Cash for Clunkers, A Case Study in Why Obamanomics Will Fail

If you watch television you’ve seen the ads: “So bring in that old jalopy and get up to $4,500 towards the purchase of a new or select used vehicle. That’s right, get up to $4,500 for that old piece of junk, plus you keep the rebates. You have to hurry! Since funds are limited for this program it’s first come, first served!” Well, we’re about to find out just how limited those funds were. The Obama administration’s cash-for-clunkers program has been such a “success” that in just the first week of full implementation, the $1 billion originally allocated for the program is about to be exhausted already. Does this mean the program is over? We don’t know. Nobody does. And that is just the beginning of why this program is a perfect illustration of why Obamanomics will fail.

Government administrators are ineffectively co-ordinating what should be a relatively simple project; i.e., give people money to trade cars. Of course, government has a long history of bungling when it interferes with markets.