Fausta's Blog

American and Latin American Politics, Society, and Culture

September 9, 2009 By Fausta

Money down the bailout drain

At the WaPo, the realization it’s a waste of money:
U.S. ‘Unlikely’ to Recoup Auto Outlay, Panel Finds
Treasury Urged to Be More Transparent

The federal government is unlikely to recoup all of the billions of dollars that it has invested in General Motors and Chrysler, according to a new congressional oversight report assessing the automakers’ rescue.

The report said that a $5.4 billion portion of the $10.5 billion owed by Chrysler is “highly unlikely” to be repaid, while full recovery of the $50 billion sunk into GM would require the company’s stock to reach unprecedented heights.

“Although taxpayers may recover some portion of their investment in Chrysler and GM, it is unlikely they will recover the entire amount,” according to the report, which is scheduled to be released Wednesday.

The report also recommended that the Treasury Department act with more transparency and provide a legal analysis justifying the use of financial rescue funds for the automakers. The report was prepared by the Congressional Oversight Panel, which is overseeing the federal bailout programs.

In all, the government has invested $74 billion in the nation’s auto industry, including $12.5 billion into auto financing giant GMAC and $3.5 billion into auto suppliers, according to the report.

Jacob Sullum poises the question of the legality issue, which remains unsolved.

And the government wants to run your healthcare, too.

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Filed Under: cars, Congress Tagged With: bailout, budget, Cash for clunkers, Fausta's blog, GM

August 26, 2009 By Fausta

Cash for Clunkers? Tax, rinse, repeat

Dan Riehl has it:

Clicking back a few links from an original tip from Snapped Shot on the Cash for Clunkers Program:

Here’s a new twist to both stories that you probably aren’t aware of yet:
The $4,500 rebate you “got” from the government was actually taxed both as income and as a purchase?

Even that may not be the end of people’s problems.

So here’s how that works: you pay taxes on your hard-earned income, which are spent on a wasteful handout, which is then taxed as both income and a purchase. Then the car dealers have to pay their business and income taxes on top of that.

And that’s what liberals call “creating wealth.”

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Filed Under: Barack Obama, cars, Democrats Tagged With: Cash for clunkers, Fausta's blog

August 23, 2009 By Fausta

Great idea! Let’s make air traffic controllers work at Cash for Clunkers instead

The Washington Times article’s title sounds innocuous enough (h/t Hot Air), U.S. adds clerks to clear clunkers
Volunteers include FAA
until you wonder who the FAA volunteers may be:

Employees of the FAA’s air-traffic-control unit were asked to help, but the Transportation Department stressed Friday that essential safety personnel were not diverted from their duties.

Let’s hope the air traffic controllers themselves weren’t. Still, the help ain’t cheap: According to one of Power Line‘s readers,

Another reader directs us to this salary table and adds that “overtime is capped at time and a half for a GS-10 Step 1 ($39.90/hr). A GS-15 Step 1 makes $57.90/hr whether straight working hours or overtime.”

As if that’s not bad enough,

Planners who expected to sell 250,000 cars in three months are now deluged with nearly twice that many applications seeking more than $2 billion in rebates after less than one month. Only 7 percent of the rebates have been paid, leaving many auto dealers out millions of dollars. Dealers were supposed to be repaid within 10 days.

Auto manufacturers have agreed to provide financial assistance to dealers until they are reimbursed.

You mean, the guys who needed to be bailed out in the first place? Why does the phrase “smoke and mirrors” pop to mind?

But hey, it doesn’t stop there: ‘Clunkers’ Program Benefits Foreign Automakers More, Data Shows
Smaller, more fuel efficient vehicles like the Toyota Corolla are top sellers, while buyers are trading in SUV’s like the Ford Explorer to be scrapped, turning the already dwindling number of American car owners into the growing ranks of foreign car drivers.

Is this a teachable moment? The New York Post editorial thinks so: Clunker Health Care:

Now consider health care.

The car program involved all of just $3 billion. Health care is a $2.4 trillion business, about 800 times bigger.

And, let’s be honest, ObamaCare aims to control as much of that as possible — with or without the “public option.”

So, will doctors be waiting for reimbursements?

Will patients be waiting to see doctors?

Yes, the president’s health-care promises — greater choice, lower costs, more folks insured — sound good. But they may prove just as hollow as what the car program claimed it would do.

And, again, if Americans find out they don’t like it, it’ll be too late.

Health care is way too important to entrust to bureaucrats. Monday, maybe the Obama folks should pull the plug on their health-care plans, too.

And, as you may recall, Robert Reich admitted nine days ago that

there’s still no healthcare plan. All we have are some initial markups from several congressional committees, which differ from one another in significant ways. The White House’s is waiting to see what emerges from the House and Senate before insisting on what it wants, maybe in conference committee.

Doesn’t that simply make you warm all over? Why, you can almost look forward to the day when overpaid FAA clerks (or even air traffic controllers themselves) are making the decisions on your health!

But back to cash for clunkers,
Maybe the dealers should go on vacation while they wait for their checks, and go fly the friendly unwatched skies in the hope that the check is in the mail?

Speaking of vacation, Dan has an ad,

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Filed Under: Barack Obama, cars, health care, healthcare Tagged With: bailout, Cash for clunkers, FAA, Fausta's blog

August 21, 2009 By Fausta

Donate a car, and other items in today’s roundup

Now that the cash for clunkers program is defunct, why don’t you consider donating your old car to charity? There are many local programs throughout the country, and the folks at Donate Car USA have an interesting article they would like you to read. Of course, before you donate to any charity, make sure to research them and be sure your donation will reach the people who really need it.

While on the subject of cars, armored vehicles are selling like hotcakes in Venezuela and the dealers can’t keep up with demand. No clunkers there

Mexico legalizes drug possession
Mexico decriminalizes small-scale drug possession
Mexico decriminalizes drug possession for small amounts as it battles big-time traffickers

Prosecutors said the new law sets clear limits that keep Mexico’s corruption-prone police from shaking down casual users and offers addicts free treatment to keep growing domestic drug use in check.

“This is not legalization, this is regulating the issue and giving citizens greater legal certainty,” said Bernardo Espino del Castillo of the attorney general’s office.

The new law sets out maximum “personal use” amounts for drugs, also including LSD and methamphetamine. People detained with those quantities no longer face criminal prosecution.

Education in Honduras: La Gringa asks, How low can you go?

Cuba’s economy (pdf file): Raulonomics:
Tough Diagnosis and Partial Prescriptions in Raul Castro’s Economic Policies

Drugs, money and narco-terror

Immigration Reform Is About Stopping Terror, Remember?
The author catches up with three Iraqis who attempted to illegally enter the U.S.

Following up on the Yale University Press’ deleting the Mohammed cartoons from a book on the subject, Roger Kimball found Martin Kramer connecting the dots.

Vaclac Klaus will be a speaker at the Cato Institute’s Freedom and Prosperity in
Central and Eastern Europe
20 Years after the Collapse of Communism
, which is scheduled for September 21, 2009.

Via Maria, What Would Jesus Do? Ask Obama

With dignity and respect, we are not “wee-weed up.”

Why special interests love Obamacare

Special interests, public financing a bad mix in Michigan governor’s race

———————————————-

In the fun department, Washington DC will have the Tangosutra tango festival on October 23-25.

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Filed Under: cars, Communism, Cuba, drugs, Honduras, immigration, Mohammed cartoons Tagged With: Cash for clunkers, Fausta's blog, Yale University

August 20, 2009 By Fausta

It’s official: ‘Cash for Clunkers’ to End on Monday

Let’s hope the car dealers waiting to get paid didn’t destroy the old cars yet:

‘Cash for Clunkers’ to End on Monday

Through Thursday, auto dealers have made deals worth $1.9 billion and are on pace to exhaust the program’s $3 billion in early September. The incentives have generated more than 457,000 vehicle sales. Administration officials said they have reviewed nearly 40 percent of the transactions and have already paid out $145 million to dealers.

Administration officials said applications for rebates will not be accepted after 8 p.m. EDT Monday and dealers should not make additional sales without receiving all the necessary paperwork from their customers. Dealers will be able to resubmit rejected applications after the deadline.
…
Dealers have complained of delays in getting reimbursed and backlogs of vehicle paperwork getting processed in the program.

Hmmm… running out of money, delays, backlogs… and they want to give us “free healthcare,” too?

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Filed Under: Barack Obama, cars Tagged With: Cash for clunkers, Fausta's blog

August 19, 2009 By Fausta

Playing the Cash-for-Clunkers game

Via Instapundit, Knox News links to Former Senate Majority Leader Bill Frist uses Obama’s cash for clunkers for a new Prius. Why not? He’s not breaking the law, and the program’s there.

But the cash-for-clunkers is not working out for people who would be in the market for a good used car, for mechanics, and for dealers. Dan Riehl:

Nothing like destroying lower-cost automobiles in an economic downturn. That's precisely what Cash for Clunkers does and mechanics aren't thrilled. They’re losing work. No point in re-purposing them for low income people on public assistance who could use them to get to a job. At the rate Obama is going, there won’t be any jobs in four years.

DALLAS, TEXAS – Sodium silicate. Pour 2 quarts in a car’s engine. Hold it at 2000 rpm’s. And in about 5 minutes, car dealership Service Director, Mike Zorn, says, it’s “lethal injection to a motor vehicle.”

And now New York Dealers are pulling out of the program because they aren’t being paid in time for it to make sense.

Here’s what I propose: the car dealers should keep the old cars intact and unharmed until (and if) they get paid. If they don’t get the money, they would still have an asset that could be sold or traded.

The politicians in Washington are telling us that it’s not just about how you play the game; it’s also about how you come out ahead. Might as well practice that lesson ourselves.

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Filed Under: Barack Obama, cars Tagged With: Cash for clunkers, Fausta's blog

August 3, 2009 By Fausta

Cash from clunkers

The WSJ explains the folly of the cash for clunkers program:
Cash From Clunkers
Let’s have a $4,500 subsidy for everything.

On the other hand, this is crackpot economics. The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years.

It isn’t clear this will even lead to more auto production over time, since the clunker cash may simply cause buyers to move their purchases forward. GDP will get a fillip in the third and perhaps fourth quarters, which will please the Obama Administration. But the test will be if auto sales hold up next year and into the future once the clunker checks go away. The debate over the subsidy may even have prolonged this year’s auto slump as buyers delayed their purchases waiting for the free lunch.

Betsy wants to know,

And if giving out free money for people to make their own choices is so great, how about vouchers for education? What about that District of Columbia program that the Obama administration and Democrats are eliminating?

James Pethokoukis: Cash for clunkers is Obamanomics in microcosm

An analysis by Macroeconomic Advisers forecasts that the program will affect only the timing of car sales, not total sales: “In particular, we expect that roughly half of the 250,000 in new sales would have occurred in the months following the conclusion of the program, and the other half would have occurred during the program period anyway. Therefore, we do not expect a boost to industry-wide production (or GDP) in response to this program.”

In other words, the program gets much of its juice via stealing car sales from the near future rather than generating additional demand. In practice, it works much like tax policies and subsidies to encourage women to have more children. Studies have found that women may have children earlier than they would otherwise, but they don’t necessarily have more kids.

The rebate program is also emblematic of the administration’s unwise approaches to economic policymaking. It borrows money to generate economic activity, which in effect borrows growth from the future, since eventually that loan will have to be paid back through higher taxes.

It picks and promotes a particular industry in a sort of small-scale industrial policy. It also places an emphasis on consumer spending as a route to renewed prosperity over greater investment — and isn’t that how the American economy got in trouble in the first place?

The ecological benefits may be minimal:

The fuel-economy requirements for the new car were, after all, fairly lax: You could in theory trade in a Hummer that got 14 mpg and get $3,500 toward a brand new 18 mpg SUV. That’s still an upgrade (and, in fact, that trade would actually save more gas than upgrading a 30 mpg sedan to a 35 mpg vehicle), but it’s a meager one. And if the upgrades are, in fact, all meager, they could end up being dwarfed by the energy required to manufacture new vehicles (particularly since dealers have to scrap the “clunkers” that get traded in—many of which are perfectly good, albeit inefficient, cars).

Borrowing money in order to create an incentive to destroy perfectly serviceable assets, to use the WSJ’s words, bothers me to no end: there is a historic precedent, which was nearly-ruinous. Econbrowser remembers,

One of the more embarrassing features of the New Deal was the Agricultural Adjustment Act of 1933, which paid farmers to slaughter livestock and plow up good crops, as if destroying useful goods could somehow make the nation wealthier. And yet here we are again, with the cash for clunkers program insisting that working vehicles must be junked to qualify for the subsidy.

Cash for clunkers? No, just more feel good crap that goes against capitalism.

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Filed Under: cars, Democrats, economics, economy Tagged With: bailout, budget, Cash for clunkers, Fausta's blog, GM

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