Monday, August 3, 2009

Cash for Clunkers = EPIC FAIL

So today the Legislature is going to approve even more money to be flushed down the toilet that is "Cash for Clunkers."

Harsh, you say? How could it be a Fail? Isn't the program so wildly successful that the government has run out of designated funds for the program?

If your measure of success when it comes to government programs is the amount of expenditure of tax dollars, I suggest you try a similar practice with your own bank account. Spend a month's worth of grocery budget on one week's worth of food, and let me know how that works out for you.

The problem with Cash for Clunkers isn't that people are taking advantage of it. The problem is that the government is taking advantage of it.

If your measure of the success of a government program is how many people use it, then I'd advise you to revisit the recent CRA debacle, which - in a curious similarity to Cash for Clunkers - required (housing) lenders to issue more financing to loan applicants than they could afford - all for the Greater Good, you understand.

Skip the first 30 seconds to get to the actual meat of the video.

First, it's obvious this has nothing to do with stimulating the economy. Aside from the fact that government subsidies only create economic bubbles that eventually burst (see above) - they are instead requiring that the trade-in cars be destroyed.

This doesn't make any sense from an economic standpoint. After all, what traditionally happens with trade-in vehicles? The dealer either flips them itself or sells it to a smaller, independent dealer who in turn is able to sell it to someone who couldn't afford a newer car on their own. However, by destroying the trade-in cars, the government is undercutting an entire segment of the industry. And to reiterate, it's not a proof of GOOD planning that you run out of money 1/10th of the way into the plan.

Second, Cash for Clunkers only does marginal good to the environmental cause, and that's even allowing for the fallacious position that the government exists to enforce environmental ideologies. Must have missed that part in the Constitution.

To believe Cash for Clunkers will make a significant impact on the environment, one must assume one of two things: either A) all Americans drive equal miles, therefore by trading in cars getting 21mpg for cars getting 22mpg, it'll significantly reduce fuel usage, or B) some Americans drive more than other Americans, and those are the ones that will trade in their cars for more fuel-efficient cars, not the segment of the population that drives less. The first assumption is obviously ludicrous, and the second is improbable and unprovable. But that's only the first chink in the "environmentally-friendly" facade.

Specifically exempted from the Cash for Clunkers program are motorcycles. This makes no sense if the point of Cash for Clunkers (as has been alleged) is the "Greater Good" goal of lesser fuel consumption, since motorcycles average 35-40 mpg, much higher than the required 22mpg for cars. And anyway, the list of qualifying cars has changed weekly since the bill was signed at the beginning of the month, because apparently the definition of "environmentally friendly" is as nebulous and non-specific as the "Greater Good."

So, if it can't be economically or environmentally justified, then what's the real motive behind Cash for Clunkers? As always, the goal is control.

Back when the auto bailouts were in process, there was much talk from Capitol Hill that this money didn't come without strings attached. Pelosi and crew told automakers that if they accepted bailout money, they would be subject to Congressional regulations when it comes to the types of cars they manufacture, specifically environmental regulations. This was, again, wildly unpopular with voters.

So, rather than push new environmental regs on automakers, they backed off and have been laying low for a while, instead focusing on tanking the rest of the economy and getting unemployment back into the double-digits.

But now they have found the magic bean to get their fantasy of total auto regulation into becoming reality - Cash for Clunkers.

By allowing only certain cars to be traded in (the evil pre-2007 21mpg cars) for approved cars (the sainted 22mpg cars), the idea is to saturate the market with approved cars. Then, once they have data showing "that's what people are buying" they can justify requiring automakers - pursuant to their acceptance of the bailout money - to make cars falling within their environmental regs, which if you recall they couldn't even keep standard for this Cash for Clunkers program.

This is an irresponsible program all the way around. Considering the government has designated a 5-year-old 21mpg car a "Clunker," how will they designate your 80-year-old grandmother applying for a pacemaker under Obamacare?


AndrewPrice said...

You just asked more questions (and provided a far greater range of information) than every journalist combined. Congrats! :-)

Nice article, well analyzed!

BC said...

Disabling fine used cars will go down in history right with FDR's crazy idea to plow under food crops while people were starving during the depression. This program will hurt the poor by removing large numbers of used vehicles from the market thus making used vehicles less affordable.