Jul 31 2009
President Obama’s One Successful Stimulus Idea Goes Bankrupt
I am not a fan of the “Cash for Clunkers” government giveaway. We all should have been given the opportunity to save our tax money and apply it to buying a new car. The fact only people with older or larger cars got the hand out is another classic case of government playing favorites, which I believe is unconstitutional.
In any event, this unconstitutional idea turned out to be the only successful idea the Obama administration had for stimulating the car market and economy because it has already gone bankrupt due to its own success:
The Obama administration is telling lawmakers that its much-touted “cash-for-clunkers” program is already running out of money, according to three Senate aides familiar with the discussions.
The program — aimed at giving at boost to the U.S. auto industry — was supposed to expire at the end of October. But in the one week since it took effect, it appears to have run dry of the $1 billion allocated to it, aides said Thursday.
The Obama administration had told senators that the program would be suspended at midnight Thursday, aides said, but a White House official told POLITICO that the administration is “working tonight to assess the situation facing what is obviously an incredibly popular program. Auto dealers and consumers should have confidence that all valid CARS transactions that have taken place to-date will be honored.”
Why was this market driven stimulus given such a small, insignificant place in a $787,000 billion stimulus package (FYI – thats .00013%)? Because the stimulus package is a liberal disaster built on the idiotic premise that government spending, not the free market, can create jobs and pull us out of this Great Recession. Where would the auto industry and its workers be today if this plan had some serious funding to it? Where would this economy be today if the rebate was a tax rebate for all Americans?
It would be in a lot better shape. Instead we got a failed liberal fairy tale about the magical powers of a sluggish and constipated federal bureaucracy riding to the rescue. Think about this. The federal spending for job creation has not even really started, it has spent less the 1% of the money that was supposed to go to job creation 5 months after it was enacted. And many of those jobs are a joke:
How much are politicians straining to convince people that the government is stimulating the economy? In Oregon, where lawmakers are spending $176 million to supplement the federal stimulus, Democrats are taking credit for a remarkable feat: creating 3,236 new jobs in the program’s first three months.But those jobs lasted on average only 35 hours, or about one work week. After that, those workers were effectively back unemployed, according to an Associated Press analysis of state spending and hiring data. By the state’s accounting, a job is a job, whether it lasts three hours, three days, three months, or a lifetime.
But the miniscule part of the stimulus plan which is market driven runs through its budget in ONE DAMN WEEK!
Hello! Is there anybody in DC paying attention!
Update:Â More bad economic and jobs news, something we will be getting a lot of through the end of this summer of ’09:
More than 90 percent of the nation’s largest metropolitan areas saw their unemployment rates climb in June from the previous month.
…
Unemployment rates rose from May to June in 348 of more than 370 metro areas, according to an Associated Press analysis of Labor Department data released Wednesday.
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The Labor Department does not provide seasonally adjusted metro area unemployment data. It does adjust the national unemployment rate for seasonal factors. The U.S. jobless rate, which hit 9.5 percent in June, is expected to rise to 9.7 percent when the department reports the July rate next week.
We are spending ourselves into $1.85 trillion worth of debt this year (see chart below), yet the one successful program was 185,000th of that massive, generational debt. DC needs to be cleaned out, top to bottom, left to right.
Update: Allah Pundit over at Hot Air has similar thoughts about the teaching moment here. Allah Pundit also links to a way to game the system and get that Corvette of your dreams!
[…] about Politico as of July 31, 2009 President Obama’s One Successful Stimulus Idea Goes Bankrupt – strata-sphere.com 07/31/2009 I am not a fan of the “Cash for Clunkers†government giveaway. […]
“Cash for Clunkers” should have been applied to Democrat Congressmen, not old cars.
So people are loosing jobs, homes, medical insurance, savings and you give away $1 billion of my hard earned money so SOME can buy new cars? And you’re proud of how successful the program is?
Oh please, a big give away government. It makes me sick!
I can’t disagree that perhaps the government shouldn’t be incentivizing car purchases, but the fact remains that this $1 billion is doing far more for the private sector than the other 750 billion or so in “stimulus” that was aimed at the public sector.
There will be somewhere around 250,000 new vehcile purchases, no doubt saving jobs at both the dealership, and manufacturer supply chain levels, not to mention inventory replacement. Including interest on loans, roughly $7.5 billion in economic activity has been realized, with a multiplier effect down the road.
I think the value of “Cash for Clunkers” for us fiscal conservatives lies in the teaching moment it provides, clearly illustrating the folly of Obama’s stimulus plan, which had most of the money targeted to ACORN, and other public sector entities. The Obama “stimulus” was seemingly hell-bent on avoiding the private sector. Perhaps road building will have some benefit to the private sector, but the overwhelming majority stimulated government, not the private sector.
We should not fail to point out how tax cuts would have a similar stimulative effect, because they would target the private sector as “Cash for Clunkers” has.
There is a long term problem with the idea behind “cash for clunkers” programs – and it is the same problem the auto companies ran into with the zero finance options that got popular before they augured into the dirt.
It is this – an incentive program like this grabs potential demand from the next several quarters and advances it into this one. Yes, it increases sales, but it does this by borrowing from future sales. These older cars being traded in would all have been replaced at some point in the near future; the CARS program gave people an incentive to make that replacement now.
Therefore, short term demand goes up but long term demand goes down. And worse; all of the money to create this short term pop in demand comes out of the government deficit, which is going to come back out of the economy at some point. If this money is spent to create new jobs and new investment it may be worthwhile; but if it just serves to keep short term numbers up it is probably not a long term positive.
If you really wanted to help people, why not give everybody who has no health insurance $4,500 to buy it? To buy a car, a car? A car is more important then keeping a home, health insurance, paying down debt. Another temporary fix for a really sick economy. Does anyone think long term. How many of the people with clunkers can really afford a new car. I have a clunker because I can’t afford to borrow for a new car, even if I had $4,500. How many of these people will default on this loan?
[…] President Obama’s One Successful Stimulus Idea Goes Bankrupt […]
If you really wanted to help people, why not give everybody who has no health insurance $4,500
kathie
This health plan is not about health or ins. It is about control. How better to control the population than with withholding or giving the OK for treatment? And from what I have read they will even be able to draft your bank accounts and meddle in your financials. Plus this is just another effort on Obama’s part to push government into the private sector.
Let’s just put aside Obama’s motives for the moment, still the people whom he wants to help are the very same people in inner cities who don’t benefit from our educational system, or clinics, who they say have crummy teachers, and clinics who have crummy doctors. I don’t think for a moment these very same people are going to get the kind of care that Teddy Kennedy got, even if we put a trillion dollars into the system. And in enacting the proposals that the House is proposing will bring every body down to an unacceptable standard. We need a robust privately insured population to help support our medical community and those who will never help themselves, no matter how much we beg them to take care of themselves.