Not everyone will operate this way. But enough people will that the fuel savings is sure to fall short of the rosiest expectations.
Likewise with the stimulus. Right now, it looks as though Cash for Clunkers is a blessing to automakers and the economy because it's induced consumers to buy cars they wouldn't have bought. Actually, a lot of the vehicles would have been purchased regardless -- just not right this minute.
Some people undoubtedly put off shopping for a car back in May or June to get in on the deal. Others who were planning to wait until fall or winter to get rid of the old beater decided to act sooner. Just because dealers are selling more cars right now doesn't mean they'll sell more cars overall. If the program gave the economy a jolt in July, it will be a drag in December.
The buying frenzy is widely interpreted to mean that Congress and the administration did a brilliant job of designing the plan. George Mason University economist Russell Roberts contends on his Cafe Hayek blog that it proves just the opposite.
If you put your house on the market and immediately get 10 offers at the listed price, it means you should have asked for more. The stampede, says Roberts, indicates the subsidy ($3,500 or $4,500 per trade) was too rich and the government could have gotten "the same effects with a much smaller amount."
As it is, the House and Senate quickly allocated another $2 billion to consign more cars and trucks to the scrap heap. Isn't that just like our government? A lot of money spent and a lot of wreckage left behind.
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