None, because, as has been noted, the program is a wild success. Had it failed, I conjecture, we would have heard the same song with altered lyrics. You really didn’t get that?
I’m happy to hear that, honestly. But it wasn’t by design or requirement that people bought more efficient cars - but consumer choice. Again, unless I’m misinformed, there was nothing that demanded a certain percentage increase in fuel economy.
And your position is that this is hypocritical? “It’s a bad program conceptually” would logically result in criticism of the program regardless of the outcome.
Edit:
Actually, I think the reverse situation may be more realistic. If the Republicans ran this program, it would be their rich buddies raiding the public treasuries.
Not a certain percentage – a certain numerical increase in fuel economy, depending on what is being traded in for what. I would have preferred to see a greater emphasis on improving fuel economy, so I’m not going to say that the program is perfect.
But here’s the salient points: if the reports out today prove accurate, then the bottom line is that people are trading in inefficient trucks for cars that are substantially above the minimum requirements in the law. And if more people than expected are making greater gains in fuel economy than what the law requires, how is that a failure of the program?
No, you were misinformed SenorBeef. The law can be found here[PDF] and is explained here. There are explicit incentives to purchase more efficient vehicles.
Not only are there minimum requirements for the mpg difference between the trade-in and the new vehicle, whether you get $3500 or $4500 depends on the amount of the difference.
That’s not what you said. You said that the government was giving away free cheesecake at the post office, with the person getting the cheesecake giving nothing in return. That’s the heart of my criticism. I’m sure you know better and were just making a cheap shot at the program.
The government is clearly making a long term investment here. First government as a whole gets back the sales taxes this thing stimulated, which can be a big chunk of the payment. Second, it gets the social good of getting the cars off the road, which pays off in the same way paying for EPA does. Third, it might increase the probability that we get the money we loaned GM and Chrysler back. Fourth, it gets the incremental income taxes from commissions, extra wages for workers, and maybe has to pay less in unemployment. And if this investment brings the recession closer to being over, it has a big payment in increased revenue from the increased business during the period the recovery moved forward.
California has subsidized hybrids by allowing them into carpool lanes, and has paid to get polluting cars (also gas guzzlers) off the roads. The return was an absolute decrease in gas consumed, even before the recession hit, which helped limit the rise in gas prices.
Government already invests much less efficiently than this. I review SBIR proposals, which gives money to small business to develop new products. An awful lot of the companies seem to do nothing but get SBIR grants, and most of them should be getting venture capital if it was a good deal. I think my tax dollar is doing a lot better in the Cash for Clunkers program than in SBIR. A billion bucks is chicken feed in terms of the whole stimulus package - what other part of it could possibly have increased sales at Ford?
I think the best use of the money would be to build a time machine to ship all of you original intent guys back to the 18th Century where you’ll be happy. 
Actually I measure it in increased car sales. If the extra money were being funneled into the program to produce the benefit originally promised, it would be a waste. But 3X the money is producing 3X the benefit, and when we need it. If we were paying for this in November when car sales had picked up anyway, then it would be a waste.
If I were driving a Prius now, then practically anything anyone buys would be worse than my current car. The comparison with your car is meaningless - it is with what they are driving now. If I keep my house at 60 degrees in the winter, that doesn’t mean you aren’t saving energy if you turn your thermostat down from 70 to 65.
They can have mine. When things pick up, and people buy more new cars, there will be a bunch of trade-ins. My mechanic is doing great because so many people are fixing their cars now instead of selling them. Given the number of clunkers on the road, this is a drop in the bucket.
I was attacking the idea that “lots of people are using it!” is the criteria for determining whether or not the program was successful. The analogy was that “lots of people are using it” would apply to the cheesecake program - but it couldn’t be considered a successful program just because people wanted to partake in it, especially when the cheesecake was spoiled/government computers were down/the system was backlogged, etc.
Why didn’t you bother to make these arguments before, rather than essentially just saying “HAHA STUPID REPUBLICAN”?
It’s still a $4500 loss of revenue, whether it happens by giving money to the dealership or requesting less in taxes or some combination. Which part it comes from exactly is irrelevant - the net result is $4500 less in the public treasury.
If it has a positive environmental impact, it will essentially be a happy coincidence that people traded in their low milage vehicles for milage vehicles, rather than their low milage vehicles for slightly higher milage vehicles.
So we loaned GM and Chrysler money in the hopes that they could pay us back with our own money that we gifted to them through new car subsidies? It would’ve been more efficient to just give GM and Chrysler free, no strings attached money - after all much of the subsidies are going to foreign-owned companies.
This all can be used as an argument for subsidizing anything that’s later taxed.
I’m not sure this is analogous. The point of carpool lanes is to reduce fuel usage and provide an incentive for creating less traffic. It’s somewhat logical that another method of reducing fuel usage (high milage cars) would fit into the intent of the law here. Although even that’s arguable, since 1-person cars don’t alleviate traffic and I’m not sure if high-milage non-hybrid cars are allowed similar priviledges.
“The government commits bigger wrongs, so lets ignore this one” is not any sort of productive argument.
My response to anyone who says, “If the government was wrong about C4C, how can it run UHC?” Is to say, “If the Government was wrong about C4C, how can it run a nuclear armed military?”
I have no desire to debate the merits of C4C itself.
But you do see that the amount of stimulus to the economy is terrific, right? A 300% return to the economy for stimulus spending is phenomenal.
Where are you getting the 300% number?
Look at it this way: Let’s say the average value of the cars traded in was $3000. The government pays $4500, on the condition that the $3000 car is destroyed. The destroyed car has a scrap metal value of $500. So each time there’s a transaction, $4500 of taxpayer money is spent, and $2500 of existing value is lost.
If 750,000 cars are destroyed, that’s a loss of real assets to the country of 1.75 billion dollars. The program costs $3 billion in taxpayer money. So right from the start, you’d need a multiplier of more than 1.5 just to recoup the losses of assets the program destroyed. A multiplier of 1.5 is on the extreme end of the theoretical multiplier a Keynesian stimulus might provide. In practice, there’s no evidence that multipliers are anywhere near this.
No. A multiplier is not a universal constant. If it was, then we could always just spend our way into prosperity.
For a fiscal multiplier to happen, you need a lot of conditions to be in place. First, the money has to be spent in a way that puts idle resources into play. Second, these idle resources have to be resources that will still be valuable to have once the economy recovers. Third, the idle resources are assumed to be re-investing the money back into the economy. Fourth, the money spent cannot crowd out private spending or borrowing.
Here’s an example of where a fiscal multiplier would work. Let’s say you have a car factory that is normally at full production. A recession happens, and people stop buying cars. So the factory sits idle. It could be making productive things, but it’s not. Worse, if the car company goes out of business, the factory is dismantled and the nation loses productive assets. Then when the economy recovers, you wish you had your car factory back, because demand for cars outstrips supply.
In this case, there’s no financial loss from the stimulus. So the government borrows money, and gives it to people to buy cars. They buy the cars, and keep the factory running. And the employees of the factory now have money which they use to buy things, and that’s where the multiplier comes from.
But let’s consider how all this can go wrong:
First: The car factory may be idle because it’s no longer competitive. Perhaps demand for cars has permanently fallen. Or perhaps other car companies are doing it better. So you spend money to stimulate production of cars in this factory. Are you getting a multiplier? You’re certainly giving the factory workers money to spend. But in this case, sales of these cars reduce sales of cars from the other factory. So now THOSE workers have less money. There is no multiplier. What you’ve really done is subsidize a non-productive factory and punish the productive factory. You’ve made the economy worse. If the subsidy is big enough, you might drive the good factory out of business. Then when the subsidy ends, the subsidized factory is STILL non-competitive, and still goes out of business once someone rebuilds the better factory.
Here’s another way the stimulus can go wrong - the money winds up going to a factory that’s already at full production. Now the government money simply crowds out private spending. One way it can do this is to drive up the prices of cars. You give everyone a subsidy to buy a car, but factories are already at full production, so the increased demand just drives up prices.
A variant on this is that even though the factory you are stimulating is idle, the manufacture of cars requires some resources that are NOT idle. For example, steel. This may drive up the price of steel, which hurts other sectors of the economy. One of the ways in which recessions end is that lack of demand in some areas causes commodity prices to drop, which stimulates demand in other areas. Stimulus spending works against this effect.
Another way it can go wrong - you spend money on the stimulus, and the people receiving the money just save it. No stimulus. This happens even when people have a desire to spend money, because they know the stimulus is temporary. So they receive stimulus money and save it.
Another way it can go wrong - since the stimulus money has to be borrowed, it can crowd out private borrowing. For example, interest rates for mortgages have gone up 1% this year, and many economists attribute that to crowding out in the bond markets because of the government’s need to raise huge amounts of capital for the stimulus. So you wind up stimulating one sector of the economy, but depressing real estate or business investment.
Another way it can go wrong - government fiat money distorts markets and causes delays in spending. For example, a state government may have been about to start a road project, but then the feds start talking about a stimulus program, so the state projects are put on hold waiting for the federal money. So the program becomes anti-stimulative.
Another way this particular one can go wrong - if it encourages people to buy cars who otherwise wouldn’t have, and they do it on credit, it exacerbates the core problem we have, which is that there’s too much bad credit out there. In addition, these people now have car payments, which means less money for them to spend on other things. So you’re just shifting money from one sector of the economy to the other.
There are other ways a stimulus can go wrong. There have been several economic studies of actual stimulus programs which found a multiplier of < 1. For example, a study of military spending buildups found a multiplier of only .8, which means each dollar spend actually cost the economy 20 cents.
Not even close. For one thing, many of these sales would have happened anyway - it’s hard to calculate how many of these sales are simply slight changes in timing (i.e. someone was planning on buying a car in the next few months anyway, but the existence of the C4C credit caused them to buy now instead of in a month or two). It’s not clear that there’s any multiplier at all. And you have to count the productive value of the cars destroyed.
‘Moonbats’ such as the 400 economists, including 5 nobel prize winners, who opposed the stimulus? This is just pure name-calling - attempting to shut down your opponent’s arguments through ad-hominem and belittlement.
Keynes himself stopped believing in using a fiscal stimulus to end recessions - he came to the belief that government’s couldn’t target the money accurately or time it accurately. And it turns out he was right - the recession may already be over, or it may end in the next quarter, and yet only 9% of the ‘stimulus’ money has been spent. For the rest of it, there will be no multiplier, and in fact it may contribute to another bubble and another subsequent crash, except this time with goverment debt much higher.
It does no such thing. Even if the program worked exactly as intended, its effect is a drop in the bucket. It’s a ‘feel good’ policy at best.
Not if it encourages them to maintain unustainable levels of production. Then it will just push the point of pain down the road a month or two.
Not really. Under this program, if you have a heavy truck you can trade it in for another heavy truck that only gets 1 mpg more. The original bill would have made a much bigger environmental difference, but lobbying by SEMA and the UAW watered it down so it will have little or no environmental impact.
Here are some cites for you. I’ll let you decide if they are ‘moonbats’:
The Keynesian Multiplier Effect Reconsidered - The Institute of Social and Economic Research, Osaka University
Government Spending is no Free Lunch - Robert Barro, Paul M. Warburg Professor of Economics at Harvard University.
Fiscal Stimulus Fallacies - John H. Cochrane, Myron S. Scholes Professor of Finance, University of Chicago
A Negative Fiscal Multiplier? - School of Economics, University of Queensland
New Keynesian vs Old Keynesian Government Spendingl Multipliers - John F. Cogan, Tobias Cwik, John B. Taylor, Volker Wieland, Stanford University
I don’t understand the spoiled cheesecake analogy. You said that program would fail because the free cheesecake would be inedible. Obviously, people are buying working cars. And on the computers being down, I repeat my comment that this criteria would make the iPhone a failure: it was popular and the computers crashed. So what?
The “happy coincidence” was designed into the law, and people seem to be surpassing the bare minimum of what was required. How you can say a the program is a failure because the worst case scenario you posit still COULD have come true, even if it didn’t?
I had to look this up: there are approximately 237 million passenger car and trucks on the road today. At most, CfC would scrap between 667,000 to 858,000 of them. Something tells me that there will still be used cars on the market next year. And if the CfC program is as successful as early indications, then there will still be plenty of competition among car dealers (and manufacturers) to help the American consumer get good deals on new or used cars.
You are comparing things of the same order of magnitude.
C4C is relatively small as far as government programs go. Yet it still was plagued with problems.
UHC is an order of magnitude larger. The possibilities for screwing it up are infinitely larger and riskier. That concerns me. I think it concerns a lot of other people as well. Establishing a track record of implementing smaller government programs without a hitch would go a long ways towards convincing people that something bigger like UHC would go as planned.
A minor league manager with good players might have a winning record, even if he manages the game poorly. But he won’t (and shouldn’t) get promoted to the big leagues.
No, because someone left it out in the rain.
Do you think the Medicare Part D benefit is a disaster? There was trouble when that program began with seniors being confused about enrollment options.
A couple years later, a survey indicated that 45% of beneficiaries rated Part D a “10 out of 10” in terms of satisfaction, and another 30% of people rating it an “8 or 9.”
I ask you, which is a more apt comparison to UHC: the government establishing a new prescription drug entitlement, or establishing a subsidy for cars?
Not if the reason you’ve got so many customers is because you are charging less than your expenses.
I understand that you really love your ideals here, but does the economy take a hit if you throw your TV into a landfill? Of course fucking not. That argument is simply silly.
The loss is in your head. Unless you think the economy suffers when people throw away CRTs for LCDs. This is simply shrill sour grapes.
No. We’re in a recession and capacity is sitting unused. Ceo John Doe at Widgets Inc. is sitting on a factory that is running at half capacity. If his orders increase he’ll up output and hire new workers. Of course it wouldn’t work if the economy were fine. :dubious:
All of this ignores the fact that there are something live seven million less cars sold (as I recall, no time for a cite this second) this year. The recession is causing the slump in sales, not the competitiveness of the cars. They may be on the downturn, but it’s not like the sales would precipitously drop by seven million in a year. So unless C4C sells seven million cars your objections are unfounded.
That’s probably because money has to be spent to keep useless stuff ready to roll. A 100 million dollar fighter doesn’t just sit on the tarmac when unused, it requires constant upkeep and maintenance.
It matters in how soon the recession ends. The sooner the economy begins moving again the sooner it fixes itself. And you have no data suggesting that all these people were going to buy anyway. We know for a fact that people are hoarding their money because of low confidence. This has nudged them. And in turn has freed up more money into the economy. Buying a car now is better than six months from now.
Yeah, 400 of the most partisan, trickle down conservative economists. Against how many working economists in the country? Moonbats.
Cite that he stopped believing that. I don’t necessarily disbelieve you, and it doesn’t matter in any case, but I hadn’t heard that. And even if he did, one of the developers of the birthcontrol pill doesn’t like it now. Does that mean it doesn’t work?
And you are far in the minority for disbelieving in multipliers. That’s simply partisan dogma that you’ve decided by faith is true. I’ll go with the experts on that.
It is a part of a larger whole. And a great success. It helps the auto makers, it stimulates the economy, it is a green initiative. Sorry it couldn’t fix the economy by itself.
The production levels are retarded by the recession. How is it possibly unsustainable? This is all about time. The recession will end. If we can speed it up is the big question.
Yes really. Currently the average MPG were 61% higher. The reason, I assume, that working trucks get a smaller requirement is to help small business.
Again, they are in the minority. Not being a world class economist myself, I put my trust with what the majority of experts think. Isn’t that more rational than picking the small minority that agrees with my ideology?
Your analogy is ridiculous. This is working well. It was so popular that it got swamped. That is a good thing. It is otherwise working better than anticipated.
Nothing about this program is broken. Too many people signed up at once, they are fixing that. It was so popular that it depleted the account. They are fixing that. There is no one not getting their rebate. There is no one stranded in tears at the dealerships, not getting their cars.
This has not been a failure. You are simply trying to find fault in a success.
No one is arguing that C4C or Medicare Part D aren’t popular. But like C4C, I don’t think Part D was well thought out, or implemented well (donut hole, negotiable prices, etc). Is it really that difficult to seperate those concepts out?
Also, I think you might want to look into who is actually administrating the Part D plans…