I read with great interest this editorial on the so-called Cash for Clunkers program reprinted from Salon.com below.
Everyone says the program is a failure except those that think it is a success.
To me, the program is everything government should not be doing to stimulate the economy at a time of $1 trillion Federal budget deficits.
- These so-called "clunkers" in many cases are good cars, running vehicles capable of delivering transportation to the next generation of users. Everyone has owned a junker car in their life and when they bought one, they needed one. College students, lower middle class workers with jobs not supported by bus routes or public transportation, station cars for commuters, first time auto buyers, the list goes on and on. Instead of recycling these cars to promote economic growth and jobs, even giving them away to the poor, these cars are INTENTIONALLY DESTROYED for nebulous environmental gains.
- The auto makers claim that Cash for Clunkers is filling their showrooms and sales are tremendous. REALLY? Auto sales were down 12% this month over last year. Ford reported an end to 19 straight months of sales declines with a 2% increase this month. This is worth $1 billion in government subsidies?
- The prime beneficiary of Cash for Clunkers has been Toyota, not exactly an American automobile company. Yes, they make cars in the U.S. but so what? Is Proctor & Gamble a Chinese company because they have factories in China? Why isn't Toyota paying to increase the sales of Toyota products? American taxpayers are not subsidizing earning per share gains of Japanese stockholders?
- The notion of lower middle class workers who cannot afford to buy new cars subsidizing the purchases of upper middle class workers who can afford new cars is offensive to me. It is the height of regressive taxation. Why should cashiers in Wal-Mart or workers in a McDonalds who ride a bus to work pay taxes so insurance executives and accountants at Fortune 500 companies can buy a new Toyota Prius at a subsidized price?
Lawmakers ridiculed auto executives for flying to Washington in corporate jets but think nothing about buying new 737s for their own private use at taxpayer expense.
I want to puke. Apparently flying coach or even first class on commercial airlines is beneath these "public" servants.
Some people think that Cash for Clunkers can be used as an example for a real estate inventory bailout model. After all, destroy perfectly good (but older) cars for cash. Why not bulldoze perfectly good (but older and newer too) homes for cash?
The notion of destroying cars at a time when people are struggling to afford clunkers to get to jobs or shopping for food is disgusting. The notion of destroying houses when so many people are without places to live in this decaying economic environment is immoral.
So watch Congress expand both ideas very soon.
Robert J. Abalos, Esq.
So Cash for Clunkers, the scheme by which the Obama administration hoped to both stimulate auto sales and get fuel-inefficient vehicles off the road, has turned out to be hugely popular, burning through its initial funding of one billion in just a week. On Friday morning the House of Representatives hurriedly authorized another two billion, grabbed from stimulus funds earmarked for the Energy Department. The Senate will decide on the additional funds next week.
It's a fascinating little story, because both the left and the right are claiming the program to be a failure, while at the same time, on at least one metric, it is an obvious success. As a flat out stimulus measure aimed directly at one of the U.S.'s most ailing industries, Cash for Clunkers might end up being the most effective government intervention masterminded by the Obama administration so far. Auto sales in July are almost guaranteed to hit a high for all of 2009.
President Obama took immediate credit on Friday:
Not more than a few weeks ago, there were skeptics who weren't sure that this "Cash for Clunkers" program would work. But I'm happy to report that it has succeeded well beyond our expectations and all expectations, and we're already seeing a dramatic increase in showroom traffic at local car dealers.
Republicans, unsurprisingly, are upset. Arizona representative Jeff Flake complained that the government is picking "winners." Well, sorry Jeff, but your party lost the election, Michigan has 15.2 percent unemployment and the U.S. government has invested billions in Chrysler and GM. If you are striving, a la Keynes, to juice demand by getting consumers to open up their wallets, why not encourage them to spend on products that will help out the nation's most depressed region, thus dovetailing with other government support of the auto industry? That just seems smart.
Environmentalists are unhappy, however, because the original guidelines for the program were so watered down that it's all too possible to buy a new car that has only marginal fuel economy improvements over the old clunker. People are buying new Ford trucks to replace their old ones, instead of Priuses in exchange for Hummers. Or so we hear from anecdotal reports -- we don't have good data yet on the breakdown of the new purchases, which has led to some Senators declaring that they won't vote to authorize funding unless the environmental rules are tightened, or there is evidence that the program is working as planned.
As Senator Claire McCaskill, D-Mo. tweeted this morning:
Want to study & read what House passed yesterday.We'll not consider in Senate till next week.Also want details of how program is working.C4C
The most hilarious aspect of this are right-wing attempts to depict Cash for Clunkers as an unmitigated failure that should be a case lesson in why we don't want the government running health care. Instapundit is exhibit A: Glenn Reynolds cherrypicks a few paragraphs detailing some technical problems implementing the program from a Minneapolis-St. Paul StarTribune article that mostly documents how popular Cash for Clunkers is, in the service of a clumsy partisan attack.
"Producers can't catch a break under this Administration," concludes Reynolds, in a mind-boggling display of blind obstinacy. The problems "producers" -- in this case, car dealerships -- are having are a direct result of the success of the program. There's so much demand, that government is having a hard time processing reimburses of the $4500 credit that goes towards the purchase of a new car. The "producers" are also worried that because demand has already sucked down the initial $1 billion of funding provided, they might be left holding the bag for cars that consumers have already bought, if the program closes down abruptly.
Congress is not going to let that happen. Even if Cash for Clunkers is providing only marginal environmental benefits, it is clearly exerting a stimulative effect on the economy, automakers, and, eventually, recession-hammered Midwestern states. That's a winning trifecta for the Obama administration. I would be shocked if the Senate doesn't fall into line with the House.