Rolling Stone is looking at the problems in the Bush Administration’s Millenium Challenge Corporation — a new initiative that was supposed to reduce poverty and aid economic development in poor countries.

In March 2002, with one war raging in Afghanistan and another looming in Iraq, President Bush announced that he intended to undercut terrorism by attacking poverty overseas. “I’m here today to announce a major new commitment by the United States to bring hope and opportunity to the world’s poorest,” Bush declared. Under his watch, the president said, America would increase its annual foreign aid to $5 billion. And instead of giving handouts, he added, the program would employ an entirely new model: investing in countries to spark their economic growth and holding them accountable for their policies. “I carry this commitment in my soul,” Bush said, concluding his speech with a trademark religious touch. “We will make the world not only safer but better.”

The president’s plan looked revolutionary. U.S. aid efforts, long hampered by an ossified bureaucracy, often fail to ensure that recipient nations spend the money wisely. Bush’s plan, by contrast, recognized that poverty cannot be conquered without economic development, and that countries should continue to receive aid only if they use it effectively. “It seemed a bold, exciting new experiment in development policy,” says Mary McClymont, the former head of InterAction, the largest alliance of aid organizations in the U.S.

In a pattern that has become a hallmark of the administration, however, Bush’s aid initiative — the Millennium Challenge Corporation — has become an object lesson in dramatic ideas followed by disastrous action. Over the past three months, Rolling Stone has reviewed the MCC’s “compacts” with foreign countries, compared the work of similar agencies and spoken with a wide range of supporters and critics — including many of the conservative insiders responsible for creating the program. Instead of hiring aid experts, the administration at first staffed the MCC with conservative ideologues. Rather than partnering with other countries, the White House operated on its own, disconnected from the rest of the world. And when experts criticized the new agency, the administration responded with a bunker mentality, refusing to talk to detractors and learn from its mistakes.

Today, four years after the president announced his initiative, the MCC has signed compacts with six countries — offering only $1.2 billion in assistance. In February, Bush released a budget for 2007 that falls another $2 billion short of his pledge, bringing the total aid to less than half of what he promised. And the new budget once again pushes back the goal, stating that the administration “expects” to provide $5 billion annually in 2008.

“Not only has President Bush broken his word on funding, he has not put in the effort required to turn this excellent idea into a lifesaving reality,” says Jamie Drummond, executive director of DATA, the international aid organization co-founded by Bono.

Even leading conservatives who initially supported the program are now blasting the MCC. “The great promise of the Millennium Challenge was met with tremendous hope and anticipation,” said Rep. Henry Hyde, who voted to authorize the initiative as chairman of the House International Relations Committee. But now, he said, “we see a program struggling to get off the ground . . . lacking the boldness necessary to break the cycle of poverty” — a failure that “belies the original vision.”

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Applegarth, in fact, had a different kind of work in mind. In a report he authored for a think tank, Applegarth outlined ways to “establish financial-sector development as an explicit objective of U.S. development assistance efforts in sub-Saharan Africa” — in short, how to assist banks in the world’s poorest countries. To do so, Applegarth recommended “bringing more people with capital market skills and experience into government by, for example, establishing a separate salary scale within the government for financial-markets experts” — in other words, paying Wall Street honchos extra to aid the poor.

Under Applegarth, the MCC was dominated by a pro-business orientation. In fact, buried in the MCC’s own charter is a statement committing the program to “achieve market-driven economic growth.” A review of the program’s compacts reveals that the MCC has favored projects closely linked to the private sector — especially those that benefit commercial deals and investors. Rather than funding projects that directly aid the poor — building schools and hospitals, providing electricity and clean water to rural villages — the MCC takes a trickledown approach. Help private companies prosper, the reasoning goes, and jobs for the poor will follow. Or as Applegarth told a forum on aid to Madagascar, the MCC can “create opportunities for rural Malagasy by unleashing domestic investment.”

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It’s the promise versus the reality that angers people like me, who want to believe politicians, even Republicans, are acting in earnest when they propose bold new initiatives. But when you look at the record of the President’s initiatives — No Child Left Behind, Social Security privatization, health care savings accounts, the prescription drug benefit, and now, the MCC as described above — the pattern is that the program does not come anywhere near meeting its grandiose vision, and much of the money invested in these programs is drained off into corporate coffers. The same can also be said of the war in Iraq, where corporations like Halliburton have profited enormously, and of the initial Dubai Ports deal, where corporate profits again appeared to trump humanitarian concerns.

Can the Democrats, if they ever secure a majority in Congress, do a better job of keeping their eyes on the prize? Let’s hope so.