Should Congress Refuel The Stalling "Cash-For-Clunkers" Program?
Doug Kass Presidnt, Seabreeze Partners Management
CARS is another transfer payment with no meaningful and enduring multiplier effect. While the program will modestly raise both consumer confidence and insure a boost to third-quarter 2009 GDP growth, it is small in scale relative to the size of our economy and is not contributing to a self-sustaining recovery. Indeed, the beneficiaries are mainly foreign automobile manufacturers and the program may be "borrowing" from car sales for next year - setting the stage for a possible double dip.
Like Bastiat's "broken window fallacy” we are simply destroying old cars and replacing them with new ones without stopping to consider the opportunity cost of capital.
And I suspect the "real cost" is far in excess of $4,500/automobile. There is simply too much effort involved for what we are receiving - popular with a select group of consumer and politicians that are elected by those consumers!
Jim LaCamp Portfolio Manager, Portfolio Focus, RBC Wealth Management
Co-Host, Opening Bell Radio Show, Biz Radio Network
Although this program makes far more sense than most of the programs like crap and trade, and the healthcare bill, the money from this program doesn't come from the tooth fairy. It comes from taxpayers. Enough.