Political Accounting
August 3, 2009
|
Posted by Michael S. Langston
As we all know, Congress, the Senate, and the President of the United States is pushing hard for health care reform, which they promise us will lead to lower costs and will be completely revenue neutral.
To take their claims into context, these are the exact same individuals who brought us a really good program, Cash for Clunkers, only to bankrupt it in 1/11th the promised time.
The program, which was intended to remove older, less fuel efficient cars off the road, started on July 24th, 2009, with a total of $1 Billion dollars in assets (here):
…Approved last month, the program known officially as the Car Allowance Rebate System offers rebates of $3,500 to owners who relinquish cars rated at less than 18 miles per gallon to purchase ones getting at least 22 m.p.g. If the new vehicle gets at least 10 m.p.g. more than the trade-in, the rebate is $4,500. For SUVs, minivans and pickups, a 2 m.p.g. improvement is required, while a 5 m.p.g. gain nets the full rebate…
…The program is expected to run four months, or until the $1 billion is depleted. The National Highway Traffic Safety Administration has until July 24 to issue the final regulations, putting most transactions on hold until Friday…
It was supposed to last 4 months, but is now almost out of money (here):
WASHINGTON — Transportation Secretary Ray LaHood said Sunday that unless the Senate approves $2 billion in additional funding, the Obama administration could be forced to halt as early as Tuesday the “cash for clunkers” program that has become one of the most visible and fast-acting of the government’s economic-stimulus programs.
& the analysis itself wasn’t a simple mistake or a black swan. We didn’t run into any unknown situations or start out with bad numbers. The reason the initial analysis was wrong was negligence:
…U.S. auto sales have been running at an annual pace below 10 million a year since January, a steep drop from the 16 million annual sales levels normal earlier in the decade. That sales collapse has led to tens of thousands of layoffs at auto companies and the manufacturing and service firms that support them…
Using just those numbers alone, we expect 3.2 million cars to be bought in the next 4 months, but Congress allocated money for just 8% of expected sales, without apparently contemplating the obvious increase in demand.
Of course this is a minor example when comparing the relatively small number of $1 billion dollars (or $11 billion) against a $3 trillion dollar budget, but it’s clearly instructive.
Time and time again, the government had lead us down a path with promises of this and that kind snake oil, this and that kind of freedom. Yet almost every single time, they have proven their inability to fully understand the consequences of legislation.
The amount of willful ignorance it mush take to be consistently wrong, but still think you’re helping now or will be helpful in the future is simply astounding.
But shooting fish in a barrel will only get us so far. In our system of government, the end result is that the voters are truly responsible. Politicians run on incentives like us all & as long as voters don’t hold them accountable for their mistakes, they have no obvious reason to change course.
If we as voters show, by our very actions, that we are ok with a system that rewards incumbency without contemplating actual results, rewards style over substance, rewards politically correct talk as opposed to direct debates, we are contributing to a system which will allow these actions to continue.
But since there doesn’t seem to be any grassroots effort aimed at actually changing the system itself instead of ensuring “our team” wins, we might as well ask the question:
How much did they say health care would cost?
Categories: Economics
| 
Tags: Auto Industry Bailout, Economic Predictions, government spending, Obama Administration, Stimulus, TARP
|
Leave a reply
Trackbacks / Pingbacks