"Cash for Clunkers" Program Doesn't Make Sense

My partner in medical practice, Dr. Jim Conant and I, have a saying:  “Fair is fair”.  Whenever we discuss business things, we both know what fair is, and we get along well because we both only want what is fair, and we treat each other with fairness.  As a legislator, I try to keep the same concept in mind.  Legislation ought to be fair. 

The recent “Cash for Clunkers” Program violates my fairness doctrine.  All it does is redistribute wealth, something government should never do.  For some reason, many people think that taking money from rich people and giving it to poor people is what government should be doing.  But what is fair about that? 

From time to time, Congress decides that a certain behavior is either good or bad, and they decide that it is their duty to encourage good behavior and stop bad behavior.  So they pass laws that include incentives to encourage behavior they want and incentives to discourage behavior they don’t want.  But you have to ask yourself—is this what Congress ought to be doing?  Should Congress be deciding which behaviors are good and which are bad? 

Let’s assume for a minute that it is the place of Congress to decide what you should or shouldn’t be doing.  Then how should Congress go about putting incentives in place to get you to start doing good things and stop doing bad things?  I would say that incentives should always reward good behavior, punish bad behavior, and be fair.  What do you think? 

Now consider the “Cash for Clunkers” Program.  Congress has said that they will take taxpayer dollars and give up to $4,500 to each person who trades in a gas guzzler he or she has owned for at least a year for a new high-mileage car.  But does Congress’ new incentive reward good behavior?  Does it punish bad behavior?  Is it fair? 

First, is owning a gas guzzler good behavior or bad behavior?  Congress would say that is bad behavior.  So of all the people who will be getting the reward (the $4,500), how many of them were behaving well (according to Congress)?  The answer is NONE OF THEM!  Congress is rewarding their definition of bad behavior, that of driving a gas guzzler.   

Now you might say that Congress is rewarding what they think is very good behavior of buying a brand new fuel efficient car!  But Congress is NOT rewarding everyone who does that… if you bought a brand new car the day before this new incentive, you get NOTHING.  If you never owned a car before and bought a fuel efficient one, SORRY.  If your fuel efficient car wears out and you decide not to buy an old gas guzzler, but instead get another fuel efficient one, YOU GET ZILCH.  You only get rewarded if you, according to Congress, were BAD.  Congress is NOT rewarding good behavior. 

Look at it another way:  Two guys go to the car dealer.  One has an old gas guzzler.  The other has no trade-in.  Both buy a shiny new fuel efficient car.  The one with the old gas guzzler gets a cool $4,500 bonus of taxpayer dollars.  The other gets ZERO, so he essentially has to pay $4,500 more for his new car.  But they both were behaving as Congress wanted them to!  That IS NOT FAIR. 

What is fair about giving one man’s hard-earned money to another so he can buy a new car?  Nothing is fair about that.  The law only helps a subset of citizens, those who have owned a gas guzzler for a year. It isn’t available to everyone.  Wouldn’t it be nice if everyone could have a cool $4,500 discount on a new car? 

Nope, for the “Cash for Clunkers” Program, Congress gets an “F”.  It rewards bad behavior, it does not reward good behavior, and it isn’t fair.  Congress just spent three billion dollars to redistribute wealth.  But the bad incentives don’t end there. 

In the past, Congress decided that recycling was a good thing to do.  They passed all sorts of grants and programs to encourage recycling.  But what about recycling car parts?  One of the provisions of the “Cash for Clunkers” Program is that the old gas guzzler must be destroyed!  So hundreds of thousands of old cars will now be destroyed across our land.  So much for recycling the car parts on them!  And so much for having those old cars around for people who can’t afford to buy a brand new car even with the $4,500 discount.   

What do you think will be the effect on the used car parts businesses and on the used car businesses?  Did Congress stimulate the economy for THOSE people? 

Consider the amount of energy that must be used in making a brand new car.  All that metal must be mined and smelted… how much energy does that take?  All the car parts must be machined and transported to the factory, which I bet takes a lot of energy, too.  How does all that energy used in making a new car compare with the savings in energy over the life left in the old gas guzzler by switching to a new fuel efficient car?  I suspect it would be a net loss, were the truth known! 

So did Congress do what it did in order to save energy?  Did they spend three billion of our tax dollars so that everyone would be burning less gas?  No, they did not incentivize the buying of new cars by everyone, only the trading in of old gas guzzlers for destruction, which probably saved little energy at all, and perhaps even resulted in the usage of more energy overall.  Maybe Congress really did it to “stimulate the economy” by helping the car manufacturers, do you think?  After all, the government now owns a good percentage of General Motors.   

But not all the dealerships that used to be with General Motors can do business anymore!  Don’t forget that it has been reported that many of those car dealers who had contributed to Republicans had their dealership franchises cancelled, leaving the ones that had contributed to Democrats.  And that happened just before the “Cash for Clunkers” bonanza went into effect!  Could the Democrat-controlled Congress be that sinister?  I hope not. 

Let’s see… the government also owns a good chunk of several banks.  How many of the people who buy a new car under this new program will have to borrow money in order to do so?  I’ll bet a lot of them!  I sure hope those banks take better care in loaning that money than they did when people were buying houses they couldn’t afford! 

So what’s the bottom line?  Americans ought to be furious with Congress over this poorly conceived program.  The incentives are all wrong, and the program isn’t fair.  It may even be downright evil.  Now I’m not saying you should boycott the program.  By all means, if the Congress that people elected passed this program in their infinite wisdom, go ahead and take advantage of it.  Get your $4,500 gift of taxpayer money!  …Unless of course, like me, you bought a Prius LAST YEAR.  Then you’ll understand very well what I mean when I say “Fair is fair”. 

Now back to the question of should Congress be deciding what behaviors you should and should not be doing?  The answer should be obvious after thinking about “Cash for Clunkers”.  Is Congress smart enough to decide what you ought and ought not do?