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Tipsheet

Surprise: Gov't Intervenes in Market, Chaos Ensues

What many of us predicted of the Cash for Clunkers program has finally been confirmed.  In a press release issued on Friday, online automotive sales resources site, Edmunds.com, announced that the CfC program provided "windfall for some, high prices for all."
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"Since the program launched, we've seen that shoppers are getting less of a discount off sticker price for new cars," notes Senior Analyst Michelle Krebs in her report on Edmunds' AutoObserver.com. "In some cases, they are choosing less expensive trim levels and option packages than had been typical in recent months, but paying more for them."

"In truth, this program launched at the worst possible time of the year," opined Edmunds.com CEO Jeremy Anwyl. "The annual summer sell-down typically creates a rush of activity for the industry, and this year that rush came right after automakers cut production in response to the floundering economy. It's a simple case of supply and demand, bolstered by a reduced level of negotiation on the part of excited clunker traders. Add to this the automakers' unseasonable reduction in incentives and the message is clear: if you buy a car this summer, you should expect to pay higher prices."
Politicians and bureaucrats with no experience in the auto market implement a plan that
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seems like a good idea, but turns out to do more harm than good.  Thousands of Americans are receiving our tax dollars so they can buy a new car, and hundreds of thousands are left to swallow higher prices in purchasing their own vehicles. 

I wish I could be surprised by this news, but most of us conservatives have been preaching this for a long time now.  How many similar programs have we seen politicians in Washington implement "to help" us, only to be left with a disaster?  I'm sure many thought Social Security seemed like a good idea at the time, but now my generation is paying more money into the system than we could ever hope to get out of it at retirement. 

Lesson learned, America? I doubt it.

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