The Peter Schiff Show Podcast
Episode: You Can't Have Government Programs Without Waste, Fraud, and Abuse – Ep. 1011
Date: February 20, 2025
Host: Peter Schiff
Episode Overview
In this episode, Peter Schiff delves into the perennial issues of waste, fraud, and abuse in government programs, discussing the new Department of Government Efficiency (DOGE) created under Trump, and its attempts to identify and cut wasteful spending. Schiff blends analysis of federal budget issues, program inefficiencies, consequences of welfare incentives, and the broader economic climate, including inflation, Fed policy, and gold markets. As always, he contextualizes current headlines with historical perspective and biting critique.
Key Discussion Points & Insights
1. Introduction to DOGE and History of Reform Efforts
[05:45]
- Peter reflects on his skepticism towards Trump's original DOGE proposal, comparing it to Reagan's Grace Commission, which identified but failed to implement meaningful spending cuts.
- Notes the escalation of federal debt—from less than $1 trillion during Reagan to $37 trillion today—highlighting the increased urgency.
- DOGE now operates within the White House, with real authority to address wasteful spending without congressional approval.
Quote:
"You can't have a government program that isn't wasteful, that isn't abused, and that isn't the subject of fraud. I mean, that is par for the course." – Peter Schiff [10:00]
2. The Scale of Government Waste
[08:15]
- DOGE has found $114 billion in spending to eliminate—just 1.5% of the $7.2 trillion budget.
- Optimism for DOGE to make more cuts than past efforts, but cautions they are unlikely to achieve trillion-dollar reductions.
- Waste is endemic: "Anything the government decides to do is going to be subject to waste, fraud, and abuse."
3. Social Security Fraud: Dead Recipients and Moral Hazard
[13:20]
- Explains prevalent fraud in Social Security—payments made to deceased individuals, sometimes for decades.
- Points to direct deposit systems making it easier for relatives to continue withdrawing funds unnoticed.
- Suggests many perpetrators don't see this as "real" theft—victimless in their eyes because it's just government money.
Quote:
"A lot of people may rationalize it like, well, you know, I'm helping the economy... It's my own stimulus, it's my own QE, right?" – Peter Schiff [18:30]
- Ties this to broader economic distress: record high credit card delinquencies, even among higher-income households now shopping at Walmart.
[22:30]
- Suggests a solution: require anyone over 90 to provide proof of life to continue receiving benefits.
4. Perverse Incentives and Moral Hazard in Government Programs
[29:00]
- Contrasts government and private sector: in the private sector, efficiency is incentivized; in government, there's incentive to spend more to get a bigger budget.
- Explains phenomenon of "spend it all or lose it," especially at fiscal year-end.
Quote:
"There's actually a perverse incentive to excessively spend money... It's a perverse incentive to be wasteful. That's government." – Peter Schiff [32:00]
- Discusses "moral hazard"—people adjusting their circumstances legally or fraudulently to qualify for government benefits.
Example:
If a program benefits those earning under $2,000 a month, someone earning $2,200 might voluntarily reduce hours to qualify, or take under-the-table jobs to supplement while appearing eligible. [34:40]
5. Welfare State and Family Structure
[41:00]
- Analyzes long-term effects of Aid to Families with Dependent Children (AFDC) from the Great Society, which paid women with children but without husbands.
- Argues this incentivized single motherhood, leading to explosive growth in fatherless homes, particularly in the African American community.
Quote:
"Families were more intact when they were slaves than when they were entrapped in the welfare state." – Peter Schiff [47:15]
(Schiff clarifies he's not condoning slavery, but using the example to underline the devastating effects of policy incentives on family structure.)
- Points out near 48% of African American children now grow up fatherless—worse than even under slavery.
6. Federal Reserve, Monetary Policy, and Inflation
[53:00]
- Reviews recent FOMC minutes: Fed continues to delay additional rate cuts, waiting for evidence inflation is headed to 2%.
- Schiff says policy is not truly "restrictive": real rates are negative, credit continues to expand, and inflation is driven higher.
Quote:
"If your fed funds rate is lower than your inflation rate, well, by definition that's stimulative... You're getting paid to borrow money." – Peter Schiff [58:10]
- Provides international context: New Zealand raised its inflation target, hinting the U.S. may do the same.
- Predicts the U.S. will eventually accept higher inflation targets to maintain government largesse.
7. Trump, Deficits, and Blame for Inflation
[01:07:00]
- Notes Trump’s claim that during his presidency, the economy was the best ever and inflation was low.
- Schiff disputes this narrative, emphasizing that much inflation materialized during Trump’s final year and that realities are inherited between administrations.
8. Potential Gold Audit and Implications
[01:14:30]
- Reports on discussions to audit Fort Knox, noting last audit was in 1953.
- Raises possibility that U.S. gold reserves may not exist as claimed, which could lead to a crisis of confidence in the dollar and soaring gold prices.
Quote:
"If the United States doesn't have that gold that we claim to have, gold prices are going to go ballistic and the dollar is going to tank..." – Peter Schiff [01:16:20]
- Dismisses notion that bitcoin would "fix" this issue, arguing physical gold still underpins true trust in reserves.
9. Gold, Silver, and Mining Stocks
[01:21:30]
- Gold hit new record highs (~$2,945), silver near $33. Schiff reiterates: gold is a "buy," silver is a "steal."
- Notes that mining companies (e.g., Anglo Ashanti) beat earnings expectations despite temporary dips on production outlook.
Quote:
"Gold's a buy. Silver is a steal, right? At this price." – Peter Schiff [01:24:20]
- Urges listeners to invest in gold and gold stocks before mainstream sentiment turns.
Notable Quotes & Moments
-
On government waste:
"You can't have government programs without waste, fraud, and abuse." [10:00] -
On moral hazard and entitlements:
"We've created a country of people who think they're entitled to free stuff." [19:45] -
On perverse government incentives:
"If you're a government bureaucrat, your salary is the same whether you waste money or not... In fact, there's actually a perverse incentive to excessively spend money." [32:00] -
On the welfare state and broken families:
"The US Government, through the welfare state, did more damage to the family than slavery." [47:15] -
On inflation policy:
"They're just pretending that their accommodative policy is restrictive." [1:00:00] -
On auditing gold reserves:
"If we don't have our gold, that doesn't just mean there's more gold in the world. It just means that... the gold that we used to have [is in other countries]." [1:16:50] -
On gold and investment advice:
"Load up on the Euro Pacific Capital Gold Fund... One of these days I'm gonna be doing this show and I'm gonna be talking about this explosive move up into gold stocks." [1:26:50]
Timestamps for Key Segments
- DOGE and government efficiency: 05:45 – 12:00
- Social Security fraud examples: 13:20 – 22:30
- Credit card delinquencies and economic hardship: 18:30 – 22:00
- Incentive structures in government vs. private sector: 29:00 – 34:00
- Welfare incentives and family breakdown: 41:00 – 48:00
- Fed monetary policy critique: 53:00 – 1:06:30
- Trump, inflation, and the blame game: 1:07:00 – 1:13:00
- Gold audit discussion: 1:14:30 – 1:19:00
- Gold & silver price surge, mining stocks: 1:21:30 – end
Summary
Peter Schiff delivers a thorough critique of government inefficiency, dissecting the structural incentives for waste, fraud, and abuse in federal programs and recent efforts such as DOGE to combat them. He exposes the real-world impacts—rampant fraud in Social Security, the destabilizing effects of welfare incentives on family structures, and persistent inflation fueled by misguided monetary policy. Schiff ties these systemic issues to current economic stresses, the debate over gold reserves, and urgent investment advice for listeners, all with the incisive, provocative tone he’s known for.