Obama and the Dems got to test the effects of Obamacare--with "Cash for Clunkers"
Conservatives have been enjoying the entertainment that is the ghastly roll-out of Obamacare, with its utterly unconstitutional changes to the law's provisions, by imperial decree. And suddenly it occurred to me: this isn't the first time the Democrats rushed a catchy but astonishingly dumb proposal into law. The only requirements were that it sound good, give away taxpayer funds to participants, and pay lip-service to the goal of "reducing income inequality."
The press called the program Cash for Clunkers, and it offered "vouchers"--i.e. government money--for $2500 to $4500 for people willing to scrap a perfectly fine older car and buy a new one that got better gas mileage.
As far as can be determined, the idea started in July of 2008 with an op-ed in the NY Times by economist Alan Blinder. Blinder argued that the program would "help the environment, stimulate the economy, and reduce income inequality." [quote from Wiki]
Left-wing outfits absolutely loved the idea. In November of 2008 the Center for American Progress distributed a letter to congresswhores describing these three fabulous benefits of a cash-for-clunkers program. Democrats and a few Rino's jumped in, and on June 16th, 2009 it was approved by congress and rushed to Obama's desk, by rolling it into a "supplemental war-funding bill"--universally considered to be a "must-pass" bill. Most Repubs opposed it, but of course they didn't have a majority, and a week later Obama signed it into law.
If the very short time between concept and signing into law, or the support of so many left-wing outfits like the Center for American "Progress," ring any alarm bells for you, congratulations. There was little critical evaluation of the idea, and the main debate was over relatively trivial details: should the traded-in car have to get less than 17 mpg or 18?
If the lack of time to evaluate isn't alarming enough, consider that the program was to start giving its first "rebates" just eight days after Obama signed it into law.
Again, there simply wasn't enough time to think the thing through--not that doing so would have made a bit of difference in the outcome.
This was one of those many bills that the Democrats were determined to pass so they could be seen as helping their king "fundamentally transform" this country. It said all the right words--environment, economic stimulus and reducing income inequality--so no Democrat was ever asked to explain how it was supposed to actually accomplish any of that.
But no matter. Cuz, if you're a Democrat all that matters is that you have good intentions.
Congress initially appropriated a cool Billion dollars for this lemon. That ran out in a month, so they added another two billion. In all the program lasted four months and resulted in 690,114 "dealer transactions."
So the program resulted in 690,000 sales, at an average cost of $4,169 per sale. (Interestingly, a study at the University of Delaware later managed to conclude that the actual "net cost" of the program was under half that figure. One would be interested to know...nah, never mind.)
But aside from the huge cost--and 690,000 presumably lucky buyers--did the program do anything good? Not surprisingly, analysts found that car sales were depressed in the four months after the program's end, and total car sales for the 12 months starting just before the program began were almost unchanged from the same period a year earlier--suggesting that the program simply shifted sales that would have happened anyway to a slightly earlier date.
As for the environment: No one disputes that the cars purchased got better gas mileage than the ones traded in (24.9 mpg vs. 15.8), but it takes a very large amount of energy to make a car, and one group claimed the energy needed would offset the reduced gasoline use almost completely.
An even sadder thing was that to prevent trade-in cars from getting back on the road with a new owner, the regulations implementing the law required that the engines of the trade-ins be "rendered inoperable"--i.e. destroyed. See, if they didn't do this, the environmental groups would be pissed, since the bill wouldn't actually be taking a "gas-guzzler" off the road. And the enviros were *big* supporters of Democrats and Duh Won.
The engines were destroyed by pouring essentially sand in them and running them until they seized up.
Unless you've worked with engines and cars you might not understand the outrageous waste--the insanity--of this demand. Imagine that Leftists decided the U.S. had too many people, and managed to pass a law demanding that any of your kids who couldn't run a six-minute mile had to be euthanized and you'll get the idea.
Economists also noted that by removing 690,000 used cars from the marketplace, prices for all used cars nosed upward after the program. So the program ended up costing low-income car buyers money!
In summary: A feel-good law was rushed through congress, rammed into law with little debate, cost taxpayers $3 billion, didn't do anything for total car sales, and ended up raising the price of used cars.
And with that marvelous practice run under their belts, Obama and the Dems took up nationalized health insurance.
===
Postscript:
Do this enough and you'd theoretically get a booming economy. It follows that the way to get an economy booming is to hire lots of kids to throw rocks through windows!
Wait, you say something doesn't seem quite right about that? You say that even though you can't dispute any of the recitation, something just seems 'off' about it?
Congratulations. Bastiat agreed, and did a fine job of exposing the flaw in the "reasoning." (Click on the link if you're curious.)
But geez, that was 163 years ago! Nothing that was true then could possibly apply to a modern society like ours, right? I mean, did the U.S. even exist back then?
Good point. Certainly Paul Krugman believes that forcing companies to spend billions complying with new regulations is a great way to get an economy going. And you've gotta believe Krugman cuz, you know, he writes for the NY Times. And he got a Nobel prize. Which I'm sure he deserved just as much as our dazzling king deserved his--which, you may recall, was a Peace prize.
The press called the program Cash for Clunkers, and it offered "vouchers"--i.e. government money--for $2500 to $4500 for people willing to scrap a perfectly fine older car and buy a new one that got better gas mileage.
As far as can be determined, the idea started in July of 2008 with an op-ed in the NY Times by economist Alan Blinder. Blinder argued that the program would "help the environment, stimulate the economy, and reduce income inequality." [quote from Wiki]
Left-wing outfits absolutely loved the idea. In November of 2008 the Center for American Progress distributed a letter to congresswhores describing these three fabulous benefits of a cash-for-clunkers program. Democrats and a few Rino's jumped in, and on June 16th, 2009 it was approved by congress and rushed to Obama's desk, by rolling it into a "supplemental war-funding bill"--universally considered to be a "must-pass" bill. Most Repubs opposed it, but of course they didn't have a majority, and a week later Obama signed it into law.
If the very short time between concept and signing into law, or the support of so many left-wing outfits like the Center for American "Progress," ring any alarm bells for you, congratulations. There was little critical evaluation of the idea, and the main debate was over relatively trivial details: should the traded-in car have to get less than 17 mpg or 18?
If the lack of time to evaluate isn't alarming enough, consider that the program was to start giving its first "rebates" just eight days after Obama signed it into law.
Again, there simply wasn't enough time to think the thing through--not that doing so would have made a bit of difference in the outcome.
This was one of those many bills that the Democrats were determined to pass so they could be seen as helping their king "fundamentally transform" this country. It said all the right words--environment, economic stimulus and reducing income inequality--so no Democrat was ever asked to explain how it was supposed to actually accomplish any of that.
But no matter. Cuz, if you're a Democrat all that matters is that you have good intentions.
Congress initially appropriated a cool Billion dollars for this lemon. That ran out in a month, so they added another two billion. In all the program lasted four months and resulted in 690,114 "dealer transactions."
So the program resulted in 690,000 sales, at an average cost of $4,169 per sale. (Interestingly, a study at the University of Delaware later managed to conclude that the actual "net cost" of the program was under half that figure. One would be interested to know...nah, never mind.)
But aside from the huge cost--and 690,000 presumably lucky buyers--did the program do anything good? Not surprisingly, analysts found that car sales were depressed in the four months after the program's end, and total car sales for the 12 months starting just before the program began were almost unchanged from the same period a year earlier--suggesting that the program simply shifted sales that would have happened anyway to a slightly earlier date.
As for the environment: No one disputes that the cars purchased got better gas mileage than the ones traded in (24.9 mpg vs. 15.8), but it takes a very large amount of energy to make a car, and one group claimed the energy needed would offset the reduced gasoline use almost completely.
An even sadder thing was that to prevent trade-in cars from getting back on the road with a new owner, the regulations implementing the law required that the engines of the trade-ins be "rendered inoperable"--i.e. destroyed. See, if they didn't do this, the environmental groups would be pissed, since the bill wouldn't actually be taking a "gas-guzzler" off the road. And the enviros were *big* supporters of Democrats and Duh Won.
The engines were destroyed by pouring essentially sand in them and running them until they seized up.
Unless you've worked with engines and cars you might not understand the outrageous waste--the insanity--of this demand. Imagine that Leftists decided the U.S. had too many people, and managed to pass a law demanding that any of your kids who couldn't run a six-minute mile had to be euthanized and you'll get the idea.
Economists also noted that by removing 690,000 used cars from the marketplace, prices for all used cars nosed upward after the program. So the program ended up costing low-income car buyers money!
In summary: A feel-good law was rushed through congress, rammed into law with little debate, cost taxpayers $3 billion, didn't do anything for total car sales, and ended up raising the price of used cars.
And with that marvelous practice run under their belts, Obama and the Dems took up nationalized health insurance.
===
Postscript:
Hey, that "Cash for Clunkers" thing was so amazingly clever! Why don't we Dems try it again? But we've already done cars, so let's try...oh, say, houses. A huge part of the economy depends on the housing market, which is sorta depressed, right? So why not pass a law that demands that cities bulldoze, say, 10,000 old, inefficient homes in every big city? Then we'll give the owners free money to build new, more energy-efficient ones!This has actually been proposed by lots of goofy economists. It was analyzed and discredited way back in 1850 by one Frederic Bastiat. It's called the "broken-window fallacy," and it uses the same principle as the example above: When someone accidentally breaks a shopkeeper's window, either the shop owner or the parent of the wayward kid pays to have it replaced. Conventional thinking is that this gets money circulating.
Hey, it's win-win: stimulates the hell out of the economy, better for the environment, and reduces the effects of income inequality! Let's move on this!
Do this enough and you'd theoretically get a booming economy. It follows that the way to get an economy booming is to hire lots of kids to throw rocks through windows!
Wait, you say something doesn't seem quite right about that? You say that even though you can't dispute any of the recitation, something just seems 'off' about it?
Congratulations. Bastiat agreed, and did a fine job of exposing the flaw in the "reasoning." (Click on the link if you're curious.)
But geez, that was 163 years ago! Nothing that was true then could possibly apply to a modern society like ours, right? I mean, did the U.S. even exist back then?
Good point. Certainly Paul Krugman believes that forcing companies to spend billions complying with new regulations is a great way to get an economy going. And you've gotta believe Krugman cuz, you know, he writes for the NY Times. And he got a Nobel prize. Which I'm sure he deserved just as much as our dazzling king deserved his--which, you may recall, was a Peace prize.
posted by SF at
9:17 PM
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