specific objectives, such as preventing the spread of HIV/AIDS, and bilateral economic assistance packages.