Cash for Clueless, er — Clunkers

Let’s set aside the health care reform debate for a moment — it’s horrendously complex with multiple constituencies, conflicting goals, and major philosophical disagreements.

Let’s look instead at something simple — with minimal variables and little debate between the two ruling parties — Cash for Clunkers. How simple can it get, right?

During the boom years when everyone was spending money they didn’t really have by borrowing against home values that didn’t really exist, we were buying 16 million new cars a year. Once the bubble burst and people decided to stop spending pretend money, it turns out we’re really a 9 million car a year nation.  Not good for our government owned and operated auto industry.  So they decided to juice the numbers.

So, the government’s Keynesian savants looked at aggregate demand, average wages, consumer sentiment, blah, blah, blah, carry the 2, yada, yada, yada, and came up with the exact answer — “if we give $4,500 to people, we can boost car sales 200-300,000 over 3 months for 1 billion dollars.”  Give or take a week.  You know — for rounding errors.

They kicked it off the last week of July with a Nov 1 cutoff.  And ran flat out of money.  That week.  On the 5th day the pols TRIPLED the spending and are now relatively confident it will last until Labor Day.  Got that?  The “budget” was to spend $1 billion in three months, and the reality cost $3 billion for one month.  Wrong by a factor of nine.

Lesson?  Given the above, if you believe the collective economic imbecile that is our government has any real capacity or interest in “fixing” something as complicated as our health care system, then you my friend, are stark, raving, howl-at-the-moon crazy.

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