August 24, 2009
There Ain't No Such Thing As A Free Lunch. I was taught this most elementary of facts in my science, math, and economics classes growing up. The concept stuck: In order to get something, someone or something must give something up. In the most basic of explanations, you can't get something for nothing.
Ah, but the geniuses on Capitol Hill don't want you believing that. Take their remarkably "successful" (their definition, not mine) Cash For Clunkers program: They collectively expressed amazement that it has been so "successful". Our illustrious president Obama called it "successful beyond anybody's imagination." Well, Mr. President, let me explain it this way...when you GIVE someone else's money away (mine and every other taxpayer's), LOTS of people will line up to take it.
Approximately 750,000 cars were purchased by Americans who took advantage of the C4C giveaway, I mean program. We'll assume there were two licensed drivers per household that bought new cars. That means the rest of us paid $3 billion so 3/4 of 1% of our peers could cruise around in a shiny new car with a shiny new monthly payment.
Most of the "clunkers" traded in were American made, yet 60% of the new cars purchased were foreign-made. One columnist stated the program was "a winner for almost everyone except the U.S. taxpayer." But then again, did you really think the vast majority of us would benefit from yet another ill-advised federal subsidy? Yeah, me neither.
My beef isn't with the amount of money earmarked for this giveaway. After all, we saw hundreds of billions dumped into all these other stimulus packages, with seemingly similar dubious results. My problem lies in the fact that a very small percentage of Americans are directly benefitting from all these giveaways, while the vast majority of us (and our children, and their children) are expected to step up in the form of higher and higher taxes in the long term to pay for all this short-term spending.
Let's talk about all the new debt that resulted from the latest spending spree. Incomes are stagnant right now, and were declining for the eight months prior to that. Therefore, any household that must now allocate part of their income to a new car payment has that much less disposable income to spend on other goods and services. Are you able to see how this program is going to better the overall economy? Yeah, me neither.
Many dealers nationwide stopped utilizing the program last week, even though the 'official' end of the program is today. Why? Because the federal government has returned only a tiny fraction of the advances owed to auto dealers nationwide. Many dealers are fearful they won't be reimbursed for the discounts they gave. Can you blame them for distrusting a bureaucracy that can't live up to its obligations?
For that matter, can you trust a government who can't manage a relatively small program like this one to manage the overhaul of our entire healthcare system?
Yeah, me neither.
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