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Practically Speaking

Kyle and her husband moved to Brookfield in 1986. She became active in local politics and started blogging in 2004. Her focus is primarily on local issues but often includes state and national topics, too. Kyle looks at things from the taxpayers' perspective in a creative, yet down to earth way, addressing them from a practical point of view.

Corrected Musing about Cash for Clunkers and the economy

Musing, Government / Bureaucracy, President Obama, TAXES, THE ECONOMY

Correction: I posted this piece earlier today before rushing out the door for a lunch date, an appointment, some errands, and family dinner. Finally I have some time to repost as promised.

Something about this piece just did not seem right but I went over the numbers again and again and they always came out the same. It wasn't until I talked to my lunch date about it (en route) that my mistake was discovered: I had inadvertently rounded the 99,880,230 of tax filers to 1,000,000. Obviously, that was incorrect; it was off by 2 decimal places! It should have been 100,000,000. Chalk it up to decimal dyslexia or being in a rush, but it was a big mistake.

We rushed back to my house and I quickly pulled the posting because I did not have time to rework it and I did not want readers to have the wrong information. I have no idea if the comments will stay or not when I repost this, and I did not take the time to read them. As my former boss' husband used to say, We all get a chance to wear the lampshade. Today was my turn. Sorry.

The incorrect numbers are noted with asterisks and posted at the bottom with a line through them. I did have to change a few minor things because clearly $10 has a different in impact than $1,000! There are a few post thoughts too.

Well, that was fast. The Cash for Clunkers program is already out of money. They blew through that billion pretty fast for an ailing economy, eh?

I just heard a radio commercial made by Milwaukee icon Ernie Von Schledorn, where he says something like, The government is going to give you money for your clunker.

Ah, how easily we are entranced by the prospect of getting "free" money from the government as if it has no cost. I wonder how much we would embrace the program if all commercials advertising Cash for Clunkers would have to say, You taxpayers are giving these buyers $3,500 to $4,500 to turn in their old heap and buy a new car.

The government allotted $1 billion for the original Cash for Clunkers. In very rounded numbers, if we divide that number by number of taxpaying returns -- *about 100 million -- we get roughly $10 per taxpayer return.

According to CBS News, the House just passed adding an additional $2 billion into the program!

That would add an additional $2 billion, or another **$20 tax liability for those of us who actually pay taxes.

If the additional funding passes, and why wouldn't it, this President and Congress spend money like water, the total Cash for Clunkers tax liability would be $3 billion dollars. That is $3,000,000,000 or ***$30 per taxpayer return. (The $30 is an averaged number. None of these figures include the interest on the debt.)

One way to know if a program is really a good idea is to ask yourself, would I give a total stranger ****$30 in order to help them buy a new car? (I am a taxpaying household.) Would you even give them $10? I wouldn't.

I suspect you wouldn't either.

Another thought: Considering that all these clunker chuckers now have to buy a new car, is our economy sluggish because people don't have the money to spend or because they don't have enough faith in our economy to part with their money? Obviously, getting up to $4,500 in "free" money has nudged these reluctant consumers into the buy column.

Post thoughts: We don't know the long term consequences of this program. I have to think it will take a fair amount of affordable cars off the market, the cars that lower income families and college students depend on for their transportation needs. On the positive side, the automotive industry is at last making some sales.

Although I am not in favor of deficit spending to stimulate the economy, is anyone wondering what a plain old stimulus check paid directly to taxpaying Americans would have done to stimulate the economy instead of the $787 billion dollar pork laden one we were saddled with? Someone who is good at math: What would $787 billion divided by 100 million taxpayers be? ;-)


More reading: Aug. 4, Obama administration withholds data on clunkers: 6 out of 10 vehicles purchased are Honda, Toyota and Hyundais.

Heritage Foundation Cash for Clunkers, A Case Study in Why Obamanomics is Failing
Dealers Race to Get Their Clunkers Crushed
New Cash Steered to Clunkers

Original wording:

*about 1 million -- we get roughly $1,000 per taxpayer.

** $2,000

***$3,000

Is anyone thinking here?

****$3,000 in order to help them buy a new car? (I am a taxpaying household.) Would you even give them $100? I wouldn't.

Links: 

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Brookfield7, Fairly Conservative, BetterBrookfield, Vicki McKenna, Jay Weber, The Right View Wisconsin, Randy Melchert, Mark Levin, The Heritage Foundation, CNS News

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