Everybody loved “Cash for Clunkers” and why not?
Americans are not stupid.
They recognize a good deal when they see it and when the federal government threw money at people so they would buy cars they responded by going to the showrooms in droves.
Consumer sales raced to an eight year high in August because of “Cash for Clunkers.” But when the money ran out, so did the interest in buying cars.
The Washington Post reports that General Motors sales dropped 36 percent in September compared with the month before. Ford was down 37 percent and Chrysler dropped 33 percent.
Why? Everyone who had waited to buy a car or was thinking about buying a car over the next few months made their purchase in August. All “Cash for Clunkers” did was jam the demand into several weeks.
Meanwhile, the Obama Administration and others in Washington are considering a second stimulus package. The unemployment rate has reached a 26-year high of 9.8 percent and many economists believe it will go above 10 percent.
The first stimulus is turning out to be a $787 billion pork project. It’s impossible to measure whether it’s meeting President Obama’s prediction of saving or creating 3.5 million jobs, but it does give the Administration a chance to say “things would have been really bad” had we not had the stimulus.
A second, more targeted stimulus would help trigger new hiring, goes the argument.
One of the options is a $3,000 tax credit for each new hire. Sounds good, right? But what prevents businesses from claiming the tax credit for a worker they were going to hire anyway, or eliminating one position while filling another to get the credit?
I’m not saying business people are conniving, but they are skilled at using any tax advantage that the government makes available.
The federal government is forever trying to out smart the marketplace. Somehow, bureaucrats in Washington think they can pick economic winners and losers. The concept is not only delusional, but supremely unfair to those businesses and individuals that don’t happen to be “picked” for government favor.
This is a deep and painful recession. Businesses and individuals continue to recalibrate their personal economies as they move cautiously forward. But when they look forward they see trouble on the horizon.
They worry about a potentially wildly expensive health care reform law. They see cap-and-trade as a tax on the energy producing sector of our nation that will trickle down to bill paying Americans. They worry that the EPA has gone rogue, putting climate change ahead of the economic well-being of the country.
These are real and substantial concerns by Americans who are asking more questions about whether the country is headed in the right direction. Not even a sweet deal on a new car can calm the fears.
