Update to post – August 3 —  Shame on me.  I fell prey to finding what I was looking for instead of finding the truth.  This would not be so bad if it were not for the fact that I often call out others for doing the same thing.  Below, I give a figure of 7.5 million cars sold in a year.  I now can’t find where I got that number but I think it was a monthly sales number being extrapolated as a yearly running rate.  The actual number for 2008 light vehicle sale was 13.2 million or nearly twice the number I used.  That would make my numbers of per vehicle subsidy much lower, and, not as dramatic.  The current prediction is for sales of a bit over 10 million cars in 2009 which is closer but still a far cry from 7.5 million.  I am sorry and apologize for my mistake.  Here is the original post:

With the rush to legislate, number crunchers have not had time to look at what all our new legislation is going to cost us.  When the Congressional Budget Office looked at Mr. Obama’s claims regarding his proposals for healthcare reform, they came up with the not so surprising fact that the President’s healthcare plan would cost far more than he was telling people.  He didn’t want to hear that.  In fact, he summoned the Chief of the CBO (Douglas Elmendorf)  to the White House to discuss the issue (read, “so he could threaten him”).  The CBO is supposed to support Congress with independent analysis of legislation proposals.  The President has no business even talking with the CBO, let alone “inviting” the Chief of the office to visit so that he (Obama) could remind Mr. Elmendorf just how short-lived his stay will be at the CBO if he continues to reveal the truth about Mr. Obama’s healthcare plans.

clunkertoonNow someone is finally taking the time to run the numbers on the Cash for Clunkers Program.  An interesting article today at seekingalpha.com praises http://www.edmunds.com for giving the straight skinny on Cash for Clunkers (CARS or Car Allowance Rebate System).  And, it is not pretty.  I have a slightly different take on the numbers but either way, it once again shows just how expensive things are when they are done by the Federal Government.

Let’s do the math my way.  Initially, $1,000,000,000 dollars was allocated to the CARS program.  Here are the numbers that I was able to find.  The initial program had $One Billion that lasted from July 1 to July 31 (give or take).  Now the House has approved and the Senate appears ready to pass a bill adding another $2 Billion to the program.  That is estimated to last until August 31.  So we have 62 days, $3 Billion dollars and rebates of between $3,500 and $4,500 per vehicle.  Just to keep it simple, let’s assume that the average is $4,000/vehicle traded in using the CARS program.  Assuming this all makes sense, let’s just divide $3 Billion by $4,000.  That gets you 750,000 cars…..in 62 days.  That means that in a year (365/62 (=5.888) x 750,000 or about) 4.5 million cars would be sold using the CARS program (at a cost of about $18,000,000,000).  My research tells me that in 2008, 7.5 million light vehicle were sold in the USA.  If we used the $18 Billion and divided it among all 7.5 million vehicles, it would mean a taxpayer subsidy of $2,400 for every car sold in the country.

clunkersQuestions:  Does it make you happy that our government is giving $2,400 of your tax dollars to every car buyer this year?   I wonder if the government gave $2,000 cash to everyone who bought a new car, if that would do a better job of stimulating cars sales?  I wonder how many cars would have been traded in and new cars purchased without the Cash for Clunker Plan…half as many?  The seekingalpha article concludes that each Cash for Clunkers Car (that would not otherwise have found its way to a dealer without this plan) is costing the government $45,000.  And then you have to ask if this is doing anything more than encouraging people to do something today that they were going to do anyway, but, probably not until next year.  If that is the case, will there be lower sales next year because of this plan?  Is this how you want your government to spend your money?

I hate the fact that Mr. Obama and Congress are in such a hurry to do things that they won’t take the time to do things right.  I really hate the fact that Congress and the President are not taking the time to run the numbers.  It is lucky we have an independent Congressional Budget Office to do that, or do we?