The Conservative Edge

I didn’t watch President Obama’s State of the Union address. That was no accident. I didn’t tune in for two reasons: first, I knew the speech would be extensively published and reviewed, so I wouldn’t be missing anything; second, I didn’t care to witness Obama’s lack of accountability (from himself, his party, and the media) in defaulting on his campaign promises.

It seems that Obama spent roughly two-thirds of his speech explaining what he intends to do about the sputtering economy. Of course, he is not the only one responsible for crafting economic policy. However, the Democrats have always campaigned on their economic expertise. They claim to know what it takes to either cure a recession or accelerate economic growth. Bill Clinton became President by affirming his plan to pull America from the mild recession of the early 1990s. Obama was no different in 2008. He vowed that his administration would give a “quick jolt” to the economy, and that lots of new jobs would be made as green energy technology flourished.

On January 27, 2010, after one full year in office, Obama promised that he would make job growth his top priority. This begs the question: if job growth was NOT a priority, then what WAS his top priority? And why has it taken so long for him to give attention to the American economy?

Sadly, there were priorities that Obama and the Democrats had in mind. Some of the highlights: in January of 2009, they slapped additional taxes on tobacco products; they decided the government should own General Motors; Obama felt the need to apologize to foreign countries for America’s previous behavior; the Democrats reneged on Obama’s promise of transparency as they tried to pass health care legislation without debate, discussion, or acceptance by the American people; Obama “called out” Glenn Beck and Fox News; Obama traveled to Europe to plead for the Olympics to be held in Chicago; Obama pocketed a million bucks for winning the Nobel Peace Prize. Those were just some of the items on the Democrats’ “to-do” list.

So, it becomes apparent that job creation never was a top priority. For all their self-proclaimed expertise, the Democrats do not understand that reducing unemployment is the key to economic recovery. Rebate programs like “Cash for Clunkers” mean nothing to people who are struggling to buy groceries or pay their mortgages. Obama’s chastisement of “fat cat” bankers may make us feel good for a while, but feelings don’t pay the bills.

Let’s hope that Obama and the Democrats really do get serious about fixing America’s economic problems. If they do not give heed, there will surely be more losses for the Democrats in upcoming elections. And they won’t have anyone to blame but themselves.

The rush is over. The Cash-for-Clunkers program ended yesterday, August 24. Also known by the acronym CARS, the clunker program was originally planned to be effective through November of this year. Several factors may have contributed to the early termination.

For one thing, the processing duties were overwhelming. The government had to hire hundreds of people to keep up with the flood of paperwork. Additionally, many dealers weren’t getting reimbursed by the government. As a result, dealerships were left with dozens of clunkers on their lots. The dealers could send the vehicles to salvage yards only after receiving CARS money for the trade-ins.

Besides these and other operational hiccups, there might have been another reason the government terminated the program. Sales figures show that many Americans were still buying trucks and SUVs, rather than Priuses and Civics. Lots of folks wanted bigger vehicles; they simply traded in older trucks and 4×4s on similar, more fuel-efficient vehicles of the same size.

This is not what the Obama administration was hoping for. The were two underlying purposes of the CARS program. Firstly, the government hoped to steer people into buying the kinds of cars that the government wanted them to drive (and destroy hundreds of older vehicles in the process). Secondly, the government really wants people to think that only the government can provide for them. In fact, Obama made a statement earlier this year that “the federal government is the only entity left with the resources to jolt our economy back into life.” The CARS program is the first step in convincing the public of that notion.

And now, comes the second version of CARS. The government is going to offer everyone rebates to help purchase more energy-efficient appliances. As described on Yahoo! Finance, “A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers…Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. Only appliances covered by the Energy Star seal will qualify. The money is part of the broader economic stimulus bill passed earlier this year. Unlike the clunkers auto program, consumers won’t have to trade in their old appliances. ‘These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy,’ Energy Secretary Steven Chu said in a statement announcing the plan.”

How nice to have the government taking care of us. For a growing number of Americans, it’s getting so that whenever they get in their car, or open the fridge, they will warmly think of the benevolent government that helped pay for it all. But look at it another way—this could cause some people to assume larger levels of debt in order to purchase these goods through government programs. This may give a short term boost to the product makers, but it will be detrimental to consumers’ financial health.

Americans are aware, by now, of the need to be energy-efficient. We shouldn’t need the government to make product choices for us. Besides, we’re still waiting on the thousands of jobs that the Obama administration was going to create. He campaigned on the idea that Americans would be put to work rebuilding our crumbling infrastructure. But now, he wants us to buy a new fridge. Some of us might do so, if we had good-paying jobs.

It does sound like a good deal. The “Cash for Clunkers” program will help put you behind the wheel of that new car the government wants you to own. Old vehicles get taken off the roads, and are replaced by new fuel-efficient cars, and the consumer gets a good deal to boot. So what could be wrong with the program?

There are actually a few negative side effects. Firstly, there are restrictions on the purchase of the new vehicle; namely, the new vehicle cannot be resold for the first two years of ownership. This makes sense, in a way, but it does prevent the buyer of a new car from potentially making a profit by selling the vehicle. For instance, say a person takes advantage of the CARS trade-in program in addition to factory rebates and dealer incentives. But, six months into ownership, say the buyer either doesn’t like the car after all, or needs to sell it due to financial considerations. He or she could get his or her money back, and then some. That transaction, however, would be disallowed by the CARS program restrictions.

Secondly, the used car and used parts industries are being dramatically affected. This is because any vehicle (the “clunker”) traded in must be scrapped, and cannot be re-sold. Salvage yards are not even allowed to sell the engines and drivetrains; they must be destroyed. According to the Dayton Daily News, one local salvage yard refused to take part in the CARS program because of all the rules and restrictions. Another local salvage yard is approved to accept the clunkers, but has declined. Apparently, a government safety bulletin has been issued, stating that disabling the motors yields a toxic substance when the components are melted together, possibly causing skin irritations and other hazards to workers in unventilated areas. These are serious safety concerns for salvage yard owners.

Thirdly, there are higher costs projected for used auto and truck parts. One local proprietor predicts that consumers will see an increase in the prices of used parts for SUVs and trucks, simply because there will be fewer parts available. Another salvage yard owner stated that in the future, if someone needs a transmission, they will be paying quite a bit more for it. This will affect the people who cannot afford a new vehicle, even if they could be eligible for the clunkers deal. With so many Americans still out of work, the last thing they need is higher vehicle repair costs.

Finally, many of the cars being traded in are still driveable. A local car dealer observed that, out of 25 “clunkers” taken in, 15 or 16 of them could have been retailed, or given to someone in need of a nice car. Furthermore, some dealers aren’t getting paid for the “clunkers.” One dealer has 96 cars ready to be taken off his lot, but hasn’t been paid by the government. He has close to half a million dollars’ worth of vehicles ready to send to the scrap yards.

Even though the “Cash for Clunkers” program seems to be a great deal for the consumer, there is still an underlying goal for the liberals in the federal government. Their goal is to dramatically reduce the numbers of cars on the road, and in the process, reduce our dependence on automobiles as personal transportational devices. This CARS program is only the first step. Don’t be surprised if, under the authority of the EPA, the government mandates emission tests for all used vehicles; if the vehicle can’t pass the new emission tests, it will be taken out of service. That won’t be a good deal for anyone.