Cash For Clunkers is an Economic Clunker
Just a few months ago, our political geniuses in government thought is was a great idea to create a new handout from 99% of the American public to a fraction of 1%, all in the name of saving the environment and stimulating the auto market. Like always, this Keynsian nightmare was a complete bust and did nothing to create a long term stimulus to the economy (no surprise there)… In fact the top 3 auto makers in the US posted record sales drops in the month of September to the tune of 33%-37%. Heritage explains below…
The dramatic decline in sales reported Thursday by the Big Three automakers suggested the extent to which the stimulus act has propped up the economy. The government’s wildly popular “Cash for Clunkers” program drove consumer spending to its highest level in eight years in August. But after it ended, so did the growth in auto sales.
General Motors’ sales plunged 36 percent in September compared with August. Ford plummeted 37 percent. Chrysler dove 33 percent.
Cash for clunkers “was a one-time boost of sales followed by a crater,” said Ben Herzon, an economist at Macroeconomic Advisers. The firm forecast that the program was likely to have no effect as a stimulant for national economic output.”
Just as dubious is the ‘mickey mouse’ finances behind the entire ‘Cash for Clunkers’ program. It is estimated that an additional 320,000 cars were sold in the US due to the ‘cash for clunkers’ program. The cost to the American Tax Payer was approximately 2.9 billion dollars. So let’s do some simple math…
2.9 billion dollars / 320,000 additional cars = cost of $9062 per additional car sold to the US taxpayer.
Wow, what a great investment of the taxpayer’s money! You would think with all the intellectual power in Washington, they could figure out a better way to spend the taxpayer’s hard earned income. It’s almost seems as if they want the economy to stay in the tank?
Well, I’m just a two-bit blogger, and I have one simple suggestion to improve the economy that I bet my life savings would create an economic boom…
Suggestion #1: Reduce the size of government to the size under the Clinton Administration. Eliminate the federal income tax for every soul in the US and still have a balance budget. (And you wonder why this option is never considered?)
That’s Right: Economic Boom!
Cash for clunkers was also an economic clunker for auto repair shops and charities that rely on the proceeds from car donation.
Good point. I gave my explorer to a great charity last year. They fixed it up and sold it for a profit. Many of these wonderful charities depend on auto donations to keep the doors open…. I’m sure cash for clunkers hurt many of them in this regards…
Jason