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Republicans Fri Aug 07 2009
I Don't Think That's Why the GOP Opposes Cash for Clunkers
I have to admit, I don't pay nearly as close attention to national politics as I probably should. The reason for that is because national politics are boring, and for the most part feel like a play-pretend game where very little changes after enormous energy and resources have been poured into pretending they are going to change. But that's just me (actually, it's not just me, it's also the tens of millions of Americans who have dropped out of civic participation, but that's besides the point. Wait, that's the whole point.) Whew! That might be a new record for digressions.
Anyway, when I read things like what's below, I despair a bit. I'm as opposed to conservatism as anybody you'll meet. It's reactionary, deceptive in practice, and defends the status quo against change. I hate conservatism. I tend to be more forgiving to conservatives, and, for the most part, I do believe that most conservatives actually believe the things they say--or at least, they convince themselves of these things. Impugning one another's motives is as old as politics, but has become particularly pernicious since the advent of identity politics in the 1970s, when who you were and what you felt became a political matter.
I ask you, neighbors, will we make progress when we make claims like:
GOP Wants Cash for Clunkers to Fail Because It's Helping Mainstreet America Economically. But It's Too Late.
Mark Karlin is a friend of Mechanics, but, come on. I don't think this is why the GOP hates Cash for Clunkers. I think that if this had been a Bush program they'd be crowing about how successful it's been and how it's been a great boon to automakers and whatever, and, sure, I think there's some intellectual dishonesty in their arguments. But I don't believe that Republicans want it to fail because it's helping America economically. I think they actually believe it isn't helping American economically. I don't know if that belief is right--probably it isn't--but that probably is what they honestly believe.
Mark goes on:
Reason number 5 is that the "cash for clunkers" program is so popular with Mainstreet Americans that it makes them feel more positive about the national government. My God, it's kind of like a tax break, but coming from the Democrats, but it benefits middle Americans, not just the tiny percentage of super wealthy, and it boosts the economy by increasing production -- not by just tossing 2 trillion dollars into the Wall Street gambling casino that only produces embossed paper shares that have little anchoring real value and gambling debts from the likes of derivatives.
I'd be more sympathetic to this if the national Democrats ever had the nerve to come out and make the argument that the government is good themselves. But they rarely do, and even when they do, they qualify it so much that it is essentially meaningless. They pretend like tiny tax cuts to the middle class are the solution to every problem, thus reinforcing the idea that taxes are necessarily bad. Also, while TARP was a Bush program, President Obama hasn't exactly been the scourge of Wall Street, has he? CoughHamilton ProjectCough.
There are plenty of GOP operatives and high ranking corporatists who collaborate with that leadership to create narratives that, in their heart of hearts, they don't actually believe. I got bad news for you Democratic activists out there: you've got them, too. In fact, some of them work for the President. Many of them are in Congress, or work as Committee staff. There's no doubt in my mind that the Democratic Party is a party that prefers progress and social mobility and is at least mildly hostile to the status quo; but it's frustrating to constantly fight for symbolic victories at the margins.
I have to believe that disarmament will be more effective than this constant narrative arms race that makes our political battles into viscerally hateful death struggles where we claim to know what's in each other's souls.
Good Luck / August 7, 2009 2:53 PM
The clunker program is a feel good program, but it is an example of fiscal incompetence. That is why conservatives do not like the plan.
I'll use Mark's points and then add my own.
1) Surplus inventory that is forcing the automobile industry to lay off and furlough workers is sold off, resulting in unemployed people involved in the auto industry going back to work.
- no argument here
2) The hike in employment and in car industry cash flow results in more consumer spending, which helps the economy in general.
-its a wash, because there is the temporary increase in one-time consumer spending, but the majority of people trading in old cars that are paid off will now have to pay for the new car, which leaves less budget available for future spending.
As for a hike in employement, it is unlikely. All this program does is borrow money to fuel short-term demand. It is estimated that a large percentage of the new car purchases would have been made in the near term, so this program just sped up the cycle. There is no underlying reason to expect that the program would affect long term demand projections for the car companies.
3) Car owners will find that they are paying less at the gas pump and have more in their wallet as a result.
- The new vehicles on average get 25.4 miles per gallon, compared with an average of 15.8 mpg for the trade-ins.
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/04/AR2009080401700.html
So lets round to 25 and 15mpg for simplicity sake.
The 10 mpg improvement means that over a vehicle's lifetime of 100,000+/- miles, the vehicle will use 4,000 gallons of gas vs. 6,666 gallons of gas. The 2,666 difference would be around $6,500 in savings at $2.50/gallon gas. That is good for the consumer, but has hidden consequences. Figure in the amount of tax revenue that is lost (fed gas tax is $0.184/gallon, IL is $0.19/gallon, and 6% sales tax) and the government loses roughly $2,900 in revenue for each vehicle.
If you actually run the numbers on this, for every $1 billion spent on this program, it creates a $644 million tax revenue shortfall (split pretty evenly between fed and state)
That shortfall will have to be made up. Since cutting spending is so out of vogue, the choice is to raise taxes elsewhere, leaving consumers with less money in their wallet, or run a defecit that just kicks the problem down the road.
4) The Detroit car industry gets a shot in the economic arm (even though foreign car manufacturers also make out big).
- at what cost? Given that the current federal budget has increased the defecit from around $500 billion to around $1.75 trillion (the White House's own estimate), the cash for clunkers program is being financed by issuing more debt in the form of long dated treasury bonds. The cost of financing the program will be more than any short-term benefit.
Here lies the problem with progressive/liberal policy, it relies on the substitution of responsibility with popularity.
Say what you want about conservatism, but at least it is economically literate.