According to this WETM story, Tom Reed doesn't like the Cash for Clunkers program. Reed says that "the program is artificially interjecting the government into the economic model and he doesn't think that's money well spent in the long term".

This raises an interesting question: is Reed against stimulus in general? After all, the point of stimulus is to "interject" government money "into the economic model" during a severe downturn, because private spending has fallen off. If he is, then he's way out of the mainstream of economic thinking about recession economics, and he needs to explain why he opposes something that almost every economist supports..

If Reed isn't against all stimulus, I don't see why Cash for Clunkers is so objectionable. Unlike almost every other stimulus provision, Cash for Clunkers gives the government a little leverage. For every $4,500 the government spends, someone buys an automobile, worth on average $28,400. This means that Cash for Clunkers will inject far more than its $3 billion pricetag into the economy -- that's a heck of a lot better than paving roads or building bridges.

Also, unlike the tax rebates of the last recession, every dollar in Cash for Clunkers will go into the economy. Consumers won't have the option of banking their $4,500, as they did with their rebate checks. And unlike the SUV tax credit of the last administration, Cash for Clunkers encourages buying vehicles that will decrease pollution and lessen our dependence on foreign oil.

I'm sure there are many little details about Cash for Clunkers that can be criticized, but it seems a hell of a lot more reasonable than spending millions to pave remote airports in Alaska, for instance.


It would seem that progressives may not like this because the government is handing out money to people who already have it and is increasing the cost of used cars to people that don't. Obama taking care of the rich people? I wonder if Tom Galisano got his $4,500 discount?

You must have missed this BBC story, reporting that France and Germany are out of their recessions:

In France, economy minister Christine Lagarde said: "The data is very surprising. After four negative quarters France is coming out of the red."

Ms Lagarde said that consumer spending and strong exports had helped to pull France out of recession.


She said government incentive schemes for trading in old cars, together with falling prices, were helping consumers.

Since the French are doing it, it's OK with progressives.

Oh -now I understand - thanks :)

"I wonder if Tom Galisano got his $4,500 discount?" My guess is Tom doesn't drive a clunker so it's not likely he had one to trade in.

Wow. It's logical to assume that Reed is also opposed to government interference with the market through deductible mortgage interest on one or two houses, or tax-free compensation in the form of employer-provided health insurance benefits.

Re the wealthy shedding their clunkers: Hummers, Towncars, Escalades, Corvettes could probably qualify as clunkers (less than 19 mpg).

Yes - he needs to explain this better. His campaign manager has added me to his press release list, and I'll excerpt what I get if he sends something further out.

"Re the wealthy shedding their clunkers: Hummers, Towncars, Escalades, Corvettes could probably qualify as clunkers (less than 19 mpg)." True but most of those clunkers would also be worth more than the $4,500 they would get for it.

I wasn't suggesting that anyone sell their Escalade for $4,500, I just thought it ironic that it might be a clunker.

In the past, when I've see Golisano around town, he's always in a vehicle worth far more than $4,500.

I think the serious part of Elmer's comment was the used car market. It's true that the market is going up, and I'm sure at least some of the reason is that the supply of used cars is a bit diminished by the Cash for Clunkers program.

But -- wouldn't the cost of a used car go up during a recession anyway? There are more people driving their cars longer (less supply), and people who need to change cars will be more likely to want a used one rather than a new one (more demand). Less supply and more demand leads to higher prices.

You are correct - more people will hold on to their cars longer - but this program will make things even worse - and remember - for all the progressives out there - it will affect the lower wage earners.