Sanity Injection

Injecting a dose of sanity into your day’s news and current events.

“Cash for Clunkers” a perfect example of what is wrong with the federal government.

Posted by sanityinjection on August 5, 2009

Imagine if you could find one federal government program that exemplified everything that’s wrong with the federal government. Would you cancel it, or would you increase the funding for it? Well, if you’re the Congress of the United States of America, the latter of course!

I am referring to the so-called “Cash for Clunkers” program, whose official name is the “Car Allowance Rebate System (CARS)”. This program, signed into law by the President on June 24, offers $4500 discounts toward the purchase or lease of a new vehicle, in place of a traditional trade-in allowance if you are trading in an older vehicle with poor gas mileage for a more fuel-efficient one. The program was initially funded at $1 billion, but that money ran out much more quickly than expected, so the House has approved $2 billion in additional funding. Fortunately, the Senate, where apparently some sane individuals still exist, is balking at holding a quick vote – mainly because the DOT is refusing to release the sales data that shows the results of what the first billion was spent on!

Unfortunately, the additional funding is likely to pass eventually – because the President wants it and because it’s difficult for politicians to vote against giveaway programs that put money in the pockets of their constituents. (There are no income qualifications for the program – Bill Gates and I would both get the same $4500 if we had eligible vehicles to trade in and were buying new ones that cost less than $45,000. That’s one reason for the quick drawdown of the funds.)

Fundamentally, this program is a half-assed, rushed attempt to do too much at once. It’s supposed to boost the auto industry and consumer economy, help the environment by replacing gas guzzlers with fuel efficient cars, and help people hurt by the recession. As a result, it largely fails in all three categories. Furthermore, it’s essentially nothing more than redistribution of wealth  – the federal government takes our tax dollars and redistributes them to somebody else in $4500 chunks.

Even a person of average intelligence could conclude, after a bit of thought, that most people participating in the program probably were going to buy a new car anyway, even if they had to wait a few more months. So the program isn’t generating additional car sales for the industry – just moving some of them sooner than later. An even brighter person might recognize that Japanese firms like Honda and Toyota make more fuel-efficient cars, so the program will probably help them more than struggling US automakers – which is in fact what the limited data available seem to indicate. As for the environment, if your new car only has to get about 4 MPG more than the one you’re trading in to qualify, how much of an impact can that possibly have?

So let’s recap all the ways in which this program typifies bad government:

1.  Rushing through ill-conceived symbolic legislation to throw money at a problem instead of really solving it.

2. Trying to achieve multiple, sometimes conflicting goals at the same time.

3. Blatant redistribution of income whose goal is political gain for its proponents.

4. Lack of sufficient restrictions on program to ensure that it actually meets the goals.

5. Refusal to share critical data on administration of program to avoid analysis of flaws.

6. Program torpedoed by basic failure to understand the workings of a free market economy (DOT Secretary LaHood insists the fact that the program ran out of money so fast is proof that it’s a great success.) 

7. Political pressure applied to continue program that has demonstrably failed.

All of these factors are extremely common in much of the dumb legislation that Congress passes. The only thing unusual about this particular program is that it so obviously displays every single one of them at once. This being the case, you would think that Congress would be happy to let it die, but in fact they want to throw twice as much money down the rathole.

This underscores a more general point about state and federal legislatures. Most of the damage that is done is not caused by legislators who are criminals or intend to do harm, but by massive amounts of stupidity coupled with cowardice and corruption. I salute those legislators – and the simple fact is that most of them are Republicans – who have the courage to vote against this demagoguery.

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4 Responses to ““Cash for Clunkers” a perfect example of what is wrong with the federal government.”

  1. Even Senator Tom Harkin (Agrarian Communist – IA) sees a problem with this idiocy – in fact it seems he’s been reading Sanity Injection:

    “Sen. Tom Harkin, D-Iowa, for example, wants the vouchers limited to individuals earning less than $50,000 a year or joint filers earning less than $75,000.

    As the bill stands, Microsoft founder Bill Gates can get $4,500 to buy a new car, Harkin said Thursday. “You have to ask,” Harkin said, “is this a wise way to spend limited amounts of money?””

    Unfortunately, the Democrat leadership will not allow any amendments to pass because they don’t want the bill to have to go to conference committee. So reasonable efforts to improve this disaster like Harkin’s, or the proposal to put a cap on the number of sales, or even stricter fuel emission numbers as the super Lefty enviros want (and this time I would support them), are all doomed to failure and we can only watch as ,more tax dollars go down the drain. The $2 billion in additional funds had previously been earmarked for renewable energy projects – a much better initiative with long-term potential to benefit the nation.

    http://news.yahoo.com/s/ap/20090806/ap_on_go_co/us_cash_for_clunkers

  2. As expected, the additional funding passed the Senate. However, if 7 Republicans hadn’t voted for it it would have failed. Shame on them, and credit to the four Democrats who voted against it:

    http://www.politico.com/news/stories/0809/25898.html

  3. Update: AP is now reporting that hundreds of auto dealers are quitting the CARS program because the government has only reimbursed them for 2 percent of the discounts they’ve given buyers under the program:

    “…it’s in the hands of this enormous bureaucracy and regulatory agency. If they don’t get out of their own way, this program is going to be a huge failure.”

    In short, the federal government cannot manage something as simple as an auto rebate program – and the President wants to put it in charge of something as critical as *health care*???

    http://www.breitbart.com/article.php?id=D9A63RC81&show_article=1

  4. Final Update: Data from Edmunds.com on the Cash for Clunkers program backs up my prediction that it mostly just moved up purchases rather than prompting additional ones. They estimate that taxpayers subsidized each additional car purchased under the program to the tune of $24,000. Auto sales are now slumping because most people who were in the market for a car already bought during the promotion:

    http://money.cnn.com/2009/10/28/autos/clunkers_analysis/index.htm

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