The one thing we can never get enough of is love. And the one thing we can never give enough of is love.
Henry Miller
"Cash for Clunkers" Revisited: The Law of Unintended Consequences
Consider the following chart of year-over-year used car prices from Edmunds:
We would need more information than these data to draw conclusions; for example, a saturation of used cars during the clunkers program could have had dampening effect on used car prices, and there probably has been a reduced supply of larger SUV's or other high-price vehicles, say coming off lease or rental car companies. It could also reflect changes in consumer behavior; for example, some people who would normally in the new car market are looking to save money because of the fragile economy and bidding up the prices for used cars, or maybe consumers are trying to save money by holding onto their vehicles longer and hence there aren't as many trade-ins available. And, of course, the clunkers program intentionally retired some vehicles which contributed to a reduced supply. To some extent, I expect steadier gas prices, enabled by suppressed demand, has renewed demand for cars that did not sell well during the oil squeeze in 2008. (I should note that consumers piling back into fuel-thirsty vehicles may find themselves regretting their decision. Barack Obama has not supported a goal of national self-sufficiency in fuel production.)
The point is--the "Cash for Clunkers" program created unnecessary distortions and uncertainty in the market segment. The policy goal (of stimulating the purchase of more fuel-inefficient cars) was poorly conceived and executed; it had a limited-term period, which was unfair for people not in the market to purchase new vehicles at the time and did zero to contribute towards the alleged fuel efficiency push after the program expired and/or ran out of money. Others got a tax credit for a car they were planning to purchase anyway, which means the tax break was an unnecessary giveaway by a trillion-dollar deficit government. Why is it the year after we hit $4.50 a gallon in gas, we needed the government to throw money at us to purchase marginally more fuel-efficiency vehicles? Shouldn't the operational savings of more fuel-efficient cars serve as an intrinsic purchasing factor?
What did this policy do to motivate automaker behavior? They had limited production lines for the temporarily popular, artificially-inflated consumer demand for more fuel-efficient cars. These business executives know better than to permanently raise production of vehicles whose sales may slump after you take away the limited-availability spiked federal punch, made possible without the informed consent of future taxpayers. All the progressive Democrats did was to enable producers to protect their margins on more fuel-efficient vehicles in a challenging economy.
What should the Democrats have tackled? More serious issues like a regressive fuel tax used to cover the costs of public transit ways. Do the Democrats expect cash-strapped young adults, just out of school possibly with large loans to pay off, or lower-income Americans to purchase $40K Chevy Volts? Chances are, they'll purchase a used car and/or live in apartments without electrical outlets in parking areas (I know I did). Why should they pay the fair share of highway costs of Volt owners? We need to have some way of providing a more equitable tax policy, e.g., a tax on relevant car batteries. To be sure, progressives would quickly scotch such an idea since they want to reward those yuppies buying Volts with the progressive bumper sticker: "We did our part" (to do the politically correct green thing...)
The fact is that progressive Democrats zealously guard their politically favored tax breaks without equal protection with the same fervor they criticize in terms of conservatives wanting to protect the political compromise underlying the Bush tax cuts. We've seen this kind of one-sided political response before: for example, Barack Obama seriously undermined the political compromise underlying 2007 immigration reform by helping to knock out two crucial Democratic concessions in terms of a temporary work visa program and more emphasis on merit-based criteria, e.g., knowledge of English, professional credentials, entrepreneurial skills, etc.
Speaking of Another Progressive "Badge of Honor"...
You know that government Medicare commercial starring an elderly Andy Griffith? He, just like Speaker Nancy Pelosi, have some nice surprises for senior citizens in the progressive facelift of government healthcare. Now any senior citizen who believes, with doctors currently subsidizing most of the elderly on Medicare, that hundreds of billions of dollars of Medicare cuts underwriting the current government expansion in health care isn't going to affect accessibility and quality of health care, he or she is in a state of denial. No, in fact Andy wants to sell them on "free" annual checkups. Do people seriously believe that checkups are no cost? I'm not arguing against the fact that early diagnosis of a catastrophic health condition will more than pay for itself, not just in terms of treatment, but also in extending affected patient lives. But doctors have bills to pay; it's like trying to squeeze a balloon. If they can't charge you for checkups, they have to mark up other services.
But of particular interest to conservatives is a point that Republicans constantly raised--fraud. It's sold, of course, as protecting senior citizens from fraud--not the taxpayer. Why did it take government operations decades to discover fraud when security is an obsession for American banks and other businesses? You might as well ask why it took the government years to discover duplicates in social security numbers or why the government was mailing stimulus checks to dead people...
I have another program in mind--the much-typed $5B weatherization program under the stimulus bill, which Vice President Biden promoted, once again, this week. Now why the federal government needs to subsidize something to do something that people should be doing out of their own vested interest to hold down energy costs, I'm not sure. There's some vaguely fleshed-out notion that lower-income people can't get the financing to do weatherization without government meddling, despite the fact that electric/gas and home heating costs take a significant bite out of their budgets. Where does it end? Perhaps lower-income people don't get home security systems, flood insurance, pest control services, home repairs, etc.
There does seem to be some rationalization of promoting a green agenda in terms of energy self-sufficiency and national and economic security. In fact, I am very concerned about a shortfall in terms of America's energy imports and the prices of these imports are artificially low given the cost of the nation's military to guarantee safe transit from America's suppliers. But weatherizing one home at a time, at the expense of the overextended American taxpayer, just like the Obama Administration propping up with borrowed money boutique energy sources which altogether account for single-digit percentages of American energy production, is a weak, ineffective way to get to the goal of energy independence. I have no issue with the basic concepts of energy conservation, but I believe that the most effective path to get there is by unleashing the power of the private sector with regulatory streamlining and more globally competitive tax rates, not the ineptness and glacial slowness of the government conglomerate.
The weatherization program is a good example to make my point. Last February, the GAO reported that only 9000 out of a projected goal target 593,000 homes due by March 2012, at a first year expenditure of roughly half a billion dollars. Biden now indicates that nearly a third of the homes had been retrofitted, but there have been a number of problems reported, including spending delays, mismanagement, and inefficiencies cited by auditors and experts, no homes in Alaska to date have been retrofitted, Delaware's program has been suspended since May because of suspected fraud, Texas' largest program contractor had been cited for shoddy work on over half of the jobs it has completed, and California's inspector general found dozens of contractor employees caulking homes had not been trained.
It sort of reinforces the American taxpayer's faith in the competence of progressive government, don't you think? I'm sure the Democrats will find some way to try to blame all of this on George W. Bush.... In the meanwhile, I don't have a warm and fuzzy feeling about retired Sheriff Andy Taylor's assurance that the Obama Administration is on top of Medicare fraud; in fact, I'm sure defense attorney Ben Matlock would find some way to get his clients off.
Political Humor
Still more originals:
- Remember when, at the height of the Bee Gees' popularity and saturation of the airwaves, WXLO had a "no Bee Gees" weekend? I'm still waiting for my first "no Barack Obama" weekend....
- Democratic politicians are like teenagers, their dads and money: the candidates like Obama's fundraising, but would rather not be seen in public with him....
Musical Interlude: The American Songbook Series
Rosemary Clooney, "You Make Me Feel So Young"
