A Clunker of a bill...

In general, I'm not a fan of using the tax code as a means to enact social change - I think it should be used to raise the money needed to keep the goverment running and performing it's functions, not to transfer money from politically unpopular groups to politically popular ones. So I'm not a fan of the many "stimulus" tax credits that have been going on lately, including the Cash For Clunkers bill that was recently passed.

Of course, one reason I'm not thrilled about it is because I don't qualify for it - which seems to be the case for almost all of the stimulus tax credits. Because I bought my house when prices were high, because my mortgage happened to be issued by the wrong agency, because I bought my car back when people still bought cars, because I haven't found a woman willing to talk to me, let alone have kids with me - no tax credits for me. So I end up a payer instead of a payee. Then again, if they ever tried to take away the mortgage interest deduction I would be screaming bloody murder. But the problem with tax law is that it makes people make decisions based on that law, and changing it impacts those decisions - the price of housing would majorly drop (even more) if the mortgage interest deduction went away.

But I don't like the bill for other reasons than the fact that it doesn't make me any money. It's debatable if we really should be encouraging people who are on the fence about buying new cars to buy them - sure, it's good for dealers and manufacturers, but taking on more debt isn't really something the government should be encouraging. It also seems likely that a lot of that money is going to go to people who would have bought new cars anyway - so you are giving people money for doing something they were going to do anyway, which is a complete waste of money and stimulates nothing.

Also, I'm a bit of a car enthusiast - with a penchant for odd and unpopular cars. I'm also a big believer in the fact that car ownership makes people's lives better - that it gives them the freedom to go places, to find better jobs and housing, and this bill actually hurts that. It takes a bunch of perfectly good cars and destroys them, which seems like a waste of good cars. It means fewer cars out there for collectors in the future. It also means fewer cheap used cars - by crushing a bunch of perfectly good cars, we are taking a bunch of <$5000 used cars out off the market and out of the hands of used car buyers. And <$5000 cars are the kinds of cars that young people and people with low income tend to buy as their first cars, the kind of trucks and vans that contractors just starting out buy. Cutting the supply of cars will raise the prices, and it will keep lots of poor young people in the ghetto instead of being able to drive to a job.

The other thing is that the bill is being sold as good for the environment. As the Reuters article points out, the gas savings is minimal - someone could trade in a truck that gets 16mpg for one that makes 18mpg (they say a "Hummer", but good luck finding a Hummer that has a trade-in value below $4500). Wired magazine had an article last year (which doesn't seem to be online) arguing that you are better off keeping an SUV than trading it in for a hybrid, because of the huge amount of energy and raw materials it takes to make a new car. So from an envirmonmental perspective, building a brand-new car, and having to dispose of a perfectly good old one, to save 2mpg, makes no sense.

So we've managed to make a law that takes $1 billion from one group of random taxpayers and gives it to another, while making it harder for poor people to buy a car and probably causing more damage to the environment. Now there is a clunker of a bill I'd love to crush.