Cash For Clunkers, Government Boondoggle

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"Cash for clunkers" is a great example why the government is not capable of running the health care system. The clunker program offers up to $4500 for your low gas mileage, less than 25-year old car.

When you trade in your gas-guzzler the dealer advances the $4500 credit, destroys the car, and bills the government. This is where the wheels come of the program. One dealer said it took five hours to fill out the paperwork for one clunker. Truth number one: Government runs on paperwork. So much for streamlining health care claims processing, and squeezing all those legendary "inefficiencies" out of the claims process.

The "cash for clunkers" program was funded with $1 billion and projected to run until November 1. After one week, they are out of money. This teaches us the government has no idea what anything is going to cost, they guess. Sometimes worse than a kid on a playground.

The "cash for clunkers" program was going to take gas-guzzlers off the road and replace them with fuel-efficient cars that would help reduce gasoline consumption. The problem was that most of the fuel-efficient cars are built by foreign manufactures.

The biggest winners will be foreign manufacturers. Same with national health care. Chronically uninsured American Citizens count about 9 million, less than 3.3% of U.S. population. The uninsured rate for illegal aliens is almost the reverse. According the Pew Hispanic Center, illegal aliens counted 11.9 million in October 2008.

The primary purpose of "cash for clunkers" was fuel mileage. The truth is, not really. You can qualify for a rebate by trading in a pickup that gets 17 miles per gallon for a car that gets 21 miles per gallon. That is going to make all the difference in the world. If you want a Crown Victoria, it automatically qualifies you for $4500, plus your kids won't ride with you anymore.

One last observation on the "cash for clunkers" program. What economist believes destroying property is a good thing? Every "clunker" traded in has to be destroyed. Removing products from the market while they still have economic life destroys value, thus a drag on the economy. This program is counter-productive. We borrow money to destroy value! If this made sense, why didn't we level every foreclosed home in the U.S?

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John Dalt has 1 articles online

John Dalt writes about the stock market daily for online investors. His MarketToday e-letter is sent to subscribers of galtstock. You can subscribe at http://www.galtstock.com

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Cash For Clunkers, Government Boondoggle

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This article was published on 2010/03/30
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