Posted on 08/11/2009 9:48:34 AM PDT by rabscuttle385
The Cash for Clunkers program has received a lot of attention this week on Capitol Hill and across the country. The program offers a voucher of up to $4500 in federal funds to anyone who trades in a working used car for a new one with better fuel economy. Congress was shocked at how quickly people responded to promises of free money and drained the program, while car dealers have been equally shocked at how slow and arduous the government’s website to claim the rebates has been.
It’s not a shock that people respond to incentives. The program has been deemed a resounding success, and Congress has authorized 2 billion more taxpayer dollars for it. But not everyone is happy about this. Low-income earners who would have been in the market for those perfectly serviceable, working cars will have fewer to choose from, and those cars will probably be more expensive than they normally would have been. Automotive repair shops actively lobbied against this program, as it will destroy many of the cars they would have repaired. They were out-lobbied. And of course, Americans as a whole are hurt, because this additional bailout of auto companies comes at our expense through inflation.
I have introduced a somewhat similar bill that would have provided a much better alternative to Cash for Clunkers because it does not rely on increased government bureaucracy or spending. My bill HR 1768 provides tax credits to people trading in used cars for new cars with better fuel economy. There is a big difference, in my mind, between letting people keep their own money versus giving them someone else’s. It is clear which one a free and fair society would choose. Not only that, but my bill would not have required working, serviceable cars to be destroyed for scrap metal.
Cash for Clunkers is a popular program right now, but in the larger scheme of things it does very little towards accomplishing its stated goals. Requiring cars to be destroyed and new ones made to replace them might help the auto industry in the short run, but any improved fuel economy will not make up for the environmental impact of junking one car and making a new one. So this is not a program that should really make environmentalists happy.
There is also much evidence that the boost in demand for autos, that has made dealers happy, is just borrowed demand from the past and the future. In other words, many have put off purchases they would have made anyway because they were waiting to see what the government would do. Others who would have waited a little longer to trade in a vehicle are accelerating their decisions so they can get in before the money runs out. So I would not be surprised to find that this artificial boom in auto sales is followed by an extended drop. This should serve as a very tangible example of how government meddling in the economy creates booms and busts. While everyone loves the booms, the busts are what creates the crises that government thrives on, and that is what we really need to watch out for!
fyi
‘So I would not be surprised to find that this artificial boom in auto sales is followed by an extended drop. ‘
Indeed. Hard to determine the market with the circus in town.
When one considers the idea of destroying perfectly good cars and the impact this has on low income people. This program is immoral!
Think how successful this approach will be when applied to seasoned citizens in the new health care plan, brought to you by the same idiot Tsars.
I have to admit that, while I think this is a bad program for other reasons, I am REALLY bothered by the idea of destroying something that is perfectly useful.
IMHO the real purpose of CFC is not to help the environment, but to encourage short-term auto sales so that the government bailout of the car manufacturers will be viewed as a grand success. The government is basically bribing people to buy cars now - with money the government doesn’t have (per Obama, we’re out of money) - to make the government look good.
Ping
So we destroy perfectly usable cars, replace them with foreign ones, all the while going into more debt both publicly and privately... what’s not to love?
The argument ‘value created’ vs ‘value captured’ (destroyed) is lost to a ‘progressive’. They do not understand the ‘moral’ concept.
They traded virtue for ‘right’.
We’re in trouble! This isn’t going to end well.
Any reduction in emissions from trading up from a 19 mpg car to a 25 mpg car are insignificant.
Another failed policy of the 0bama administration. He acted stupidly.
It’s the former General Motors (CEO fired by Obama in takeover) now known as Govt Motors with a new taxpayer supported sales incentive which has increased sales for Honda and Toyota...once again, incentive (the money) provided by the US taxpayer.
Have you had enough yet?
IMHO, the purpose is to destroy as many good cars as possible. The bizarre rules make perfect sense when viewed in that light, and little sense when viewed in any other.
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