Been seeing a lot of conservatives poking at the recent Cash for Clunkers program. Our govt, of course, underestimated the appeal and $1 billion in funds expected to last four months only lasted a week. There is, understandably, much to poke fun at here.
What I don’t entirely get, however, is this chain of thought: I keep seeing pundits ask, “why did we pay people to buy cars? Why not…” washer/dryers, sofas, pizza, etc.
Call me dense here, but I figured we were going for stimulus, right? Maximum economic impact? So, I buy a new car, saving over $4 grand, I’m pretty happy. I’m going out to drive around my new little car, eating out more, seeing movies, generally being a good little consumer.
You pay me to buy a new washer/dryer? I’m…doing my laundry. Nice and all, especially if I don’t have a washer/dryer now, but the likelihood of it changing my spending habits is pretty low. Oh, I might buy detergent now. The makers of Tide are happy.
Cars are major purchases, and the Cash for Clunkers is a significant rebate…enough that, in my humble opinion, recipients are more likely to redirect that back into the economy than $150 off a washer/dryer or sofa.