But What The Hell Do I Know...

[UPDATE BELOW THIS POST - The program has been suspended, having likely exceeded it's budget in taxpayer-subsidized, anti-environment, immoral destruction of working vehicles] 

Before I dig into this issue let me first say that, on a personal note, half of my family live in the Detroit area. I truly feel for the people being displaced by the collapse of GM and Chrysler. That a decimated housing market has trapped so many Americans in an area of declining opportunity only makes matters so much worse. And so, I've paid special attention to these auto-industry policies.

In their recent Wall Street Journal opinion piece, "Handouts for Hummers", Senators Dianne Feinstein (D - California) and Susan Collins (R-ish - Maine) expressed their "bipartisan" outrage over what they consider to be the hijacking of a great idea by evil Detroit lobbyists. Here's the play-by-play:

It's amazing how quickly a good idea can go bad in Washington. In January, we joined with Sen. Charles Schumer to introduce a bill that would allow Americans to trade in gas-guzzling cars in exchange for vouchers worth up to $4,500 toward the purchase of vehicles with greatly improved fuel economy. This legislation was modeled after programs in California and Texas that improved fuel efficiency, reduced pollution, and stimulated auto sales.

Our "Cash for Clunkers" proposal was a win-win for the environment and the economy. Then Detroit auto industry lobbyists got involved. Soon a rival bill emerged in the House, tailored perfectly to the auto industry's specifications.

I think it tortures credibility to believe that these career politicians are "amazed" by the legislative process. The congress appears to have made it a policy NOT to read important legislation, from The Patriot Act to TARP to the Stimulus bill. That these unread tomes are chock full of pork and special interest payoffs is inevitable. And why should Diane and Susan care? After all, according to their partner Chuck Schumer, "the American People really don't care" about pork. USA Today has a good Q&A spelling out the details of this evil bill which, funny enough, was a compromise with the Obama administration.

As for the alleged benefits of a purer form of this bill, that's another matter. Indeed these vouchers would help SOME Americans to replace their cars but it comes at the expense of ALL American taxpayers. And the resulting "stimulation" of auto sales would, of course, come at the expense of depriving other industries of the demand that those taxed-away dollars would have voluntarily gone towards. There is absolutely zero net economic benefit for the society in any version of this subsidy program. It is simply wealth re-distribution from taxpayers to the car dealers and manufacturers.

And how is it that the "Detroit auto industry lobbyists" are the villain but not the members of Congress themselves? Shouldn't Feinstein and Collins be directing their scorn at the members of Congress who are clearly bought and sold by these lobby groups? After all, SOMEBODY has to be bringing these "industry specifications" to the floor of the House, right? I guess that's just bad form to criticize fellow members of Congress, especially when your own party utterly dominates the body and you can't fall back on partisan nonsense.

PROTECTIONISM ON ICE

The House bill was written so quickly that one of its main components -- a provision that would have excluded any vehicle manufactured overseas -- had to be removed because it violated trade laws. But the worst item on the auto industry's wish list is still at the heart of the bill -- a provision that undermines fuel-efficiency standards.

You just gotta love that protectionist streak in the Congress and the utter disregard for all those pesky laws and treaties. We're only beginning to see the full repercussions of the "Buy American" provisions of the unread "stimulus" bill, as Canada and China both ratchet up the tension and similar protectionist measures. Something like this would surely make matters worse. Thankfully it was removed, though the Senators seem more concerned with the legal reasons for its removal than the economic ones.

Reduced trade will make everyone poorer by forcing up prices and reducing employment around the world, but then it's almost as if the Congress WANTS us to spiral into a trade-war lead depression. On the other hand, as primary owner of The New GM, one would expect that the Congress would be interested in giving the company every advantage it can, even at the expense of society. That'd be the taxpayers interest as "owner", right? Or, wait. They're using taxpayer money... and taxpayers are also members of society (or at least a third of it). Hmm. How does this work again? Maybe it doesn't.

Pick a car, any car... so long as it's a Chevy Colorado

Now that you've traded in your otherwise functional car for $4500 and a trip to the scrapyard, what should you buy? The Senators have already picked a few options and are clearly upset that the House bill leaves them out:

On Tuesday, the House approved this legislation, which would subsidize the purchase of a new Hummer H3T (16 mpg) or a new Dodge Ram 1500 4x4 truck (15 mpg), but not a two-year-old Ford Focus (27 mpg) or used Chevy Colorado (20 mpg). A companion bill is pending in the Senate.

Who WOULDN'T want a used Chevy Colorado? Perhaps it's the people who need a taxpayer-funded subsidy before they'll buy one. There was a reason GM tanked, after all. Obviously these were simple examples meant to illustrate a point, but they also illustrate the level of granular detail these central-planners are considering. And speaking of "our" nationalized auto makers, I thought we were just recently told by our Dear Leaders that they "had no interest in directing which cars should be made". I suppose that, technically, they're just directing which cars should be bought, so it's not entirely dishonest.

Funny how supply follows demand though.

OIL SPIKES THAT THE CONGRESS LIKES

And how about that demand for gas driving up the price in this cold, rainy summer? The Senators want to make sure you noticed.

Last summer, $4-a-gallon gas prices forced many Americans to park their guzzlers. Today, average gas prices are creeping back up toward $3 a gallon. Drivers in a tough economy need more incentives for fuel efficiency, not subsidies for inefficient vehicles that will cost more in the long run.

We remember. In fact, I seem to recall that $4-a-gallon gas provided more than enough incentive on its own to change the market last summer without any taxpayer-stolen help. You couldn't find a new Toyota Prius anywhere outside of a Detroit auto dealer (and we really looked) and used ones were selling for above new MSRP. The demand was high enough to attract Honda into they small hybrid market. Market incentives work on their own and at the right time, thank you very much.

Oh, and there's a funny thing about those oil prices. They have largely been driven by drops in the value of the US dollar, which is coming under pressure after the Panic-driven dollar rally of the past six months because of THE ENORMOUS DEFICIT, to which this "cash for clunkers" bill will add billions. Dollar goes up, oil priced in dollars goes down. Dollar goes down, oil priced in dollars goes up.

As you can see, when you look at oil priced in Euros the price shock was much less severe and when priced in commodities like gold which aren't impacted by fuel demand, the price has essentially been flat (as it has for 30 years, adjusted for inflation).

It's clear that the more our government loads up on debt and the Federal Reserves runs that printing press, the more expensive oil becomes for Americans. With that in mind, it's hard not to wonder if these fiscally irresponsible weak-dollar policies are looked at as a benefit for DC's dependency agenda? And by dependency, I mean the citizen's dependency on government handouts, not on oil. The political incentives are certainly there.

Americans aren't stupid, no matter how many bills Feinstein, Collins and the DC gang of thieves craft based on that assumption. People can do the math on the price of gas, the relative prices of their car options and the tradeoffs between price and other factors like size, performance, comfort and safety. And yes, small cars ARE less safe, so the Congress is in a sense promoting more vehicular death with this small-cars obsession. That's sounds hyperbolic, but it's true.

But it's still good for the environment to trash all these "gas-guzzlers" (defined as getting less than 18MPG), right? Not so fast.

ENVIRONMENTAL & ECONOMIC FRAUD

The bottom line is that fuel-efficient vehicles should be the main focus of any "Cash for Clunkers" bill. So Americans need to make their voices heard, before Congress spends billions of dollars to put more gas guzzlers on the road at the behest of the auto industry. Our approach is good for both the economy and the environment.

Wrong and wrong. It's pretty obvious that ANY "cash for clunkers" bill doesn't help the environment, regardless of the spread between the MPG of your trade-in and the new car. That you can get the full $4500 subsidy for as little as 5 mpg on an SUV trade just highlights the absurdity of this effort. Even better? heavy-duty vehicles are given the subsidy for virtually improvement in mileage.

You see, when you discard an expensive, fully functional machine like a car only to replace it with a shiny new one, REAL environmentalists call that "waste". It takes a tremendous amount of energy, raw materials, and yes, carbon output throughout the process to manufacture a new car.

The energy expended to produce a new car far outweighs the environmental impact of mildly improved gas mileage. Of course, we have a perfectly good gage for this: market prices. New cars are expensive for a reason. So "cash for clunkers" isn't environmental in any way, shape or form.

This entire effort is nothing but numb-skulled keynesian consumerism at it's worst. I bet Feinstein and her fellow "progressive" environmentalist wannabes in DC considers it to be a problem that millions of people replace their perfectly good cellphone every year or two. It's the same thing, Diane. Driving your car until it dies has a name: conservation.

Even more insane, these perfectly good cars are to be destroyed, rather than run until they die to maximize their economic and environmental value. Cuban's are still driving 1950's Chevrolet's, so don't talk to me about "clunkers". This is "the broken window fallacy" in all it's immoral, horrifying glory.

WHY THE OUTRAGE?

Should any of this be a surprise? This bill is coming from the same awful people that instituted Ethanol mandates and taxpayer-funded subsidies, which have been decisively revealed to have no impact on carbon, while also using up arable land and driving up food prices and starvation around the world.

These laws aren't just mistakes, they are immoral acts driven by political pay-offs and sold to the public with knowingly dishonest tactics.

One of the reasons for our economic collapse is the fact that, incentivized by artificially low interest rates through government subsidies, American over burdened themselves with debt BUYING TOO MANY CARS! On the whole, the US population has probably compressed two decades worth of new car purchases into one, thanks to these cheap-credit policies.

That inflationary demand has helped lead to an over-investment in auto manufacturing capacity estimated at 20 million cars. This is why GM and Chrysler are the walking dead. There is simply no REAL demand for their product. We've all bought enough cars for the next decade, and we've all realized that fact. Now, we're all busy trying to build up our savings again and drive the cars we have.

But that's not good enough for the keynesian thugs in Washington. No, they'll stop but nothing to push more destructive consumerism and needless waste on our society. For them, the cure for a debt-bubble hangover is always a hair from the dog that bit you: more debt and over-consumption. That they try to cloak it in environmental rhetoric is simply dishonest.

STILL EXPLOITING THE WARS

The icing on this ridiculous subsidized cake must be that the Congress, working with the Administration, have jammed this "cash for clunkers" effort into a $106 billion wartime spending bill that provides continued funding for the Iraq an Afghanistan wars.

Remember those? The wars that we were absolutely promised would come to an end immediately after the 2006 congressional election? That's right. Those promises from Pelosi, then-Senator Obama and the rest are now 3 full years old as are the promises to stop exploiting the war and "patriotism" for political gain. Personally, I want those promises fulfilled as do the dwindling ranks of the anti-war movement. Talk about small change.

I truly believe that these are dishonest, immoral acts by a gang of thieves.

Yes that's harsh, but it is justified. The faux "outrage" by Senators Feinstein and Collins over business-as-usual while should be called out for what it is: meaningless theatrics.

...but what the hell do I know?