Law prof Richard A. Epstein has a withering look at the “Cash for Clunkers” program that gave car buyers a $4500 check to trade in an old car for a new one. As with any government program, the intentions of the program and the reality of the program were not quite at odds with each other:
Yet exactly what does the American people get for this expenditure? On the bright side, the beleaguered automotive industry gets yet another shot in the arm. But that cheery argument repeats the common mistake that I addressed two weeks ago: Using tax dollars to stimulate one industry necessarily impairs the recovery prospects of everyone else. To make matters worse, some stimulus payments are just outright gifts, because lots of last week’s eager sellers might have traded in their clunker in the near future anyhow. And no one has a clue as to how many miles would be put on these clunkers anyhow.
The problem with the “Cash for Clunkers” program is that it won’t provide much stimulus, but it will burn through billions in in taxpayer dollars. Is the possible increase in overall gasoline efficiency worth the $1 billion now spent and the billions more that may be spend reviving the program? It’s doubtful we’ll know, because the actual results don’t matter. Congress is essentially buying support by raiding the public fisc under dubious pretenses.
Two thousand years ago, the called it panem et circenses—but “Cash for Clunkers” seems to have much more consonance, even if the concept remains essentially the same.