• Cash for Clunkers

      One year ago, our “leaders” made grand promises for the Cash-for-Clunkers program. Senator Harry Reid claimed 

      “this program will stimulate other sectors of the auto supply chain like mechanics and auto parts manufacturers without adding to the deficit. By increasing sales we are bringing more revenue to the state and creating jobs for those who build and sell them. Cash for Clunkers is the kind of sound, innovative program that helps spur Americans’ confidence.”

      What nonsense. It was insane that Congress would use your money to pay people to junk perfectly usable cars, and then buy new cars they would eventually have bought anyway. That doesn’t create wealth. As Fox Business Senior Editor Charles Brady emailed today:

       “A major criticism of these targeted stimulus plans is that all they do is pull sales forward without providing any net gain in economic activity: a person who was planning to buy a new car in six months would be inclined to make that purchase earlier in order to get the benefit of the stimulus program, however someone who wasn’t planning on purchasing a car wouldn’t suddenly change his mind and buy one.”

      Now, one year later:

      “This is exactly what happened with Cash-for-Clunkers There was a big spike in automobile purchases when the program was in effect last July and August. Come September, though, sales plunged 35% right back to where they were before the stimulus was enacted. It’s true that auto sales have trended higher since then. But critics argue those sales would have occurred anyway, and that all Cash-for-Clunkers did was put taxpayers $3 billion further into debt.”