PPC Homepage

Cash for clunkers crashes as people get their money for nothing

by | 2:08 am, July 31, 2009 | 2 Comments

[Update: On Friday, the House passed a measure to divert $2 billion from the Energy Department to the “Cash for Clunkers” program. It faces more of an uphill battle in the Senate. The only way the response to a program would be this big is if it is “mispriced". In other words, the government is giving away far too much money. Trade in your POS vehicle and it rains money – other people’s money – on your head, thanks to The One.]

Yesterday afternoon, the government suspended the “Cash for Clunkers” program as its tremendous popularity caused it to blow through the $1 billion allocated to it in the program’s first week.

“Much faster than who expected?” you might ask. Not me.

When you offer people far more money for something than that something is worth, of course they’ll come in droves to take it. And in that sense the “success” of the program is really a disaster.

It means that our government has, in one week, funneled $1 billion from taxpayers to people who owned old inefficient “clunkers.” It’s not extremely unreasonable to believe that the average “clunker” owner is not in the top few percent of taxpayers – the people who pay most of the income tax. Therefore, Cash for Clunkers is simply a $1 billion welfare program designed to funnel net another massive slug of taxpayer money to Government Motors. Is it any wonder that Michigan Senator Debbie Stabenow is asking Congress for more money for the program?

Let’s do a little math on this. If someone turned in a 16-mpg car and bought a 24-mpg car, he’d have to drive 12,800 miles using $2.50/gallon gas to save $4,000. That wouldn’t be too bad a payback – if only the driver were spending his own money. But no matter how you slice it, it’s a raw deal for taxpayers. If the driver did drive the 12,800 per year, that driver would annually pay $300 less in federal fuel tax and (based on the national average) and $435 less in state fuel tax, adding another $735 to the cost to taxpayers and specifically depriving our transportation infrastructure of necessary funding. (Not to mention that the more efficient car will likely encourage its owner to drive more, offsetting the pollution benefits which some proponents of this program claim and causing more wear and tear on the roads.)

The other idiocy of Cash for Clunkers parallels liberals’ belief in Keynesian economics: The idea of a “shot in the arm” for the car industry simply means that demand that would have been spread out over several years is instead front-loaded. Sure, it will make the sales and earnings look good for a quarter, but it will make future sales and earnings look worse than they otherwise would have.

“Cash for Clunkers” was a terrible, obviously redistributionist program from the start. It’s screaming “success” should frighten anyone who pays taxes as it means nothing more than piling more debt on to future generations in order to pad the UAW’s coffers today.

Link to Original post at Rossputin.com.

Share
Category: Syndicated
Tags: >

Comments

  1.   Chris Maj
      July 31st, 2009 @ 4:00 pm

    The Keynesian fallacy that should be shredded here is the claim that a lack of demand is the problem during a depression. If there were a lack of demand, then even giving away new cars by way of “cash for clunkers” wouldn’t work because nobody would want the new cars. Instead, we were all witness in one week to the exact opposite outcome. Reality showed, once again, that demand exists in limitless quantities. No math required. KEYNESIAN FAIL.

    And on top of the skewed earnings is the skewered allocation of capital — resources that otherwise would have worked their way into profitable activities are now lost, some of them forever. Factories that refuse to retool get further behind the curve, laborers that do not retrain eventually suffer longer during unemployment, precious energy is wasted thus further depleting our natural resources, and potentially profitable businesses in new market sectors are stunted by moribund competition from economic zombies like Government Motors and Goldman Sucks.

  2.   albert w loescher
      August 8th, 2009 @ 6:13 am

    Will there be a ‘General Machiavellian’ auto mortgage bubble if this idiotic scheme continues? When ‘clunkers’ kill the the Tonka cars, will the czar clones triple insurance when they discover they are unsafe? Should this regime offer ‘end of life’ counseling for those who buy them? The lighter the midgets are made, the more oil they consume. Will there thus be a VAT inversely proportional with weight? Do any of the clowns understand the laws of thermodynamics and that no one has ever devised a perpetual motion machine? As we devolve toward the wooden age, will buyers of muscle driven vehicles be assessed a ‘metabolic tax’ for the estimate of CO2 exhaled? Only Bill Clinton will be exempt, ’cause he never inhales.

Praise for PPC From Our Lefty "Fan"

  • "Zany-ass bombast-entertainment...Hackneyed weirdo communist pseudo-nostalgia" --Alan Franklin, ProgressNow

Featured Posts




  • When a young girl gets close to the truth about a long-forgotten mystery, a harmless adventure becomes a threat to the future of the independent commercial settlements on Mars.

  • Advertise Here!

    info-at-peoplespresscollective-dot-org

  • Categories

  • Archives

  • Meta




  • Buy a Tea Party Poster!