The Obama Administration and your Congress funded the "Cash For Clunkers" stimulus program to spur new car sales. They funded it with $1 Billion dollars. Some group of bureaucrats wrote the rules for the program such that when a person trades in a used vehicle that gets poor mileage, they will receive $4,500 credit for that car.
But, after the first four days of the program's life, Washington announced that the program was so "successful" that it would run out of money...money that was supposed to last 90 days.
This program's rules and fine print are enough for ten negative articles. Rules like disposal of the clunker and filing the required forms are Orwellian. But today let's take the view from 30,000 feet instead of using just the ground-level look.
The five most salient points are:
1. This law is unconstitutional. Nowhere in the Constitution does it authorize Congress to spend money helping citizens to make purchases of anything. The law is clearly treason against the Constitution, and those that voted for it and He who signed the bill into law should be prosecuted for that treason.
2. The stimulus is artificial. It does not come from the needs of consumers, but creates a desire for a new car. I would argue that few of the buyers of new cars under the program actually "needed" a new car. They already had a car. Sure, it might have gotten somewhat poor mileage. But buyers of SUVs don't usually consider mileage in their buying decision. Passenger safety is their number one consideration when buying an SUV. The statistics coming out of the "Cash For Clunkers" program tell us that the most traded vehicle is the SUV, and the most purchased car is the Ford Focus. So, the government is skewing the marketplace to its own desires.
3. My understanding is that the "Clunkers" must be destroyed, not resold. So, a perfectly good automobile is sent to the crusher. Can't be resold, can only be used for some special parts. Stiff fines are assessed for dealers who sell the vehicles instead of crushing them. The circle of stupidity is complete. The economic loss for the clunker is 100%. The most uneducated child in America would instinctively understand that destroying the clunker is bad for business.
4. Destroying the clunkers will remove hundreds of thousands of used cars from the market. It will remove millions of auto parts from the market. Consequently used car and auto parts prices will go up. Lower income people don't buy new cars, they buy used cars (but so do I). They also repair their cars with used auto parts. So, this program hurts the poor.
5. Washington is encouraging debt...again. In the real estate bubble, federal law encouraged...even forced...lenders to lend to those of questionable ability to repay the loans. Washington is doing it again in the Automobile industry. They have created a new bubble, albeit a short term one. The very problem of taking on more debt instead of paying off debt and increasing savings is completely ignored by Washington. Did I say "ignored?" No, Washington has purposefully rejected fiscal responsibility, since it would be hypocritical for them the promote a philosophy they summarily reject.
"Cash For Clunkers" is yet another government program that harms American citizens. All the more reason to secede from the United States of America.
