With the passage late last week of a bailout for the “Cash for Clunkers” program, it would be appropriate to remind you that I thought it was a boondoggle in the first place. Once again, both of our local Congressmen voted for our government’s newest entitlement – the “right” to have a government subsidy to help you purchase a car.
Again, we have a situation where the market is bent to assure a particular outcome. You can’t get this on just any car; the car has to reach a certain fuel mileage standard so if you happen to want a larger vehicle for a good-sized family you may find yourself out of luck.
And it wouldn’t be surprising that after this (now) $3 billion is gone that future incarnations of the CARS program will create more exclusions, both for fuel mileage and for manufacturing point. I’m waiting for some Rust Belt Congressman like my onetime so-called representative Marcy Kaptur of Ohio’s Ninth District (a truly bleeding-heart liberal if I ever saw one) to change the program to only accept American-made cars. We need to bail out the UAW even more after buying up Chrysler and GM for their use and shafting the former bondholders.
However, even at the $4,500 per car taxpayers fork over to auto purchasers that $3 billion will only pay for around 660,000 new sales – hardly a dent in the multi-million vehicle shortfall between calendar year 2008 sales and sales so far this year. This means that in the minds of lawmakers the only way to bring sales back would be to ramp up the CARS program even more – if $3 billion won’t do it, their reasoning goes, why not $30 billion?
Of course, by Fedzilla picking winners there has to be someone who loses. Welcome to the plight of the used car dealer and the salvage yard. Michael Laprarie at Wizbang writes (h/t Atlas Shrugs):
By all counts, it appears that the Obama Administration’s good-hearted attempt to decrease domestic fuel consumption has critically wounded both the used car and auto salvage businesses. The government will not reimburse car dealers for the cash for clunkers bonus unless the dealer can prove that the trade-in car has been destroyed, so dealers must destroy the cars, which leaves the dealers with no other way to recover their clunker rebates if the government reimbursements don’t come through (or come through soon enough — and no, the government has absolutely no concept of “cash flow”). While many of these trade-ins probably are “clunkers,” the destruction of these trade-ins means that thousands of potentially good used cars will never be available for resale. And auto salvage operators are left with no choice in the matter; their primary source of income (salvaged engines) has been destroyed by government fiat.
Thus, for every job which may be “saved” at a UAW plant, there’s one or two lost at the salvage yard or the used car dealership. And remember, used car dealers make their living selling the dealer trade-ins so if there’s no trade-in their supply is limited – in turn, that drives the used car supply down and the prices up. Of course, then those in the market for a car who can’t afford a reasonably decent used car that’s a few years old will demand the same government subsidy their neighbor got when he bought his little Ford Focus – and the destruction of the free market will continue apace.
And people wonder why there’s the movement against Obamacare?
On a personal note, I happened to look and this is monoblogue’s 1500th post spanning its 44 months (and one day) of existence. It’s nice to reach milestones like this and reflect back. Hopefully as the next 1500 posts are placed on here the country will return from the brink it’s teetering on and revert to a more Constitutional government, where Fedzilla knows its place!
