A Clunker Itself

I must be the only rightospheric denizen not to have posted even once about the infamous "cash for clunkers" program.  Which is, as I briefly remarked on a recent episode of Hard Starboard Radio, would never have been the case in any time that was not dominated by another Democrat attempt at a hostile takeover of American health care.  So suffice it to say, I am arriving late enough at this particular party for the bar to already closed (and I don't even drink).

But I can still get in a few licks, even if it is well into, er, garbage time.

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As I understand it, C4C was the scheme whereby the federal government spent three billion or so taxpayer dollars to destroy the used car market.  What?  You want more detail?  Not enough "nuance" for you?  Very well.

Congress allocated a billion bucks to bribe car owners to the tune of $4,500 a head to trade in their "clunkers" toward the purchase of new, Obama-approved vehicles.  Which, remarkably enough, were not just limited to the mandated, glorified golf carts being churned out by Government Motors and Barry Chrysler, or few would have signed up for the boondoggle in the first place.

"Clunkers," as you might have deduced, were Obama-disapproved vehicles, otherwise known as vehicles people actually like to drive.  You know, like SUVs and cars with room and something approximating power and sporting an opening where one inserts a gas station filling nozzle instead of an electrical outlet for the 250 miles of extenstion cord installed in the trunk.

What happened when the bribery started?  The first billion was hoovered up inside of a week.  All of which demonstrates nothing more than what Jack Nicholson's Joker did in Batman when he took his personal money-spewing parade down the canyonesque streets of downtown Gotham, or when the back doors of a Brinks truck accidentally fly open: If you "give" away something "free," people will beat each other with sledghammers to snarf it up. 

"Greed" is the closest synonym, though you'll never hear Obamunists using that term in anything approaching this paradigm.  To the contrary, the flash-consumption of the initial C4C appropriation was dubbed a "success" and an "economic stimulus" for the automotive industry Big Labor has done so much to eradicate.  So, naturally, the Dems doubled down on their "investment" before the August recess and dumped two billion more into the maw.

Here we come to the first problem.  Since the C4C subsidy made each car exchange a three-sided transaction, and the Dems could NEVER make ANY of their "successful programs" as simple as simply giving the $4,500 to each car owner that committed to trading in their "clunker" (That wouldn't be "fiscally responsible," dontcha know), this meant that one point of the triangle had to be left holding the bag in the deal while the efficient, well-oiled, greased-lightning gears of the federal C4C bureaucracy worked their messianic magic.  In other words, the dealers were required to honor the C4C coupons or vouchers or whatever the heck they called them and then apply for reimbursement from the feds.

How'd that little caper turn out?  About how you'd expect:

Late Tuesday, the National Automobile Dealers Association in Washington, D.C., released a survey of its members that estimated they have submitted claims for nearly $3.3 billion. The Cash for Clunkers program is only authorized to spend $3 billion…

Congress is in recess until September 7, and even if members were inclined to add more money, nothing would be decided until they return to Capitol Hill in three weeks…

More than 70%, or nearly $2.2 billion, in reimbursement claims have been submitted but not processed…

Dealers are supposed to be reimbursed within ten days of the application being accepted, but that hasn’t happened because of high demand. The NHTSA is trying to triple the number of workers handling the claims.

Yep, you guessed it - screw the "greedy" businessman, who can only "save" his soul by giving up that evil "profit motive" (in case you're keeping score, the Obamunist definition of "greed") and giving away all his company's assets and wealth (and jobs) to those "in need," the "sacrifice" that Godbama requires of all his followers.

As Will Rogers once observed, there's a difference between being generous with one's own resources and doing so with everybody else's - particularly when the former is duplicitously inflicted on you after the fact.  And whaddaya know - a whole buncha dealerships realized they'd been screwed, and declined to be skinned any further:

The Greater New York Automobile Dealers Association, which represents dealerships in the New York metro area, said about half its 425 members have left the program because they cannot afford to offer more rebates. They’re also worried about getting repaid…

Schienberg said the group’s dealers have been repaid for only about 2% of the clunkers deals they’ve made so far…

“But it’s in the hands of this enormous bureaucracy and regulatory agency,” he added. “If they don’t get out of their own way, this program is going to be a huge failure.”

Economics 101: Price is where the supply and demand curves intersect.  If you give a commodity (like a C4C rebate) away for "free," you're arbitrarily setting the price at zero.  By definition, that will generate infinite demand within the scope of the consumer's available resources.  When demand disappears over the horizon before supply can even get out of bed, the system breaks down, either by the price exploding (if the market mechanism is allowed to work) or by an instant shortage of the commodity in question, which usually manifests itself in long delays in the honoring of supplier delivery.  In a word, rationing.

If the Dems just HAD to try C4C, they could have crafted it in the form of a tax credit that simply confiscated four and a half grand less per head and let car buyer and car dealer dicker with each other without Uncle Barry horning in on the deal.  But no, they had to "get money into the hands of car buyers" NOW!, another load of "good intentions" that succeeded instead in taking that money out of the dealers' pockets in the medium term and ultimately syphoning what taxpayers are left plus ChiComm bond traders for the difference.

BTW, just how enormous did the C4C bureaucracy get?  You don't want to know:

Employees of the FAA’s air-traffic-control unit were asked to help, but the Transportation Department stressed Friday that essential safety personnel were not diverted from their duties.

A total of 1,200 workers, including about three hundred contractors from Citigroup, the financial services giant, are now working seven days a week to review applications and reimburse auto dealers for rebates advanced to customers, officials said.

The department tripled its program staff to 1,100 last week, and recently added another hundred headquarters employees…

The National Automobile Dealers Association, which had endorsed the move, urged the Obama administration late Friday to extend the deadline because the program’s Web site was crashing.

Is it possible to describe, or even refer to, C4C without using the word "cluster"?  What kind of bleeped up priorities are in place that air traffic controllers are being pulled off their jobs to help review C4C rebate claims?  Could nobody in this administration have really anticipated that spraying several billion dollars into the fruited ether was going to generate a mammoth response in record time?

Put another way, how are the feds mismanaging a simple car rebate program into bankruptcy?  Simple: by using auto dealerships' money and reimbursing them with IOUs.

But that isn't the end of the economic idiocy by a long shot, because as the Cato Institute helpfully points out, what the Obamunists are claiming as an economic "stimulus" is, over time, nothing more than a PR-driven shell game:

The auto industry received a short-term “sugar high” at the expense of lower future sales when the program is over. The program apparently boosted sales by about 750,000 cars this year, but that probably means that sales over the next few years will be about 750,000 lower.

And let's not forget that, the administration's choice of derogatory nomenclature notwithstanding, the 750,000 "clunkers" traded in DID have re-sale value and were, consequently, pre-empted right out of pre-owned dealer inventories:

• A few billion dollars worth of wealth was destroyed. About 750,000 cars, many of which could have provided consumer value for many years, were thrown in the trash. Suppose each clunker was worth $3,000 at a guess, that would mean that the government destroyed $2.25 billion of value. 
• Low-income families, who tend to buy used cars, were harmed because the clunkers program will push up used car prices.

I, personally, have never purchased anything BUT used cars.  Specifically, "economy" cars a year or two past new with no more than 50,000 miles on them.  They're, well, "economical," while still retaining substantial quality and useful life.  Or, as I like to phrase it, I prefer to put on my cars rather than move into them.  The last time I bought a car was coming up on two years ago.  Hopefully my two-vehicle fleet will last a while, because I find prematurely find myself back in the used car market, I'm going to have three quarters of a million fewer of them to choose from.

Am I low-income?  No, I'm just cheap.  But for many American families who are, the "clunker" they might have been able to purchase won't be there, necessitating them to keep driving their even clunkier "clunkers," which presumably isn't a very "green" outcome.  And with fewer "clunkers" needing servicing, there will be correspondingly lower parts inventories to keep the existing "clunkers" on the road.  Which will depress that area of the auto business, destroy more jobs, etc., etc., etc.

Aaaaaand for those who might have been (or wanted to be) in the market for a new vehicle, guess when the 2010 model year starts?  Would you believe September - the month AFTER C4C, when dealers were discounting their remaining inventory to get it out the door ASAP anyway?  Whatcha think THAT'll do to 4Q new car sales?

How does destroying wealth "stimulate" the economy?  Beat the crap out of me.  But if that idea sounds ludicrous, C4C's environmentalist justifications beggar belief:

“Cash for Clunkers” has generated a surge in car and truck sales, as well as a comparable increase in complaints about the program. But whether or not the program — which is due to end at the end of the day today — meets environmental goals of reducing gasoline consumption and greenhouse gas emissions has received less attention.

“As an environmental program, Cash for Clunkers is basically overpaying for the environmental benefits,” said Christopher Knittle, an economics professor at the University of California at Davis who analyzed the Cash for Clunkers impact on the environment. …

Knittel, the economist at Davis who has studied gas prices and their effects on driving behavior, found that while the program might benefit the economy, it is an inefficient way to take older cars off the road, to lower carbon emissions and to reduce gasoline consumption.

“The fuel economy increase from the trade-in to new car seems large, but it doesn’t have that big of impact on environment,” he said.

Knittle calculated the program will save approximately 270 gallons of gasoline per car, per year. If a total of 750,000 vehicles are sold, as appears likely, approximately 12,000 barrels of oil a day will be saved in a country that consumes nine million a day.

Figure in the total cost of the rebate subsidies - the aforementioned three billion smackers - and C4C coughed up $250,000 per barrel of oil purportedly "conserved" by this program.  And people think OPEC is gouging us!  God forbid they're paying attention to this insanity, or they'll quickly get the idea that they've been giving this stuff away.

All of the above is what the White House is calling a "success".

Ensign Ed dubbed C4C "perhaps the most foolish attempt at government manipulation of the private market since the Community Reinvestment Act and the mandates for Fannie Mae and Freddie Mac to securitize sub-prime loans."  And just think: the same people who sabotaged the U.S. economy with the latter are in total power keeping the U.S. economy sabotaged with the former, alongside Hogzilla, cap & tax, BarryCare, etc., etc., etc.

"Votes for clunkers" is how we got into this predicament.  "Destroying" them is the only way out.