Whose Ponzi scheme is worse?

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By Jon Kraushar - Communications Consultant
Originally posted December 25th, 2008 3:14 PM Eastern
Whose Ponzi Scheme Is Worse: Madoff’s or the Government’s?

Pardon my humbug this Christmas Day, but how many people have considered that the trillion-or-so dollars the Bush and Obama administrations might spend on bailout and stimulus efforts could turn out to be a worse Ponzi scheme than Bernard Madoff’s fleecing of investors, estimated at up to $50 billion?

Before we rush headlong and panicked into throwing even more good taxpayer money into believing that, yes Virginia, government programs like this actually work, have we looked at the model for all this — similar government “rescue” spending during the Great Depression?

That “New Deal” turned out to be a bad deal. Research by historians including Amity Shlaes, Jim Powell and others has found that President Roosevelt’s expensive Depression-era make-work projects actually coincided with an increase in unemployment and that the projects took years to complete, producing at best minimal benefits to the economy.

When was the last time that government spending on such a large scale turned out to be anything more than a stimulus to special interests? Labor unions and favored industries, including “green” ones, will benefit under the ongoing or proposed stimulus plans by Obama and Bush.

But where is the evidence that when government throws billions at a crisis it stimulates much more than waste, mismanagement, fraud, abuse and campaign contributions to politicians from the special interests chosen as the beneficiaries of all that taxpayer money? Where are the facts — the historical precedents — that prove that “this time it’s different”?

There is a huge risk here that, as in a Ponzi scheme, the government is merely paying off some people and some businesses as long as money can keep coming in from the suckers still paying in — and those suckers are us, the taxpayers! Where is the outrage?

I’m not saying that nothing should be done. What I am saying is let’s not be so hasty, desperate and credulous to buy into — to trust — government schemes that could make Bernard Madoff look like a piker.

Let’s listen more to those in Congress like Republican Paul Ryan of Wisconsin and some “blue dog” Democrats who are waving a caution flag saying, “Hey, slow down. There are alternative ways for government and the private sector to work together to work us out of this economic crisis. Let’s not just throw billions at this, willy nilly and half-cocked.”

Government isn’t Santa Claus. Taxpayers needn’t be Scrooges. Let’s not confuse humbug with prudence.

This Christmas season let’s submit our ideas and call for more thorough thinking before a trillion dollars in government “stimulus” and “bailout” spending possibly turns into another cautionary tale of a Ponzi scheme.

Communications consultant Jon Kraushar is at http://www.jonkraushar.net/.
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