-By Dan Scott
In another example of feel good legislation Congress has once again come up with a plan to help their primary constituents, the unions under the guise of advancing environmentalism and helping the economy. The cash for clunkers act as it is named will pay anywhere from $3,500 to $4,500 for any vehicle sold in a transaction to purchase a more fuel efficient one. As with most feel good legislation, it is ill considered with unintended consequences and a waste of taxpayer money.
Let’s examine the pertinent numbers. Under the act, $1 billion as a starter will be spent by the taxpayer to buy up (and scrap) a vehicle that gets less than 18 mpg. The better gas mileage the newer vehicle gets, the higher the amount of taxpayer money you get. Using an average $4000 as the credit that would take approximately 250,000 used cars off the road. As of 2006 there were roughly 135.4 million passenger cars, 6.7 million motorcycles and 99.1 million light trucks and SUVs. In that same year, roughly 42.6 million used vehicles were sold. Why is that important? Approximately one sixth of the total vehicles on the road are re-sold each year and that’s a sizable market. Taking 250,000 off the road would barely register at 0.6% of the annual sales volume of older vehicles. While this is a very small percentage, it will have a most pernicious effect of setting the base price for any used car at $3,500.
Once the act goes into effect, the value of the older cars goes up thus hurting those who depend upon such vehicles the most, the poor. Who do you think bought those ten-year-old cars? Let them ride the bus! So once again, the know it all, meddling, busybodies of Congress have found another regressive government policy in which to disadvantage those who are already struggling with the other ill considered ideas heaped upon them. What? Who is it insisting upon the domestic drilling ban keeping up the price of fuel? Or have you not noticed lately the rising prices, which once again threaten to derail the economy? How many thousands upon thousands of well paying energy exploration jobs have been outsourced overseas? The oil has to come from somewhere. Over $250 billion a year in capital outflow are lost due to oil imports, not counting taxes that could have been received.
Who really gains by taking some 250,000 old vehicles off the road? Certainly not the poor who cannot afford the $15,000 plus price tag for a new vehicle. Not the used car sales dealerships, since now they have lost any possible profit, nor the new car dealership since they won’t be reselling them either. Not the auto parts and repair businesses. Not the States who collect gasoline taxes for road maintenance since higher efficiency vehicles will be reducing the gasoline used. It will be the majority share owners of GM and Chrysler, the unions, since the point of the legislation is to encourage the sale of vehicles that get more miles per gallon with the rationalization that It’s good for the environment and the economy and it will be the politicians saving face in the short term keeping their pet constituencies contributing campaign dollars. The Cash for Clunkers Act is nothing more than the Broken Window Fallacy dressed up with frilly curtains where the taxpayer is the tailor.
Sources
Congress Passes Cash For Clunkers Bill, Offers $4,500 Stimulus Vouchers to Car Owners
Pimp My Ride DC Style 4,000 deaths projected over life of buy back program.
Table 1-11: Number of U.S. Aircraft, Vehicles, Vessels, and Other Conveyances (2006)
Table 1-17: New and Used Passenger Car Sales and Leases
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Dan Scott calls himself a “Member of the Global Capitalist Cabal preaching Capitalism and personal responsibility as the economic solution to world poverty.” He is also a member of the 14th Amendment Society — victimhood is a liberal code word for denying the civil rights of others. He is also a proud member of the Global Warming Denier Cabal, insisting that facts not agendas determine the truth.
Dan can be seen on the web at http://www.geocities.com/fightbigotry2002/ as well as http://www.geocities.com/dscott8186/saidwebpage.htm, And can be reached for comments at dscott8186@yahoo.com.
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