The government's cash-for-clunkers program appears to be working like a charm, so time to shut it down. Good old Washington!
Offering rebates of up to $4,500 to folks trading in their gas guzzlers for new, more fuel-efficient cars, the program has been everything a stimulus package ought to be: a quick and efficient way to spur private-sector spending in support of a worthwhile civic goal.
Congress put up $1 billion for the program, which it found under the sofa cushions in a room where they were meeting to discuss this year's proposed $3.5 trillion budget. Or maybe it was in the Appropriations Committee's sock drawer.
Anyway, the program received its formal launch last week and was supposed to run through Nov. 1 unless the money ran out before. Americans rushed out to buy cars possibly as many as a quarter of a million in a matter of days. This jolt to a moribund industry will send cash surging into the pockets of dealers and factory workers across the country. From there, the money will ripple onward to grocers, dry cleaners, amusement-park operators, day-care workers, pedicurists, BassPro, the ShamWow guy and so on.
Money's moving, consumers are opening their wallets, dealers are happily filling out more paperwork than they've ever had to deal with, and the fuel efficiency of the U.S. auto fleet is incrementally improved. What's not to like? But this success has left Washington dumbstruck. It all happened so fast that the Department of Transportation was preparing Thursday evening, July 30, to pull the plug, pronto lest backlogged applications for the rebate pile up beyond the available $1 billion. The White House put out a statement: "We are working tonight to assess the situation facing what is obviously an incredibly popular program." Translation: Oops, it worked! Dealers and buyers of the new autos were assured that any sales already booked will receive the promised rebate. By Friday morning, the White House was doing its best attempt at damage control. "If you were planning on going to buy a car this weekend, using the program, [it] continues to run," White House spokesman Robert Gibbs said, stressing that the program will stay in effect at least through the weekend.
The question still remains, however, whether Washington can find more money to keep the ball rolling beyond this weekend. The House voted Friday afternoon to apportion $2 billion in additional funds for the program, and the Senate will probably take up the matter next week. One obvious place to find the money is in the ocean of green already set aside for economy-boosting programs that haven't worked yet.
A little background: The past year, you may recall, has seen a sharp drop in the world's economic fortunes. In response to the calamity, Congress and the White House engineered a couple of huge spending packages in 2008 and 2009. The first was a tax rebate designed to inspire consumer confidence swamped, unfortunately, by the abrupt collapse of the financial system. So a second package, amounting to $787 billion, was engineered to unfold gradually over several years, like Wagner's "Ring" cycle. Thus far, this has been stimulating only in the sense that setting out to master Latin in order to read Aquinas in the original is "stimulating." If you like studying the 17-year life cycle of the cicada, you'll love this stimulus package.
Surely some of the dough stashed away to encourage energy efficiency in 2011 could be diverted into a program that is stimulating energy efficiency this week. Or maybe funds could be scrounged from the moribund program to buy toxic assets from troubled banks. Or perhaps there's some coin-jingling unused inside the failing program to inspire lenders to restructure troubled mortgages.
As the management guru Peter Drucker once counseled: "Results are gained by exploiting opportunities, not by solving problems." If something is working, stick with it, Washington. After all, we've tried everything else.
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