Why is the United States funding terrorists?

When I see an article with this title, Bush warns US may cut aid to Palestinians, my only thought is why are we giving them any money.

WASHINGTON (Reuters) - The United States warned on Friday it may cut back its $234 million aid earmarked for Palestinians this year because the militant group Hamas was expected to form a new Palestinian government.

I've heard all the arguments for foreign aid and don't buy any of them.