An Obvious Question

So, while I was busy yesterday trying to finish up work, frantically reading some stuff for class, and spending every spare moment looking through the health care bill released yesterday, America learned just how much of a miserable failure the Cash For Clunkers program was. A study by the folks at Edmunds.com showed that taxpayers forked over $24,000 for each new car sold.

Perhaps the best synopsis of the study results and the best analysis of what it meant could be found at HotAir.com. Here are a few excerpts:

The Cash for Clunkers program provided federal subsidies of up to $4500 for those car owners willing to buy a more fuel-efficient vehicle in exchange for certain classes of gas guzzlers. In all, the C4C program generated over 690,000 sales in the few weeks that it ran, with an average subsidy of $4,348 per sale. How many of these, though, would have bought a new car in the near future anyway? According to a new study by Edmonds, an industry analyst, only 125,000 of these sales would have not been made without C4C — which brings the subsidy to about $24,000 per actual successful incentive.

In the end, almost all C4C did was steal sales from the new model year. Dealers unloaded last year’s models, and their new inventory will sit on the lots without the buyers they may have had otherwise. The destruction of used cars will make it more difficult for lower-income earners to buy vehicles, thanks to a shortage of about 700,000 in the national inventory. That will impact employment and consumer spending indirectly, which will mean a drag on future GDP growth.

Meanwhile, we spent almost as much to buy an average new car to incentivize each legitimate new sale. Is this smart economic management? Or is this yet another data point that proves that this administration has no idea how a free-market economy works, and even less idea of how a top-down managed economy fails?

I’d like to take it a bit further and ask an obvious question that was perhaps even too obvious for a professional like Ed Morrissey to mention at HotAir: is this the same federal government which hopes to run one-sixth of our national economy through health care reform?

After all, the purported deficit neutrality being promised by the administration depends largely upon the government becoming more efficient in the way it spends money, as they hope to find and excise more than $450 billion in Medicare waste in order to pay for Pelosi’s monstrosity.

We just paid $24,000 per car for a program which, compared to health care reform, is the size of a flea on an elephant. Not only that, but the downhill consequences pointed out by Morrissey–and pointed out on so many prior occasions here at America’s Right in Cash For Clunkers-related pieces–will add further cost to an already recklessly inefficient program.

Worse yet is that I’m predicting that the Obama administration brings the program back next summer, in advance of the mid-term election. Despite being a complete failure in reality, Cash For Clunkers was a populist success in the fantasyland inhabited by Democrats and promoted by the mainstream press. It will be back, and our wallets will be lighter for it.

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Comments

  1. IN LIEU OF FLOWERS says:

    24,000 per car, to get all those cars, that would have made a reasonable car for people less fortunate, to the scrap yards.

    RIP Common Sense.

  2. whats_up says:

    Jeff,

    Perhaps before you jump on this bandwagon, you should ask yourself how edmunds.com came up with this info. Did they ask those who purchased a car if they were allready going to buy one? The answer to that would be no they did not. They simply guessed. And you went with it. Pretty spotty Jeff, pretty spotty.

  3. Anonymous says:

    To "Whats_up":

    Not spotty at all, if you know anything about the "system" that we call an economy.

    Right from the start, I said that if the government was going to intervene, they should buy the excess new car inventory at cost from the manufactures and send the new cars to the crusher. It would have left all of the dynamics, including including the scrap yards, of the market system in place, and it would have cost the taxpayers less.

    Of course, the enviro-nazis had to get involved by trying to get "clunkers" off the road. Nothing wrong with that, in an ideal world, but the "system' effects of that were all wrong, and it wasn't an environmental problem that the government attempted to solve; it was excess inventory, resulting in layoffs for the Obama adminstration's constituency, the UAW.

    People who have never run a business shouldn't make market- economy decisions.

    Old Bob

  4. Roses, WA says:

    So… when are they going to start a life-long-learning school for seniors so we can get free meals with our classroom time? Don't they know that we will starve if we don't go to school?

    The older I get the less inclined I am to earn a living, and much less inclined to share a paycheck with Obama.

  5. Anonymous says:

    Edmunds.com is the new Fox News. That's right, the White House is now attacking reputable and respected Edmunds.com for daring to voice criticism. Talk about thin skin.

    http://www.businessinsider.com/the-white-house-stupidly-goes-to-war-with-car-website-edmundscom-2009-10

  6. Rix says:

    That's the ideal cycle of power as Democrats see it:

    Democrats win elections. Immediately, they start spending tax money like a drunk sailor on a one-day shore leave. They also pass a bunch of lousy, expensive legislation to please their liberal wing. Eventually, the people get sick of the spendfest, vote the crapweasels out, and Republicans take over. They introduce some semblance of financial discipline but lack the firepower (and the spine) to repeal the obviously-lousy legislation passed by Democrats. Operating a free-market economy after Democrats had their kinky way with it proves quite a burden and Democrats happily pounce on every problem, led by the MSM and Hollywood celebs. Democrats promise new handouts to the urban poor and see their ratings skyrocket. End of cycle.

    One problem I see with this cycle is that the balance gradually shifts to the left with every iteration, until it eventually gets stuck on "extreme left". The routine can be broken in a number of ways. First, the most obvious and thus least possible given the disposition of the Congress, is to follow Jefferson's vision and restrict the ballot to people who actually contribute. Another, somewhat less controversial, is to adopt the idea that many states already have, namely to impose constitutional restrictions on deficit spending. All other ways, while highly efficient, involve violence (up to and including public executions) in Washington D.C and other key locations, and will thus not be discussed here.

  7. Anonymous says:

    People such as whats_up have me really doubting the future of this once great country….. so blind.

  8. T. JEFFERSON says:

    Rix and I share the same political fantasies.

  9. Jan says:

    At this point I see little differentiation among party titles. We have a bunch of career politicians that have become power and money hungry. As long as the special interest groups have their hands in politician's pockets I don't see things like repealing disasterous bills happening any time soon. Outlaw all lobbiest efforts and incorporate term limits. Maybe then we can get back to getting business done with the best interests of the country as a whole as a motivator. Until then, power and greed will continue to rule the day.

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