Good Evening All! I apologize for the unplanned evening off last night. I am currently down with my son visiting my father and grandmother. It is a trying time here. My grandmother is quite ill. We are down to that time when she can go anytime, and where every minute spent with her is precious. She had not seen my son (her great grandson) in 3 years. At the rate he is growing, that means she hasn’t seen him in about a foot and 40 pounds! She was amazed to see how big he has gotten (only 3 inches shorter than his dad now). Needless to say, this week is all about her. When she is up and lucid, I am there. That is not a plea for pity. Believe me there is no need to pity me. I have had my grandma for 40 years, and that is more than many get. And I have never missed an opportunity to see her or to tell he that I love her. So I have no regrets on my relationship with her. But it is meant to help you all understand why writing may be hit or miss the rest of this week.
But on to my topic for the evening! I have been chuckling all week at this “Cash for Clunkers” debacle the federal government, in all its wisdom, has offered up as a fine example of how they do things. For anyone who is not aware of the program, it is a trade in program the government came up with to help spur some life into the automobile industry while simultaneously converting some people out of the gas guzzling old cars that they have. Officially called the Car Allowance Rebate System (CARS), the program offered between $3,500 and $4,500 worth of rebates towards the purchase of a new fuel efficient car. Buyers of new cars and trucks that get 10 mpg better than their trade-ins get the $4,500 rebate. People whose cars get between 4 mpg and 10 mpg better fuel efficiency qualify for a smaller $3,500 rebate. The program was allotted $1 Billion and, according to the official website, was slated to run until November 1, 2009, or whenever the money ran out, whichever comes first.
Well, whenever the money ran out came a lot quicker than the government planned. In just its first week, the program is out of money, and plagued with problems. In my opinion, this is evidence of both a vast success and a massive failure. According to which side of the aisle you sit on in Washington, the view seems particularly different.
First the success side of the aisle, the Democrat perspective. There seem to be no doubt that the programs achieved some of the intended targets during the first week. According to Transportation Secretary Ray LaHood, the difference between the average mileage of new vehicles purchased through the program is 9.6 miles per gallon higher than for the vehicles traded in for scrap. LaHood also said 62% of the traded-in vehicles were trucks and “these people are buying cars that get much better gas mileage.” The government is claiming that the program has already been utilized for the purchase of over 250,000 vehicles.
So there is certainly some positive information out there. However, former FED Chairman Alan Greenspan noted that the automobile industry was already starting to see some positive signs and pick up even before the program went into place and started being used. However, Greenspan noted, the activity in the first week certainly shows what would appear to be increasing confidence in the state of the economy in general. The fact that folks are willing to spend money on vehicles, rebate or not, show a strengthening consumer confidence.
Rebublicans, as expected when referencing any program that Democrats passed over their objections, are much quicker to point out the failures and to use whatever they can to set up the table in a way that portrays government effectiveness in a bad way. The program has certainly given them plenty of ammunition. Burning through the entire initial budget in a single week certainly doesn’t show the foresight needed to press forward during tough economic times.
Additionally, the program has seen plenty of bureaucratic hiccups. The web-based network set up to allow automotive dealers to submit the needed paperwork has crashed several times already, and further showed the government’s inept abilities to handle a program using Ray’s EEE principles. Of course that didn’t stop idiot Senator Diane Feinstein from holding a press conference and saying that the programs seems to be “running very well.”
So with the money dwindling, Congress used their second most favorite word: Emergency (their absolute favorite word these days is “crisis”, their least favorite word in “Terrorist” 🙂 ) The House of (NON)Representatives moved quickly to infuse another $2 Billion in emergency funding into the program. The Senate at one point didn’t seem to favor passing the legislation for this emergency funding, but it is certainly looking as though they have found the support needed. Of course we have the ever liberal Republican Olympia Snowe from Maine jumping over the Democrat side on this issue. Some other key leaders have seemed willing to jump on board (I imagine ANY Senator will get on board if the price is right… But I digress).
Republicans want to slow this train down a little bit. And they have some solid arguments as to why. At this point the new money infusion would be taken from another amount of money set aside for energy initiatives, which means nothing more than Democrats feeling that this crisis is more important than the energy crisis right now. Fortunately for them, all politicians only have to say what they think right now. They are then free to switch opinions when the Cap and Trade Bill comes to their floor for debate.
I am quite skeptical of this program for a couple of reasons. I can see some of the successes that are coming from the program. However, as we all know, there is no such thing as a free meal from the government. And that means that these couple of billions of dollars will be paid for by our children and grandchildren. In essence, they feel it is little more than further tax burden on an already cash strapped Americans.
Beyond that, I do tend to agree that this is just another way that the automotive industry is getting another tax payer funded bailout. And I agree with Senator Jim DeMint when he stated, “This is crazy to try to rush this thing through again while they’re trying to rush through health care, and they want to get on to cap and trade electricity tax. We’ve got to slow this thing down.” And I silently chuckled a bit when he pointed that the current rush being put on the further legislative funding is enough to make us wonder what is being hidden in there. There are many economists as well that seem to feel as though this will hurt more in the long run. Every dollar speny by consumers is money not saved, and that it will result in those who utilized that program to not have money to spend in other important things that would spur the economy.
So I am interested in hearing what everyone has to say about this subject. There are definitely some positive results that we have seen thus far. But I also don’t like the idea of “quickly” infusing even more of my taxpayer dollars into this program when it has already shown some signs of poor planning and unsustainability. I guess time will tell, as I am sure that it will get pushed through. And we will find that even more of our kids and grandkids hard earned money being thrown away.
Should we be throwing another $2 Billion into the mix? And just as important isn’t it conceivable that perhaps Congress needs to slow down and do things right rather than fast (something that they are apparently not capable of). And is it a sign of impending danger that they want it pass quickly? I certainly have not been pleased with the gigantic amount of things being rushed through all at once.
The most important lesson for Americans right now is in the failure of the “system” in place to support this program. If the government is going to screw up something as simple as the Cash for Clunkers program, why on earth would anyone this that the government is even remotely going to be able to do the health care stuff they want to have enacted.
But I like the idea of giving people trade in their old clunkers that were simply less efficient. The real question for me is when are people going to trade in this rusted out, poor efficiency government that we are dealing with. When they come up with a rebate that pays people upgrade to a better government, I will be there agreeing 100%…
Some links that I read when researching quickly to write the article tonight: