Cash for Clunkers blows through $1 billion in 1 week
The subsidy for the auto sector cloaked as an environmental program has already run through its budget. (WaPo):
“The program started only six days ago, giving vouchers to consumers who trade in their gas-guzzling cars for more fuel-efficient models. But the unexpectedly brisk response made federal transportation officials increasingly fearful Thursday that they would exhaust their [$1 billion of] allocated funds….”
Dealers are in the press touting the program’s “success.” Of course it’s successful for them, they get to clear their inventory. But the program represents a net cost to society: the money borrowed to fund it plus interest. Since, at the rate we’re going, the debt will have to be rolled over in perpetuity, we’re talking a lot of interest.
By the way, I suspect CfC is a net negative for the environment too. The MPG requirements—anything below 18 MPG traded in for anything over 22 MPG qualifies for the tax credit—are silly. And the energy consumed to produce the new cars offsets any savings from a few extra MPG.
The Obama administration wants to suspend the program because it has promised to corral the deficit. But congressmen want to keep funneling cash to the dealers in their district, a portion of which will no doubt end up in campaign coffers. They are even talking to the administration about recycling TARP funds.
How much money are we willing to spend subsidizing the auto industry? Already GM and Chrysler have received tens of billions that are never coming back. Now Congress wants to spend $1 billion more per week? Where does the spending insanity stop?
Please Mr. President, make it go away.