I’m not implying the 30 percent increase in the average price of a used car is a direct result of the Obama administration’s Cash-for-Clunkers program, but it certainly is a factor, and nobody is mentioning it.
I wish I could say I came up with the headline but I did not. It’s from the SOS. The proposed Obama tax credits for business are getting some kudos from the right but I believe it is knee jerk because there is nothing to celebrate here. The tax credits are short term stimuli not unlike the cash for clunkers program, all the while masquerading as a sop to the Republicans while still leaving control with the state and the statists. Mrs. James Carville gets it and so does … well of course he does … Charles Krauthammer. Read more
Business Insider claims the GDP figure released earlier today is warped by the huge spike in auto sales in August. The report from the Bureau of Economic Analysis’ own report say 1.66 percent of the 3.5 percent growth was specifically due to Cash for Clunkers.
In a twist that will tick-off taxpayers, the federal government’s plan to provide tax credits to buyers of electric vehicles has turned into a boon for golf cart manufactures. The IRS allows the full credit – $4,200 to $5,500 – to be applied to electric golf carts as long as they are road-worthy. Some buyers will drive carts for two years – and get paid $2,000.
The verdict is finally in on the “cash for clunkers” program, and I doubt that any rational person will applaud.
I know you will find this hard to believe, but, it appears that new car sales weren’t “stimulated” at all, they were just moved from one time period to another.
Last week U.S. automakers reported that new car sales for September, the first month since the clunker program expired, sank by 25% from a year earlier. Sales at GM and Chrysler fell by 45% and 42%, respectively. Ford was down about 5%.
Now, there’s a surprise.
But, the news gets even better, assuming that’s possible.
Rather than stimulating the economy, the program made the nation as a whole $1.4 billion poorer.
How could that be, you ask? Well, we took thousands of old cars that were traded in under the program and destroyed them…no used cars to sell to people who couldn’t afford new cars, no spare parts to sell to people who couldn’t afford new parts, and no sales of used cars to many other poorer nations that eagerly buy our used cars. That dumb piece of the program destroyed capital (i.e. used cars) and, as a result, as a nation, we are $1.4 billion poorer now than we were before this misguided legislation. Taking that further though, I wonder how many jobs were lost in those industries as well?
But, some will say, hey, look at all the gas we will save by having more fuel efficient cars on the road. Certainly that will redeem the program, won’t it? Well, no it won’t.
According to Hudson Institute economist Irwin Stelzer, at best ‘the reduction in gasoline consumption will cut our oil consumption by 0.2 percent per year, or less than a single day’s gasoline use.’
So, summing up, cash for clunkers didn’t increase auto sales, destroyed $1.4 billion in capital, put people out of work, reduced our gasoline consumption only by an amount equivalent to one day’s use per year, and it only cost us $3 billion to accomplish that feat. Pretty neat, huh?
And now, they want to run our health care. Think of how much havoc the government can wreak with a $1trillion program.
I’m revising this post thanks to Erik’s suggestion in the comments. I read the AP headline “LaHood: Gov’t paid dealers $1.2B for ‘Clunkers'” and assumed that was it; the dealers were going to get $1.2 billion. The article should have been written differently to include the words “so far” somewhere. Read more
Just when you thought you’d seen and heard it all at the auto-mall. Remember back in those halcyon day of the campaign, when Candidate Obama promised transparency? Read more
You can call it whatever you want … call it a banana … but its not a stimulus. To hear Juan Williams … it’s affirmation of all liberal philosophy. See what government can do? But, in fact it’s not. It is as Krauthammer points out … it’s nothing more than redistribution of income. It’s a great debate from last night and to be honest Juan comes off a little whiny. Listen and learn … oh and laugh.
httpv://www.youtube.com/watch?v=PSzRyrfeyFU
I have been contemplating Tom Daschle’s situation and I wonder what kind of car could possibly result in a $120,000+ tax bill. After and exhaustive search I found my answer. Have a look…
httpv://www.youtube.com/watch?v=avG9DvLi-aQ
Do you know what his carbon footprint is with this old clunker? He may single-handedly be responsible for global warming (woops, sorry I mean climate change). I am pretty sure that his car will qualify for the “Cash for Clunkers” program that if passed will pay Americans $2,500 – $4,500 to junk their old junky cars.