Israel has a population of approximately 7.8 million, or a million fewer than the state of New Jersey. It is among the world's most affluent nations, with a per capita income similar to that of the European Union. Israel's unemployment rate of 5.6% is much better than America's 9.1%, and Israel's net trade, earnings, and payments is ranked 48th in the world while the US sits at a dismal 198th.
Yet Israel receives approximately 10% of America's foreign aid budget every year. The US has, in fact, given more aid to Israel than it has to all the countries of sub-Saharan Africa, Latin America, and the Caribbean combined
- which have a total population of over a billion people. And foreign aid is just one component of the staggering cost of our alliance with Israel.
Given the tremendous costs, it is critical to examine why we lavish so much aid on Israel, and whether it is worth Americans' hard-earned tax dollars. But first, let's take a look at what our alliance with Israel truly costs.
Before the Iraq War in 2003
Direct Foreign Aid
According to the Congressional Research Service , the amount of official US aid to Israel since its founding in 1948 tops $112 billion, and in the past few decades it has been on the order of $3 billion per year. (In 2011, for example, this amounted to over $8.2 million every single day.
But this money is only part of the story. For one thing, Israel gets its aid money at the start of each year, unlike other nations. This is significant: It means Israel can start earning interest on the money right away. And it costs the US more than the typical year-end disbursements because the US government operates at a deficit, so it must borrow this money to pay Israel and then pay interest on the amount all year.
Israel is also the only recipient of US military aid that is allowed to use a significant portion annually to purchase products made by Israeli companies instead of US companies. (The costs to Americans caused by this unique perk are discussed below.)
In addition, the US gives roughly $2 billion per year to Egypt and Jordan in aid packages arranged largely in exchange for peace treaties with Israel. The treaties don't include justice for Palestinians, and are therefore deeply unpopular with the local populations.
On top of this, the US gives roughly half a billion to the Palestinian Authority each year, much of it used to rebuild infrastructure destroyed by Israel and to bolster an economy stifled by the Israeli occupation. This would be unnecessary if Israel were to end the occupation and allow the Palestinians to build a functioning and self-sustaining economy.
Yet there's still much more to the story, because parts of US aid to Israel are buried in the budgets of various US agencies, mostly the Department of Defense. For example, since at least 2006, the American Defense budget has included between $130 and $235 million per year for missile defense programs in Israel.
In all, direct US disbursements to Israel amount to approximately 10% of all U.S. aid abroad, even though Israelis only make up 0.001% of the world's population. In other words, on average, Israelis receive 10,000 times more US foreign aid per capita than other people throughout the world, despite the fact that Israel is one of the world's more affluent nations.
 And that number rises significantly when one considers disbursements to Egypt, Jordan, and the Palestinian Authority and Defense spending on behalf of Israel.