Saturday, August 22, 2009

Obama's Cash for Clunkers - Another Dumb Idea

President Obama and the Democrat Socialist controlled Congress just spent $3 Billion of deficit spending on the Cash for Clunkers Program to stimulate auto sales. On the surface this sounds like a good idea until the law of unintended consequences kicks in which politicians never seem to understand. First, 4 out of 5 new cars purchased under this program were either Toyota's or Honda's. The Ford Focus came in as number 5. It is interesting to note that the one American car company that seems to be winning is Ford, that took no bail out money, not GM or Chrysler that filed for bankruptcy. In any case, who can blame consumers? Toyota's and Honda's are great cars that hold their value. And, many of these cars are made in the US anyway so in that sense it is good for America even though the profits are going to Japan. As a free trader that doesn't bother me because in the end the money will recirculate anyway. What is important though is that consumers rejected government motors, GM and Chrysler in a big slap in the face to Obama; their CEO.

But this program is actually going to cost more jobs than it creates. Think about it. Those clunkers that have been destroyed as a requirement of this program require more repairs. Repairs involve new parts. So now the mechanics that fix cars lose jobs. And, the guys that make the parts some of whom work in the US lose jobs too. Finally, analysts now say that this program will cause the price of used cars to go up. This is not good news for the poor, who buy these older cars to go to work and/or for young people who often go off to college or work in these used cars.

So President Obama just borrowed $3 billion from the Chinese and other foreigners for the Cash for Clunkers Program and it will probably result in job losses in the US. It would be nice if these left wing politicians would think through the ultimate consequences of their actions. Cash for Clunkers was dumb, dumb, dumb. If they were going to waste government money, it would have been smarter to provide all car buyers a $2,000 cash credit for buying any new car without the requirement that the old car trade-in be destroyed. If the Obama whiz kids had done so, twice as many cars would have been sold for the same amount of government spending. Oh I forgot, Cash for Clunkers was supposed to be social engineering to get gas guzzlers off the road. I suspect many of these cars would have been gone anyway in the next few years and the government would not have had to spend a dime. Oh well, it's only money; a billion here, a billion there; but whose counting; clearly no one in the White House.

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