Posted on 08/06/2009 6:16:57 AM PDT by SeekAndFind
As a free-market capitalist who does not believe in artificial spending and pump-priming from Uncle Sam, I'm going to eat a little crow with the following statement: At this moment in history, if we're going to use fiscal stimulus as Washington insists, I favor extending the cash-for-clunkers car-rebate program.
With the greatest respect for my conservative friends and colleagues who totally disagree with me, here's why.
In virtually no time, the clunker program has become a national pastime. It has captured the public's imagination in a way that no other federal stimulus has. Everyone is talking about it. And I truly believe that consumer spirits have been buoyed by the prospect of going out and buying a new car -- even with federal assistance, and even under the duress of federal mileage standards.
After a very dreary year or two, people might just have fun trading in their clunkers and buying something new.
Even today, as unfashionable as it sounds, and given Washington's attack on horsepower, Americans are still in love with automobiles. They still like going to showrooms, checking out the new models, inhaling the great new-car smell, and yes, kicking the tires and making a buy. Cars may no longer be the heart of our economy -- that's all techie, information gadgets now. But folks still love the car thing.
Now, I wouldn't want the government to pass out free money for everything. But in this particular case, the cash-for-clunkers rebate program is working. It's working so well that it's running way ahead of the computers that are administering it at the Transportation Department and Citibank.
Well, sure. That's government for you. But unlike most of the rest of the fiscal-stimulus plan, this program actually works because the federal cash rebate actually contributes to a consumer purchase. It's not just another welfare-type transfer program.
Incidentally, with all those people rushing into the car-dealer showrooms, the ones who cannot afford new cars are buying used cars. Used car prices are up substantially this year, a healthy sign for the entire auto business.
And carmakers are going to have to ramp-up production in order to meet the clunker trade-in demand, which could well mean better employment -- something we desperately need. Plus, in addition to fueling better job creation and higher incomes, this process may generate rising tax revenues from the sale of the cars.
And the price tag of the program is a mere $2 billion compared with the trillions of dollars Washington has been wasting. So, for once in our lives, Washington spending is giving us a good bang for the buck.
The biggest trade out there seems to be selling the Ford Explorer and buying the Ford Focus. Of the top-five-purchased higher-mileage cars that qualify, Toyota has three, the Corolla, Prius, and Camry. The Prius is made overseas, but the other two are manufactured mostly in the United States. The number-three trade, the Honda Civic, is made in Indiana, while the Dodge Caliber and Chevrolet Cobalt rank in the top ten.
Yes, as for the Chevy, it is a little bizarre that the government that owns General Motors is in effect paying itself. So it goes. It ain't perfect.
And yes, it's quite possible that government rebates today will steal car sales from next year. But let's cross that bridge next year when the bull market recovery will hopefully be stronger.
Right about now you're probably saying, "Well, why not just spend another $100 billion and give consumers checks for everything?" Or, "Why not spend another trillion?" Well, I don't want to go there. Just this one cash-for-clunker program -- that's all I want. Fund it again for a couple of billion dollars more.
I mean, look, if I had my way, that trillion-dollar stimulus plan from President Obama would have gone to a six- or twelve-month tax holiday for everyone. But alas, that's not how the political ball bounced. At least for the clunkers, there's a plan that has caught the public's imagination and makes for a reasonable amount of economic success.
So I invite my Republican friends in the Senate and my conservative friends everywhere to push for the clunkers.
Ralph Waldo Emerson once said, "A foolish consistency is the hobgoblin of little minds." So I acknowledge that I am not being consistent. But I do actually believe that the new bull market in stocks and the onset of economic recovery will both be helped by improved consumer spirits, better car sales, and maybe even a new job or two for the American workforce.
And now I will try to regroup and go back to being a pure free-market-capitalist supply-sider.
- Lawrence Kudlow is host of CNBC's The Kudlow Report and co-host of The Call. He is also a former Reagan economic advisor and a syndicated columnist. Visit his blog, Kudlow's Money Politics.
wait until all those happy driving sheeple cannot afford the six dollar a gallon Obama gas in a few months....
“Yes, and a nationalized healthcare plan that only encourages euthanasia for those over 65 is better than one that encourages it for Republicans of any age, so why don’t we get behind that while the going’s good?
In fact, let’s follow the lead of the drug companies and make a secret deal with the administration that they not come after any Republicans under age 65!”
Hold on there, I never said anything about getting behind the cash for clunkers program, I’m simply expressing some relief that they are spending time working on a program in the low billions instead one that’s in the hundreds of billions. Just about everything this administration and congress have done is harmful, and they are quite eager to continue on their path of destructive behavior; I don’t expect their behavior to improve, so I’m glad when their attention is diverted by matters that are relatively small so that they are not doing greater damage elsewhere.
Without a corresponding reduction in government spending, a tax rebate is irresponsible and increases the burden on our grandchildren to pay the money back.
If your friend was going to make the trade anyway, then it makes sense for him. It makes little sense for the government to be coercing people with money to make purchases that they otherwise would avoid. It must displace other more sensible transactions.
He was.
C4C will pump the 2nd half economic numbers for Baraq and the Dems.
That’s what it’s all about.
And 40% or so of the sales are going to companies with his UAW buddies which helps them a bit. Baraq needs to keep Government Motors and Fiat alive until Nov 2012.
Does Fannie Mae or Freddie Mack ring a bell? The dims FORCED banks to loan money to home buyers who could not afford the homes, and taxpayers were forced to bail them out. This will be another guvmint bailout.
I like clunkers.
The pool of future used cars is being depleted.
It is madness to destroy a functioning automobile, junking it, salvaging no parts or components and simply selling the scrap to China.
Anyway, if you can afford new car payments, why the hell do you need a handout?
How many of the people who would be eligible for the program and can really afford a new car would be inclined to drive a real "clunker"? The purpose of the program is to destroy cars that should be replacing real clunkers. Though I wouldn't be surprised if the fact that many people will buy new cars who shouldn't be doing so will be treated as an advantage as well.
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