The federal government says Idahoans have received $11.6 million in rebates through the now-ended Cash for Clunkers program. That’s just 0.4 percent of the neatly $2.9 billion in rebates distributed nationwide.
It’s also the equivalent of between 2,600 and 3,000 old Idaho cars being taken off the road and turned to scrap. If you know anything about economics, you know that’s a problem. Remember supply and demand? More supply, lower prices; lower supply, higher prices. With supply constrained, the vehicles that remain on the market are fetching higherprices at auction.
Dealers “are going to bid all kinds of money to buy” the used vehicles they can get at auction, Yousef Zyadeh of JZ Auto Sales in Nampa said. Zyadeh said some cars are attracting 50 percent more than what they used to. Other used car dealers tell me the price hikes are having an impact on the ability of car buyers, especially students, to be able to find affordable transportation.
This is why the federal government has no business in the car business. When government tries to manipulate markets and human behavior, there are always losers.
In June, freshman U.S. Rep. Walt Minnick, D-Idaho, voted for the original $1 billion to fund the program. Later Minnick and Rep. Mike Simpson, R-Idaho, voted for an additional $2 billion cash infusion to continue the program into August. The additional money came from funds that had been previously designated for other stimulus programs.
Simpson said Idahoans shouldn’t confuse his vote in favor of the $2 billion as an indication he supports the Cash for Clunkers program.
“If the $2 billion was left in the stimulus it would be used to grow government. By moving it to Cash for Clunkers, at least that money is finding its way back to taxpayers instead of government bureaucrats,” Simpson said.
Minnick said, “I voted against the stimulus bill, but I supported this program for one-time funding because it was one of the few which proved truly stimulative: federal dollars were leveraged many times over, an important private-sector industry got a shot in the arm and frozen credit markets thawed just a bit. In the Cash for Clunkers program, the money went directly and quickly into the private sector to help consumers and businesses alike. It wasn't perfect, but it had bang for the buck."
But Cash for Clunkers appears to be another one of those constitutionally dubious programs Congress passes and adds to the deficit. The U.S. Constitution talks about regulating interstate commerce. As others have pointed out, Cash for Clunkers made the U.S. government a participant in commerce. I asked Minnick’s spokesman, John Foster, to tell me the constitutional justification of Cash for Clunkers.
“I didn’t ask Walt that, and I am not a constitutional lawyer, so I’m not qualified to answer,” Foster said. “But I think, personally, that the 316 votes in the House and 60 votes in the Senate for the program show that most members of Congress were comfortable with the constitutionality.”
Somehow, that doesn’t make me a believer. But if the federal government really does have the authority to orchestrate such a program, is it derelict in its perceived duty to aid all segments of the economy if it doesn’t?
According to market researcher NPD Group, July sales of video game systems and components were down 29 percent from a year ago – the fifth straight month that game buyers refused to invest in this important segment of the economy. Perhaps the government should create a “Cash for Consoles” program wherein Americans trade in their old game consoles for new ones and receive a $150 rebate from the federal government. To prevent their reemergence on the market, the old consoles would be robustly smashed into little bitty pieces with a ball-peen hammer, (which would have the side benefit of benefiting the ball-peen hammer industry).
Congress might be concerned about reports that the Furniture Buying Index has dropped to the point where discretionary furniture buying is at a standstill. With “Cash for Couches,” Americans could get a new couch, after which a friendly government employee will take their old sofa, tip it over and redistribute a percentage of the loot that falls out.
And while home sales jumped nearly 10 percent in July, some lawmakers might be worried that Americans are buying homes that are bigger than they really need. When our neighbors buy homes that are too large, requiring heating and cooling for unoccupied rooms, it harms the environment, right? How about a program we’ll call “‘Cash for Castles?”
Cash for Consoles, Couches, Castles and Clunkers sound odd because they are odd. Cash for Clunkers put few Americans in new cars and many more taxpayers under the tires of those same cars. The Constitution limits the power of the federal government, and this is why. If you’re not clear about that, just wait until Congress starts debating the next costly alliterative federal program that the politicians claim will help us out.
