Econ 101: put public behind wheel!
"Cars for clunkers" success shows power of putting consumers in driver's seat
Augusta Chronicle Editorial Staff
Sunday, August 02, 2009

Talk about a "teachable moment"!

The Obama administration has found it tough going in trying to stimulate the American economy -- primarily because the emergency $787 billion "stimulus" bill passed earlier this year mostly stimulated the government.

But now the administration is the victim of its own success in the one area where it actually stimulated the private sector: the "cash for clunkers" program.

On Thursday, the administration first abruptly suspended the program -- which gives federal rebates to people who trade in gas guzzlers and buy new fuel-efficient cars -- then announced Friday the program would operate through the weekend.

The reason for the confusion: The $1 billion program was too successful and appears to have run out of money.

Thankfully, the administration kept it going through the weekend, when most people shop for cars -- and, coincidentally, during Georgia's sales tax holiday. The House moved quickly to put more gas in the program's tank; the Senate is to follow.

Finally, a government stimulus that stimulates!

That should provide the administration with several important economic and political lessons -- primarily that increasing government spending and stimulating the economy are two different things entirely.

This very basic lesson in supply and demand -- and the power of the private sector vs. the government -- was totally lost on the administration and leaders in Congress. That led to brief, but massive confusion for hundreds of thousands of dealers and car buyers on Friday.

The lesson is clear: If Washington is intent on spending money to get the economy moving, the cash for clunkers program is one of the best ways they've tried so far. It not only gets gas guzzlers off the streets, but infuses the much-battered automobile industry with new cash and enthusiasm.

You have to wonder why the government didn't foresee the program's popularity.

And why we should now trust it with health care.

From the Sunday, August 02, 2009 edition of the Augusta Chronicle
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