More Eco-Fraud from CongressThe greatest flaw in congressional actions is their lack of regard to the immutable Law of Unintended Consequences, especially when it comes to Obamanomics. They do one thing and it always has far reaching effects as their largess percolates into the greater world beyond their cloistered existence. A fine example is contained within the recently passed War Funding Bill. Its stated purpose is to remove less efficient, older cars from the road in favor of more efficient models. Help the poor and all that. But it will do far more than that.
It provides a cash payment of $3.500 to $4,500 for these older cars, when traded in for a new vehicle. Sounds good, right? But what will it actually achieve? It seems to me that many people with older cars can not afford new cars in the first place. Even a Kia will set you back at least ten thousand dollars, so the buyer will be several thousand dollars short of any new car. But with many people able to do so, many of these plder cars will be traded in and disappear from the market. For people who need to buy these older, less efficient cars for their basic transportation needs, the market will have to recognize these artificial trade-in values and lower supply by raising the price of these used cars. Many of these so-called transportation cars today sell for less than one thousand dollars, with quite a few going for two to three. These prices will all rise.
So who will be hurt? Clearly, like most of what congress does, the most vulnerable among us will suffer the most. We live in such a rich country that even most people living at the poverty line own automobiles. The old pickup died, so another one is needed, but instead of being able to pick one up for $750, it will now cost more like $2,000. Our government just committed to spend a cool billion dollars to accomplish this. Nice Change, for those with a little less Hope than the rest of us.