Filed under: Capitalism, Economy, Environment, Taxes | Tags: CARS, Robbing Peter to Pay Paul, Stimulating the Economy
The Obama administration’s Car Allowance Rebate System (CARS) better known as “Cash For Clunkers” has ended. It was designed to provide benefits by reducing greenhouse gases, and stimulating the economy. To encourage new automobile sales at the newly taxpayer, Fiat and Union-owned companies, the government gave $3,500 or $4,500 to motorists when they brought in an older car to trade for a new vehicle. The bill only rewarded those who owned gas guzzlers of little value.
The EPA spent a month evaluating 30,000 models made between 1984 and 2004 and decided that only about 8,000 — that get 18 mpg or less — would qualify. Oddly enough, it didn’t matter how big a difference there was between the old car and the new one. You could get a subsidy if you traded an 18 mpg car for one that gets 22 mpg, but not if you traded a 19 mpg car for one that gets 42 mpg.
Of course this was just robbing Peter taxpayers to pay someone who could afford to buy a new car right now. Used cars worth more than the subsidy were not eligible, which rewarded those who chose to buy a gas guzzler the last time.
Those who understand the details of CO2 emissions pointed out that any environmental benefit was simply too small to be measured, so claims for the benefits of the programs shifted to the economic benefits of stimulating new car sales. Or did this just push forward new car sales that would have been made soon anyway?
Then there were all the consequences that nobody thought of. The subsidy was to be distributed only when the old car was destroyed. Mechanics assigned to destroy the so-called clunkers have posted videos on YouTube, muttering in anger as they fill the engines of perfectly good Corvettes and Cadillacs with sodium silicate and run them until they self-destruct.
Today’s old cars are tomorrow’s valued classics. Destroying old cars damages used car sales by eliminating inventory, and probably will put some used car dealers out of business. Used car prices will skyrocket. This also harms the poor who need cheap transportation. Those who make their living from selling used car parts complained loudly to the right people and got the law changed so just engines were to be destroyed. The program has undoubtedly been a net destroyer of wealth.
Many charities depend on donations of older cars which they are able to part out. There has been a 12 percent decline in donations, devastating to the funds charities depend on to provide help for the needy.
The initial $1 billion was exhausted in a week, so Congress added another $2 billion, and the program that was expected to last through the fall, ended Monday. The administration was unprepared to deal with all the applications for rebates. 250,000 cars were sold in the first four days.
Dealers were worried that they would not be able to be repaid before funds ran out. The Transportation Dept. had processed only about 2 percent of applications. Many were being turned down. They hired people from the FAA and CitiGroup to process claims, asking them to come in over the weekend to attempt to catch up, and then notified them not to come in because the system was down until Monday.
Now, it turns out that the $4,500 rebate is fully taxable as regular income.
This was a small $3 billion program that demonstrated nothing so much as the incompetence of the federal government in administering a simple congressional appropriation.
These are the people who want to completely reform the best health care system on earth, which serves 330 million people, and which will add at least 2 trillion to the deficit.They assure us that they know just how to do it; that it will save money; offer better care; insure 47 million more people; insure all pre-existing conditions; and not only cost less but rescue the rest of the economy. That sounds like a real clunker to me.
…this is animal abuse! For cryin out loud, leave them a little dignity!
Filed under: Capitalism, Democrat Corruption, Economy | Tags: Auto Bailout, Czars, Rewarding Unions, The Federal Reserve
Since 1955, the share of workers who belong to a union has dropped from 33 percent to about 11 percent. Though unions have become increasingly unpopular, they managed to scrape together $52 millions of member dues to donate to Democrat political campaigns this last year. The unions have helped to wreck two major industries, automobiles and steel.
Democrats are not ungrateful. The Unions have been rewarded with shares of GM and Chrysler that should belong to the taxpayers. Now, Denis Hughes, president of the AFL-CIO in New York, who has been interim head of the New York board of the Federal Reserve since May, when Stephen Friedman stepped down, is expected to become permanent head. So now this union activist has been elevated to one of the most important financial posts in the country, a troubling sign of the Obama administration’s over-reliance on organized labor.
Federal Reserve chief Ben Bernanke has been nominated to a second term, no surprise, as this is a time of unusual financial crisis. The naming of Denis Hughes is the surprising news, of the ‘what could they be thinking’ kind.
Hughes has no significant financial experience. He is not an economist, and his educational background does not inspire confidence. He has a B.S. degree from the Harry Van Arsdale School of Labor Studies at Empire State College. His experience has been as a union official and political operative. His entire career has been spent strong-arming and fighting the very people he will now be regulating. He may be more expert at extracting concessios from corporate America than in the complications of high finance.
As Investors Business Daily asks:
More to the point, can those on Wall Street who come before him in routine regulatory matters expect fair treatment? Will union issues become part of the New York Fed’s agenda? Will banks find requests to expand or merge stymied because unions fear a loss of jobs somewhere?
Elevating a person to the most important of the Fed Banks, whose experience would suggest an inbred hostility to capitalism and free markets, seems dangerous. Yet the White House has also named former United Steelworkers adviser Ron Bloom from head of the auto task force to “industrial policy czar” in charge of manufacturing. Itself an astounding nomination. Where does this government find the authority for an “industrial policy czar?” And since when does America have an industrial policy?
Unions have consistently been hostile to capitalism and the free market. They are opposed to free trade, and favor restrictions. They are inclined towards protectionism in the contrary belief that imports will damage their own opportunity. They favor minimum wage laws which harm beginning workers.
Unions are being rewarded with huge chunks of stimulus funds for construction and infrastructure projects that are restricted to union labor. Stimulus funds will also go to rescue union pension funds which are in financial trouble, since they spent their union dues on politics.
Policies always have consequences, and Democrats have little interest in consequences, only in their good intentions. High labor costs and hostility to the free market will drive business and investment overseas. Unemployment will continue to rise— including union jobs— and economic recovery will be long, long delayed.