Tuesday, August 4, 2009

Cash for Clunkers

There’s been no shortage of comments this week on the latest government giveaway, the so-called “Cash for Clunkers” program. Essentially, if you have a car that meets the government’s specifications, they will give you between $3500 and $4500 credit on a new car that meets the government’s specifications. The name of the program is somewhat of a misnomer. There is no actual cash and your car isn‘t necessarily a clunker. The plan is to stimulate the economy and help prop up the automobile industry, plus it’s supposed to “save the planet” by getting your low gas mileage vehicle off the road and into the junk yard, while putting you into an Obama approved piece of tin that gets better gas mileage and squashes nicely into a compact wad in case of an accident with a Volkswagen.

Originally, the Democrats wanted a mere $4 billion for this plan, but had to settle for a measly $1 billion. One could argue that this scheme has been a success because it was supposed to last into November. However, they blew through the billion dollars in six days. Presently they want another $2 billion to keep the program going—maybe for another two weeks.

Critics say it isn’t really much of a success since the money the government is giving away belongs to taxpayers—that’s you and me. If I was in the market for a new car, and I wanted a tiny car, then I might consider taking advantage of the program. As it is, I’ll keep my Dodge Magnum. I need something that will haul me, the wife, my music keyboard and amplifier.

The main complaint about the program is that the trade-ins we are paying $4500 for are being destroyed. The engines are being disabled and the bodies are being crushed. While this gets these nasty old gas guzzlers off the road, it also deprives the used car market of serviceable vehicles that poorer folks or those with insufficiently good credit who can’t afford a new car can buy. Some people can never afford a new car.

Kevin McCullough wrote in Town Hall Daily, “Imagine the government making an estimable promise of enormous proportion. Imagine the government pledging a promise so big that it would, in fact, as they would argue, actually save an entire sector of the economy. Imagine in doing so, that the same government promises blind fairness, trust, and integrity in the process. Imagine the government assuming the significant portion of funding such a program off of the hard sweat labor you and I commit to everyday. Imagine this program pledging complete utopia in helping to restore a struggling economy, even if the sector it was addressing was a largely insignificant part of the economy. And imagine if, after promising this program would last for a long period of time, it ran out of actual cash in about 1/16th of the time they pledged it would work.

Now imagine if that program dealt with something as serious and intricate to the daily lives of Americans as the provision of our health care
Oh, but not to worry, health care is still a ways off. No, we're talking about a program that uses our tax dollars to purchase cars that can not be resold, and that no one will drive, but instead be taken directly to the nearest junk yard and crushed.”

Another thing that bothers me is that the funds for this giveaway isn’t coming out of the $700 or so billion so-called stimulus package, which the administration is still sitting on. This is new money—money we don’t have. It is either being borrowed from China or being printed. It would make more sense to finance this program from the money already allocated for the purpose of stimulating the economy—money they aren’t planning to spend until just before the next election. Moreover, it would be better for the economy overall if these kinds of giveaways included a much wider segment of the population. It would be just fine if they gave my part of my tax money to me and let me spend it on something I want.