I guess the evolution of the scam goes something like this: first start overpaying cronies to do stuff. So, you know, at the local level you overpay for trash removal or bus service, but at least there's trash removal or bus service. At the national level you overpay for military toys. At least military toys get made, and perhaps even some useful R&D comes out of it. Not my preferred way to spend money, but at least something's happening.
Then people realize that's all a lot of work. Best to just stop providing useful public services altogether, and instead just find ways to download taxpayer money into the bank accounts of your rich friends. So, run a big financial company into the ground. Run a company whose job it is to provide free labor to private companies. That sort of thing.