Is Cash for Clunkers Stimulating the Economy?
Nicolas Loris /
Alan Greenspan says no:
“It’s an interesting issue. I mean, I have qualms about the concept, but there is no doubt that that very extraordinary response is a very important indicator that the state of confidence in the economy is beginning to pick up. If we had been — the clunker program had been put in place six months ago, it would have probably been a dud.”
FoxNews reports, “Greenspan said that the program has worked to get people to buy cars and move stock, but he wouldn’t necessarily recommend it as an economic fix.”
The reality is, if you subsidize anything enough, people will buy it. And unfortunately for Americans, these $3,500 to $4,500 tax credits for more fuel-efficient cars do not come from Santa. The taxpayers are left to foot the bill. It’s worth stressing again that just because a policy is successful does not make a good policy. In fact, any policy that destroys perfectly good cars is probably the opposite of good (as many know, the subsidy is only given to consumers if the dealership destroys the used car).