The Unseen Consequences of "Cash for Clunkers"

The Obama administration and the Democratic party has been hailing the "Cash for Clunkers" program as a huge success. Maybe. Some dealerships might take a different view. A recent study of 100 dealerships in Virginia reveals that less than 3% of the government rebate money has been paid out. Some dealers have threatened to quit the program if the government doesn't start re-imbursing them. Folks, these clowns in government can't even administer a $1 billion (now $3 billion) program, and we're being asked to turn one-sixth of the American economy over to them??

Incidentally, of the 10 highest selling models under the "Cash for Clunkers" program, 8 of them are Japanese or Korean cars. Of American cars, only the Ford Focus and Explorer made the top 10. No Obamamobiles--i.e., GM or Chrysler cars--made the list.

There is another facet of this program that hasn't gotten much, if any, notice (and it certainly won't by the Obama administration or the mainstream media). Ok, let's suppose that the program helps car dealerships. That's the visible results. But what about the invisible results (the "law of unintended consequences")? Who is being hurt by the program?........Do you have the answer? Think of it this way--what would consumers do with that money if they hadn't bought new cars with it? Well, some of it might have been saved, but some of it would have gone to buy other products--clothes, shoes, TVs, computers--whatever. In other words, car companies might have been helped by "Cash for Clunkers," but other retailers will be hurt because consumers no longer have the money to buy their products. But, of course, you never see that because that money is never spent. And so politicians can tout how they "helped" a certain industry because that can be seen; but they never talk about the industries/retailers that will be hurt for lack of consumer purchases. If I owned a clothing store, I'd be ticked off at the "Cash for Clunkers" program. "People go out and spend their money on new cars and now they won't have any money to come and buy my clothes. Why doesn't the government subsidize my business?"

And, as a sidelight, it might be worth asking, since this country is already $11 trillion in debt, where are we getting the $3 billion for this "clunker" program? Well, $3 billion is pocket change, I guess. Let our grandchildren pay for it. It's almost unbelievable how incredibly irresponsible the United States Congress, aided by the executive branch, has become.

Yes, of course, government subsidies, via cash rebates, protective tariffs, artifically low interest rates, etc., can (though not always) help certain elements of the economy. But always at the expense of others. Indeed, this was a major, major cause of the War for Southern Independence (euphemistically, and incorrectly, called the "Civil War")--the federal government was protecting (via a high tariff) Northern industry at the expense of Southern agriculture. The South, which had about one-fourth of the nation's population, was paying over 80% of federal taxes. Not surprisingly, Southerners got tired of it and decided to have a government of their own. Don't be too surprised, if things continue at their present pace, if they try to do it again.