As the healthcare debate continues and a public option keeps being pushed, it is a good idea to do a reality check and see just how inefficient government programs truly are. The mostly highly publicized “successful” government program of late is the Cash For Clunkers program. This was a $3 Billion taxpayer funded bailout of automotive manufacturers. It was a small part of the overall redistribution of dollars from taxpayers to automotive manufacturers and their Wall Street investors.
The program was so wildly “successful” that it looks like Ford is back on the road to recovery:
Ford Motor Co. earned $1 billion in the third quarter, fueled by U.S. market share gains, cost cuts and the government’s Cash for Clunkers rebates.
The Dearborn, Mich.-based automaker on Monday reported net income of $997 million, or 29 cents per share. Ford says it now expects to be “solidly profitable” in 2011. Previously the automaker said it would be break-even or better.
That’s great news, right? Well, I guess that depends on who you are. If you work for Ford, or are an investor in Ford, definitely great news. If you were one of those folks who traded in your clunker and walked away with a new Ford, also, great news. If you are a present or future taxpayer who actually had to underwrite this latest government scam, well the news is not so great. You may have thought you were helping your fellow citizen get into that new car ( I’m sure a high priority for most of you) with a $4,000 subsidy, but the truth is actually a much bigger subsidy:
Edmunds.com, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.
Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.
Ironically, the average transaction price for a new vehicle in August 2009 was only $26,915 minus an average cash rebate of $1,667.
Nice, every taxpayer just paid to give away a free car. Only a federal government program could take money from the masses and redistribute it to a few, who would have bought a new car at some point in the future with their own money, in order to help some companies postpone their demise or exceed expected earnings. This is just too absurd.
Still having a hard time getting a grasp on this? Well, consider what the much heralded “successful” Cash for Clunkers program may as well have done.
For that price, the federal government could have purchased the 125,000 cars outright at manufacturer suggested retail prices, such as a Ford Fusion, Focus or even a Mustang, and then handed each of the recipients an additional bonus check averaging the Cash-for-Clunkers subsidy of $4,000. Or they could have bought every one of those 125,000 people a Smart car and then given them a check for $6,000.
Now, we’re going to put these same government folks in charge of our healthcare programs in order to cut costs. Yeah, that’s gonna work well.