I’m not sure how congress managed to conceive of and pass legislation that actually makes sense, but the “Cash for Clunkers” program is the one stimulus that seems to work. After bailing out the auto industry and amid high unemployment, the idea of paying consumers much more than their auto trade-ins are worth if they buy a new (hopefully American – whatever that really means) car is simply brilliant. The $3500-$4500 cost to the taxpayer leverages its stimulating effect on the economy by getting the consumer to spend a lot more of their money at a time when an increase in consumer participation in the recovery is needed. The fact that the program went through the (hopefully first) billion dollars in only 5 or 6 days indicated the degree of pent up demand for big ticket items like automobiles. The additional impact the program has on boosting the overall fuel efficiency of the cars on the roads is a further win for the economy since it reduces the demand for foreign oil and lessens the trade deficit.
How can it be that congress managed to pass this into effect? I’m stunned. Perhaps there is hope for us after all.