Posted 8/05/09 (Wed)
By Neal A. Shipman
If you are like me you are probably secretly wishing that you had some old worthless piece of garbage vehicle just sitting around gathering more rust. Thanks to the wisdom of the Obama administration and our Democratic-led Congress, that worthless motor vehicle which once would have cost you more than it was worth to junk is now worth thousands of dollars. And believe it or not, new car dealerships are begging you to “please push, pull or drag that clunker in.”
What gives? Have automotive makers who just a few months ago were going bankrupt faster than Brett Farve changes his mind on whether or not he is going to be playing professional football again gone completely mad?
Heck no, they are just the newest group of businesses or individuals to be benefitting from a big federal handout courtesy of the American taxpayer.
And Americans who have older, poorer mileage vehicles that qualify for the “CARS” (Car Allowance Rebate System) are pouring into automotive showrooms in record numbers. And they aren’t just looking, they are buying. Can you blame them? After all, Uncle Sam (or more correctly, you the taxpayer) is now giving people up to $4,500 towards the purchase of a brand new vehicle.
It’s a heck of a deal if you can get it! But this seems like just another example of some pretty flawed thinking by those in Washington, D.C. who seem to think that the best way to solve a problem (or at least buy needed votes for the next election) is to give away the taxpayers money.
So what’s wrong with the CARS program?
A couple of things.
First, the so called “cash for clunkers” program isn’t adding to the nation’s net wealth. The program simply takes money out of one taxpayer’s pocket and moves it to somebody else’s pocket. In return, for the exchange of money, the federal government is asking the person who is receiving the free money to destroy a vehicle that was providing them with debt-free and relatively cheap transportation into a new car with debt and higher insurance payments. It kind of reminds you of the federal mortgage subsidies that encouraged bankers to write home loans to people who couldn’t afford them. But apparently in Washington, D.C. that was yesterday’s news and they don’t seem to recognize for most Americans right now any new debt is a bad thing.
Second, unless the government continues to infuse billions more of certain taxpayers money into the program to keep fueling the sale of new cars, people who couldn’t afford to buy these new vehicles will simply do what they have always done. And that is drive the vehicle that they can afford to drive. Without the free government money, new vehicle sales will plummet and car manufacturers will be wondering how to unload excess inventory.
Perhaps if the financial gurus in our federal government simply wanted to create more spending in the American economy then why not cut a $4,500 check for every taxpayer. The check could not be put into any form of savings. It would have to be spent on some form of consumer product.
That way every business in America would have been able to participate and every taxpayer would be able to reap the rewards from Washington’s benevolence.