Tag: cash-for-clunkers

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free trade & free markets national politics & policies too much government

Clunker Flunked

When the Obama Administration hit the ground running in 2009, one of its first “hopeful” and “audacious” programs was “Cash for Clunkers,” a sort of triple-​action economic stimulus, carbon-​emission reduction, and automaker bailout bill. Congress got on board, a lot of trades were made, billions spent. There was much brouhaha.

Skepticism should have been the order of the day, of course. So many things could have gone wrong.

And did.

Now, with the clarity of 20 – 20 hindsight, a consensus emerges: Cash for Clunkers was a clunker itself. An economic analysis from Resources for the Future is just the latest (mostly negative) judgment: “[T]he program increased new vehicle sales by about 0.36 million during July and August of 2009, implying that approximately 45 percent of the spending went to consumers who would have purchased a new vehicle anyway. Our results suggest no gain in sales beyond 2009 and hence no meaningful stimulus to the economy.”

Further, fuel economy gains and pollution reductions were minuscule.

The study is far from exhaustive. A lot of old cars were scrapped, recycled. Guess what this does to the used car and parts market? It’s been devastating.

Who’s hurt by supply reductions and consequent price rises? Cash-​strapped folks, the kind of people who usually buy used cars, or keep old cars running — which is a lot of people during a depression.

I bet that Cash for Clunkers served, on net, to transfer wealth from the working poor to far wealthier individuals.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

The Wrong Job

I’ve criticized the cash-​for-​clunkers program; I’ve argued against the notion that government should spend our tax dollars to create jobs.

Now the two come together. The National Highway Traffic Safety Administration is hiring 1,100 people to process the paperwork associated with the clunkers program.

Will these be long-​term jobs? Well, sure, just as long as there is a powerful need in our country for processors of ten-​page government forms to facilitate the forking over of $4,500-a-pop subsidy payments.

Maybe these United States can lead the world in such work. 

Thank goodness the feds so botched up the program it didn’t cost us as much as it could have. Dealers across the country quit the program early, scared Uncle Sam wouldn’t pay back what they had fronted to customers.

Or, at least, not fast enough. Turns out auto dealerships have certain cash-​flow concerns that our solons fail to fully appreciate.

Also not appreciated by Congress is the fact that taxpayers will have to hand over their hard-​earned money to pay for all these deals. More billions. Money that taxpayers could have put to more productive use.

Our federal government shouldn’t be in the car business. It shouldn’t be in the car finance business, either, much less subsidizing car purchases. 

The only productive jobs our current office-​holders should create is by stepping down and giving someone else a chance.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

The “Confidence” to Accept a Free Lunch

Does the alleged “success” of the cash-​for-​clunkers program prove consumer confidence is on the rebound?

Cash-​for-​clunkers is the new handout program for car owners and car dealers. Bring in an old car with lower mileage than the latest models, and the government gives you $4,500 toward a new car.

It took about a nanosecond to dole out the first billion dollars. So Congress tossed another two billion into the pot.

Alan Greenspan, former Federal Reserve chairman, was at the controls when the Fed’s massive credit-​for-​clunky-​mortgages program helped create the housing bubble. So he’s an expert. He’s been in the news lately saying that although he has his doubts about the  clunkers program, its “success” shows renewed “confidence in the economy.”

Question: If the government simply threw bags of cash at people, and people stooped to pick up this cash, would this also prove “confidence in the economy”?

Observation: The clunker subsidies comes from somebody. Because the recipients didn’t directly drop by, directly put a gun to our heads, and directly compel us to write out a check for $4,500, we’re not supposed to notice. But if you had just been forced to turn over $4,500 to subsidize somebody’s new car, you’d probably say your household economy had just taken a hit. 

Your confidence might even be shaken.

This is Common Sense. I’m Paul Jacob.