Of course the “cash for clunkers” giveaway is popular.
The government is paying people to buy cars — and subsidizing
the “sale” of cars, thereby temporarily improving the fortunes of
the auto industry.
But, is the program a success?
If the criterion is political, the answer would be yes — at
least in the short term. Thousands of people have leapt into the
breach to grab their handful of free government money. No
surprise there. It’s not often that Uncle Sam gives average
people serious cash as opposed to taking it out of their pockets.
Only a fool would leave that Old Beast parked in the back yard to
rot for another 10 years when all you have to do is break out the
jumper cables and a can of ether and gimp it down to your local
new car dealership and swap it out for $4,500 toward the purchase
of a nice new ride.
Except, of course, it’s these same individuals who have
been taxed up and down the streets to provide the revenue that
Uncle Sam then generously returns a portion of via the “clunker
credit.”
And, we’re grateful for this!
It also probably hasn’t occurred to the people trading in their
“clunkers” for new cars that they are voluntarily signing up for
a slew of new and higher taxes, too. By getting people out of
paid-for and low-value older cars, the government knows it can
extract a fortune in new sales and upticked personal property
taxes.
Insurance companies are rubbing their hands together also, no
doubt.
People of limited means trying to live within their means, on the
other hand, are probably not. The pool of affordable transpo has
just been reduced. Not just the total number of older cars — but
also the availability of second-hand parts to keep the remaining
still-operable older cars operable. Every car turned in under the
clunker program must be “recycled” — that is, destroyed. This
will exert additional cost-of-ownership pressure on the remaining
older cars not crushed — and thus, on the people of limited
means who depend on them to get around (and who are not
interested in a $500 per month new car payment).
To paraphrase the Queen of the Bourbons: Let them take the bus!
Meanwhile, the car industry.
It is indeed moving cars again. But that is not quite the same
thing as selling them. What is happening is the
government giveaway is helping to clear out the stacked-up
inventory of brand-new cars that have been collecting dust on
dealer’s lots for months now. This gives the appearance of a
recovery but once the giveaway goes away, so in all likelihood
will the “recovery.” And since Uncle Obama can’t (we
think) provide an endless 20 percent or so
government-funded discount off the MSRP of every new car
purchase, at some point, the rush to “buy” will be over.
Then we are back to where we were — only the government
(meaning, us) is now $3 billion lighter ($1 billion plus the
additional $2 billion recently approved to finance the giveaway).
It’s clever shell game, but ultimately, it’s still just a
large-scale con that’s no different in principle from what you’d
find going on in a Brooklyn back alley.
Nothing of real value has been added to the economy.
Funds have merely been shifted and transferred.
Taxpayers to taxpayers, taxpayer to car dealer, government to car
dealer to car company.
Eventually, the music stops and the con is exposed.
