Tuesday, August 4, 2009

Cash for Clunkers A Sham

What is Cash for Clunkers. It is a sham of a program and everyone has bought into it. Essentially, it is a transfer of 1 billion, with 2 billion more in the works, of taxpayer money into the auto industries pockets. It is wealth redistribution. It is the government causing the consumer to act in a way that they wouldn’t have otherwise acted if solely using market forces. Additionally, not only is this creating more debt for our nation, it is creating more consumer debt. The vast majority of new cars are purchased on credit. With the introduction of this program, many people feel incented to take on debt they didn’t have because their “clunker” was likely paid off. The goal of this administration is power. When you are a slave to debt, the lender has the power. With the stimulus program, the banks and government are one. Is trading in a paid off car worth getting to be the chauffer of a high MPG car with government in the back seat.


Kansas Bob said...

"it is creating more consumer debt"

Great insight Scott..I had not thought of that.

Scott Roche said...

"When you are a slave to debt, the lender has the power."

That's true. Who's the lender here? Not the gov't. If people bought a car they couldn't afford it's not the gov't's fault. However thanks to the gov't the cars are more affordable.

"The goal of this administration is power."

Just out of curiosity did you point this out about the prior administration's "power grabs" as well?

I will say that I think the way the cars are being disposed of is stupid.

jrchaard said...

Thanks bob and scott. I agree with the power aspect. We have been discussing this at work on our work blog. A person put it this way "And to have a program to benefit the taxpayer but at the cost of the taxpayer doesn't really help anybody. It's like if I had a pie with half of it eaten and I wanted more pie. I can't cut a piece out and put it where there used to be one and expect that to equal more pie... I've still got the same amount of pie."
I said you actually have less pie because the government takes a bite for administrative costs. If government did math, we wouldn't be in this situation to begin with.