Cash for Clunkers

OK, the fact that Congress under-estimated what the demand for Cash-for-Clunkers was going to be doesn't mean that it's a bad program. It means that Congress is bad at price discovery. Jesus, I could have told everyone that six months ago and saved the taxpayers $1 billion. Do politicians know economics??? Nope.

Still, having said that, I don't know why everyone is piling on here. I mean, aren't there bigger problems in the country right now? Such as the impact of eight years of supply side trickle down economics??

OK, I tried to get the chart here, I couldn't do it. Basically, at the end of the week for Jan 16, 2001, the S&P 500 was at 1,342.54. After 8 years of Trickle-Down Supply-Side (TDSS) policies, the S&P 500 was, at the end of the week for Jan 12, 2009, at 850.12. Excellent showing, GOP, way to go......Oh, BTW, I almost said Supply-Side Trickle Down instead of Trickle-Down Supply Side here, however the last 3 letters of that acronym would be...well....you know.............

Still, Barone does make a very good point about healthcare at the end of this article, i.e. I wonder how badly Congress is going to screw that up???

Bottom line: For a Republican who wears horn-rimmed glasses, this guy isn't that much of a loser.

How
much cash for a clunker? Congress had no clue Washington Examiner

Government is not very good at price discovery. That’s one lesson, I
think, of the cash for clunkers program. Whoever set the rebate at $3,500 and
$4,500 (let’s average it to $4,000 for illustrative That calculation proved to
be hilariously wrong. Washington
Post media reporter Howard Kurtz asks the question, “Also, isn’t is apparent
that the $4,500 payments forpurposes) evidently calculated that 250,000 car
owners would trade in their vehicles
for new
cars that get at least four miles per gallon more between July and November.
older gas-guzzlers was extremely generous? That’s a huge chunk of change to spur
people who probably would have bought a new
car anyway.”

So Congress needed to set the rebate at somewhere between $25 and
$100,000, and not surprisingly it got the number wrong. Markets are good at
price discovery; government isn’t. If the House bill adding $2 billion in
stimulus funds to the cash for clunkers program passes the Senate, the
government will spend $3 billion for 750,000 trade-ins. If Congress had set the
rebate at $1,333 instead of $4,000, it might well have had to spend only $1
billion for the same number of trade-ins. In which case Congress will have spent
an extra $2 billion for no good reason. Note that I am assuming that it’s a good
idea to spend government money to induce such trade-ins or subsidize those which
would have occurred without any rebate.

My sense is that voters had got this kind of thing figured out. Pollster
Scott Rasmussen reports that voters opposed cash for clunkers by a 54%-35%
margin and that now they oppose spending additional money by an almost identical
54%-33% margin. Why should we let Congress which couldn’t design an
intelligent cash for clunkers program redesign the health care system which
comprises one-sixth of our economy? It’s a very good question which members of
Congress are already hearing from their constituents.