Watching the continuing drama of democrats and republicans sparring over the resolution of the “debt crisis,” its difficult to resist a chuckle over what is really happening in Washington. What we are witnessing is the collapse of the biggest Ponzi Scheme ever imagined, with the beneficiaries of the scam scrambling to keep their ill-gotten gains and preserve the golden goose they have been choking for years.
A Ponzi Scheme, of course, is a scheme where investors (citizen taxpayers) are duped to put their money (taxes) into an investment plan that purports to pay unusually high rates of return (government benefits for all our friends). The benefits of a Ponzi Scheme are paid out today as other investors continue to pay in. To keep the scheme going, the perpetrators must maintain a continuing flow of money into the scheme. It is only when the incoming revenue fails to keep up with the demands for payouts that the Ponzi Scheme begins to unravel.
Until this year, with the arrival of the freshman class of Tea Party republicans in the House of Representatives and the Senate, the American government’s Ponzi Scheme was in no danger. When the incoming revenue to the federal government was not sufficient to cover the huge outlays of benefits to the “Investors,” the congress simply spent all the money it had and borrowed the rest. Each year, the amount of money spent in excess of the revenue coming in was simply labeled “the budget deficit.” When the next year began, the deficit was simply added to the previous deficits that total up to the national debt. So far, so good investors, but then those rascally republicans came along and spoiled all the fun.
When the national debt began to approach the debt limit, that staggering figure approved by a previous congress and president, the managers of the Ponzi Scheme thought they would be able to do as they have always done. They would simply raise the national debt limit. But the sweeping republican/Tea Party success in the congressional election of 2010 has changed the picture in once-placid Washington. The leadership in the House and Senate cannot simply raise the debt ceiling in the current atmosphere inside the beltway. The American people are balking at continuing the scheme. The Tea Party has changed the debate from increasing the budget and deficit to reducing both.
When a real Ponzi Scheme is discovered, the result is typically panic. Investors run on the banks and attempt to regain as much of their equity as they can from what remains. But in this grandest of all Ponzi Schemes, the victims are behaving in a very civil manner. Instead of marching on Washington with pitchforks and firearms, demanding the heads of their politicians, they are simply demanding that the Ponzi Scheme be stopped, and the damage repaired. In the case of this congress, it is the schemers themselves who are beginning to panic. Instead of running for the tall grass to hide their shame, our congressional leadership is standing firm, demanding that the investors approve an increase to the debt ceiling and continue to invest in the scheme.
The panic began earlier this year in Wisconsin, when Governor Scott Walker attempted to limit the amount of “benefits” the government union employee were receiving from that state’s Ponzi Scheme. The wild scenes of hateful demonstrators seen on the national news every night illustrate the degree of panic that shutting off the flow of taxpayer benefits will cause. We are witnessing a similar panic growing in Washington.
President Obama’s petulant speech last Friday evening, where he castigated those who dared to forward the Cut, Cap and Balance legislation, and “summoned” the leadership of a co-equal branch of the government to the White House to explain why they could not raise the debt limit, was only slightly more dignified than the mobs rioting in the rotunda of the Wisconsin State Capital.
What we are witnessing could be the dissolution of the republic. When the political ruling class in Washington realize that the people, through the Tea Party movement, will no longer fund the gravy train they have been riding for many decades, they will have to decide if they will accede to the demands of the people, or chose some other route that will allow them to continue to live in the styles to which they have become accustomed. The former option would return us to the freedom and free enterprise system that generated the prosperity we used to enjoy. The latter will continue the descent into a statist hell.
