A Clunker of a Law

The "Cash for Clunkers" law ran out of money today. The program, funded by a billion dollars, that is BILLION, went into effect a week ago and was supposed to last through November. The law gives taxpayer dollars away, up to $4500, as an allowance for a trade in, for a new car purchase. The cars that are traded in have to be destroyed. They can't be resold, they can't be salvaged out for parts.

The government completely blew it in their forecast for the cost of this program. (Is it any wonder that many of us are skeptical of the claims of cost savings on things like healthcare? But that is the topic of another blog.) In addition to another major cost overrun by a government program, the Law of Unintended Consequences has reared its head in a major way. The "Cash for Clunkers" law sacrafices the middle class and the poor on the altar of the Goddess of the Environment. The alleged benefit of the "Cash for Clunkers", in addition to allegedly stimulating the auto industry, was that it would get gas guzzlers off the road, thus saving oil, reducing one's carbon footprint and stopping global warming. As a result of this program we are taking perfectly good operating vehicles and removing them from the marketplace. Many middle and lower income people cannot afford new cars. They shop in the marketplace of used. The law of supply and demand is one that even Congress has difficulty in screwing up. When we take perfectly good used cars out of the marketplace, the supply will go down, thus,the price will go up. When we take parts to repair these cars out of the marketplace, we raise costs of repairs to keep those cars going. And who pays the bill? The middle and lower income people who shop in that market of used cars. It's not the Congressmen and women that drive up to Capitol Hill in their new Lexus. It is the poor averge Joe like me that drives a 12 year old car with 175,000 miles on it and will have to pay out the nose to replace it because Congress didn't know or care about the fact that they will raise the costs of buying used cars.