Clunkers for cash

If you were in the market for a new car, why wouldn’t you scan the Internet for a $100 beater, buy it and use it for the $4,500 the federal government guarantees you in trade?
But then, if you were selling an old beater, why wouldn’t you add a couple of thousand to its price?
The trouble with “clunkers for cash” is that it distorts the used car market, to the detriment of low-income people.
Well, that’s actually the least of its troubles. Even some environmentalists don’t like it because the new car you buy doesn’t have to get much better mileage than the one you trade in. But the biggest problem is that it creates the illusion that taxpayers are getting something for nothing, when in fact they are paying for every penny.
That, and the fact the government is again picking winners and losers among businesses. A lot of companies are going bankrupt or being forced to lay people off. But Washington chooses to pump a few billion into the auto industry. Not coincidentally, it also owns large shares of GM and Chrysler. (The House voted Friday to add another $2 billion to clunkers-for-cash. Read about it here.)
Has the program succeeded in spurring car sales? Apparently so.
But I agree with Texas Rep. Jeb Hensarling, who was quoted by politico.com as saying, “Cash for Clunkers is another example of the government picking winners and losers and enshrines us as a bailout nation.”