Thousands of people are rushing to get in on the Cash-for-Clunkers deal from Washington that pays them up to $4,500 to trade-in an old gas guzzler for a shiny new fuel-efficient car or truck. Dealers love it because it brings people they haven't seen for years back into their showrooms.
Customers love it because $4,500 is a good chunk of "free" money.
Much to the chagrin of many, however, it was announced yesterday that the response on the part of buyers has been so over-whelming - more than $850 million of the $1 billion made available was spoken for in a mere four days! - that the program is being temporarily suspended out of fear that it will run out of money by the weekend.
But don't despair! Washington politicians absolutely love programs like Cash-for-Clunkers, though for reasons quite different from those behind the enthusiasm of dealers and customers. That is why the temporary suspension of the Cash-for-Clunkers program almost certainly will be used as an opportunity ot convert the program from temporary economic stimulus to permanent federal entitlement.
Here are five reasons why Washington politicians cannot resist making Cash-for-Clunkers permanent:
Buying votes with tax dollars: Anytime Congress and the White House see an opportunity to take tax dollars and give them to somebody who can vote, they will do it, regardless of which party is in power. In a $3.4 trillion annual federal budget, the $1 billion for Cash-for-Clunkers might seem like a drop in the bucket. Oh ye of little understanding! The politicians have a billion reasons for why that is the wrong way to look at it.
You take our cash, you get our strings: Mannah from Washington always comes wth strings, like the 15 pages of regulations telling dealers how they must dispose of the trade-ins. Plus, NHTSA must approve every single Cash-for-Clunkers deal. So, right from the get-go, the government is telling the buyer and the seller what they must do to get their hands on the moolah. Washington politicians and bureaucrats are constitutionally incapable of resisting such an opportunity to expand their power and perogatives over the rest of us.
The timing is perfect: We're in a recession. Carmakers, suppliers and dealers are in a depression.
Folks want positive economic news. In less than a week, Cash-for-Clunkers injected new spark to justify more government spending to stimulate the economy. Strike now while voters are more open than they will ever be to the idea of making a temporary measure permanent.
Washington money is like crack cocaine: All it takes is a few puffs and, friend, you are hooked.
You can be certain that dealers are this very morning burning up the phone and email lines to their congressmen begging them to keep the Cash-for-Clunkers bonanza alive. But addicts always put off the misery of withdrawal, right? Making the program permanent means no withdrawal.
Nobody gets the full truth about Cash-for-Clunkers from the liberal media: We get two themes - Happy dealers and buyers getting new cars and trucks, and worried dealers wondering what will happen when the program ends. You can be sure that the real cost to the taxpayers, the transitory economic stimulus it provides, and the reality that the most severe consequences will fall on low-inome people will not find their way to the front pages.
And if you doubt that last point, check out this superb article in National Review by veteran Detroit correspondent Henry Payne.
UPDATED: House approves $2 billion to continue Cash for Clunkers
Never let it be said Congress can't move quickly when there are tax dollars to be handed out! The House this morning approved legislation providing an additional $2 billion for the Cash for Clunkers program. The added funds will come from previously approved economic stimulus money. The Senate is expected to act on the bill early next week and President Obama will sign it.
To put the priorities at work here, consider how that $2 billion compares with the following amounts of federal funding in 2008 for medical research:
Breast cancer early detection $54 million
Breast cancer treatment $169 million
Breast cancer prevention $24 million
Alzheimer's Disease $2 million
Arthritis $1.7 million
Childhood cancers $189 million
Down Syndrome $955,504
Diabetes $8.5 million
Multiple Sclerosis $457,000
Muscular Dystrophy $302,000
Tropical diseases $8 million
To view the complete list from which these data were taken, go here.
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