The $3 bil­lion le­mon

The Washington Times Weekly - - Editorials -

The health care de­ba­cle forces nearly ev­ery­one to face the re­al­ity that Pres­i­dent Obama’s schemes usu­ally crash and burn and leave only a cloud of smoke and dirt to pol­lute the eco­nomic en­vi­ron­ment. The Brook­ings In­sti­tu­tion now con­firms what many re­al­ized early on, that the ad­min­is­tra­tion’s $2.9 bil­lion “Cash for Clunkers” stim­u­lus pro­gram in the sum­mer of 2009 was the ul­ti­mate clunker.

The two-month pro­gram was the brain­child of econ­o­mist Alan Blinder, whose July 2008 op-ed es­say in The New York Times sug­gested the gov­ern­ment pay­ing to take old cars off the road would stim­u­late the econ­omy, help the en­vi­ron­ment and re­duce eco­nomic in­equal­ity. The Demo­cratic Congress gave great weight to the opin­ion of Mr. Blinder, who was an eco­nomic ad­viser to the pres­i­den­tial cam­paigns of Al Gore and John Kerry. Congress had just en­acted Mr. Obama’s $787 bil­lion eco­nomic-stim­u­lus bill a few months ear­lier, so what could it hurt to blow a few more bil­lion more?

Brook­ings re­searchers Ted Gayer and Emily Parker have now ab­sorbed all the avail­able gov­ern­ment data, and they con­clude that Cash for Clunkers was at best a dis­ap­point­ment. The pro­gram of­fered would-be car buy­ers vouch­ers of $3,500 to $4,500 if they traded an old gas-guz­zling Belch­fire 8 or a Clat­ter­bang 6 for a new model promis­ing bet­ter gas mileage. This would send cus­tomers flock­ing to show­rooms with fist­fuls of cash, ready to buy.

The Brook­ings re­port con­cedes that this might have “pro­vided a boost” in sales of 380,000 cars, but “most of th­ese sales would have oth­er­wise oc­curred dur­ing sub­se­quent months.” The clunker peo­ple were plan­ning to buy a new car, any­way. The gov­ern­ment just cre­ated an in­cen­tive to ac­cel­er­ate de­ci­sions to buy, and there was lit­tle if any net in­crease in auto sales. As soon as the sub­sidy ended, the sales boom ended.

Cash for Clunkers did as lit­tle to pro­vide relief to the un­em­ployed as the pres­i­dent’s broader stim­u­lus bill. Ac­cord­ing to Brook­ings, the clunker scheme “was ac­tu­ally more ex­pen­sive per job cre­ated than al­ter­na­tive fis­cal stim­u­lus pro­grams.” It spent $1.4 mil­lion for ev­ery job it claimed to cre­ate.

The gaso­line mileage in­cen­tive was meant to help end Amer­ica’s de­pen­dence on the Mid­dle East­ern oil car­tel, but the sav­ings in fact were but a drop in an oil drum, the equiv­a­lent of 2.4 to 7.9 days’ con­sump­tion of gaso­line. This didn’t ap­pre­cia­bly re­duce carbon diox­ide, no po­lar bears were saved and the hy­per­ven­ti­lat­ing en­vi­ron­men­tal­ists prob­a­bly pro­duced more air pol­lu­tion than the rest of us saved.

Cash for Clunkers was an eco­log­i­cal dis­as­ter, too. Au­to­mo­biles with a use­ful life re­main­ing were sub­jected to a lethal in­jec­tion of sodium sil­i­cate, a sub­stance de­signed to cause an en­gine to self-de­struct. Land­fills un­nec­es­sar­ily ex­panded, and scarce re­sources were ex­pended to make new cars be­fore they would have been needed.

The sud­den demise of so many au­to­mo­biles re­duced the sup­ply of used cars, send­ing prices sky­ward, pun­ish­ing the poor and thrifty most of all. Oba­macare, the costly and cel­e­brated stim­u­lus and Cash for Clunkers (Mr. Obama, like Kil­roy, leaves his sig­na­ture ev­ery­where) all fail for the same rea­son. Th­ese pro­grams put their faith in gov­ern­ment, not the free mar­ket. The wreck is un­avoid­able.

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