Tag: obama

Using ‘Cash For Clunkers’ Money to Buy a Muscle Car

chevelleABC News reports that the “Cash for Clunkers” scheme, a government program that offers a rebate to people who trade in vehicles with low gas mileage for more fuel efficient cars, is  gaining popularity:

The program is off to a fast start. In less than a week, 8,000 cars have been traded in for new ones – deals that might not have happened if Washington were not offering people $3,500 to $4,500 to get their aging gas guzzlers off the road.

In June, Cato senior fellow Alan Reynolds explained  how you can use that money to buy the muscle car or truck you always wanted:

Consider how easy it would be to game this giveaway program by using that $4,500 voucher to buy a big SUV or V-8 muscle car.

First of  all, with Chrysler and GM dealerships folding, it should be easy to buy a mediocre Chevy Cobalt or Dodge Caliber for about $10,000 more than the voucher.

What you do next is sell that boring econobox, even if you end up with $1,000 less than you paid — that still leaves you with $3,500 of free money, courtesy of taxpayers.

As this  process unfolds, the flood of resold small cars will make it even  harder for GM, Chrysler and Ford dealers to get a decent price for small cars, because of added competition from new cars being resold as used.

That’s their problem, not yours.

So, take the $9,000 net from reselling the crummy little car plus the $4,500 from Uncle Sam.  Then use that $13,500 to make a big down payment on a used Cadillac Escalade,  Toyota Tundra pickup or Corvette.

File this under “unintended consequences” (my own file is running out of space).

More Evidence on the Turning Tide

america-store_2065_6501360I wrote recently about the anti-Obama T-shirts on display at Washington’s Dulles Airport. This week I can report that at the Baltimore/Washington International Thurgood Marshall Airport, there are big cut-outs of Barack and Michelle Obama. But they’re standing by a display of shirts reading “Don’t Blame Me, I Voted for McCain and Palin” and another reading “NOPE (with the Obama campaign logo) – keep the change.” The times they are a-changin’.

In the interest of full disclosure, I should note that out in the real America, the airports of Albuquerque and San Diego, there are no T-shirts on display for or against any politician. It’s like they don’t think Americans care about politicians.

The Price of Universal Coverage Just Went Up

Since at least February, President Obama and other elders of the Church of Universal Coverage have labored to create the impression that universal coverage is inevitable, because a sense of inevitability reduces its cost.  If interest groups think this train is leaving the station, they are less likely to stand in its way.  Lobbyists are more likely to cut whatever deal they can if their clients believe, “It could have been much worse.”  That’s why Obama has demanded haste: the longer the process, the harder it is to maintain a sense of inevitability.

Here’s a sampling of today’s health care headlines from the non-partisan Bulletin News, which summarizes news media coverage:

  • Senate, Obama Back Off Healthcare Reform August Deadline.
  • Obama Rakes In Cash For DNC, Criticizes Media Coverage Of Healthcare Debate.
  • Obama’s Performance At Wednesday’s Press Conference Comes Under Fire.
  • President’s Media Strategy Raises Eyebrows.
  • House Democrats Consider Sidestepping Committee.
  • Democratic Caucus Holds “Contentious” Meeting.
  • Black Caucus Blasts Blue Dogs; AARP, Unions Also Criticize Group.
  • Freshmen Senators Ask Baucus To Hold Costs Down, Praise His Efforts.
  • More Criticism Of Obama.

Now that reform seems less inevitable, interest groups will be less likely to settle for a bad deal.  Instead, they will be more likely to demand higher payoffs than before, because their clients believe the expected cost of alienating Church elders has moved away from “getting punished” and toward “the status quo ante.”

So, good luck paying for this thing.

Education Reform’s Moon Shot Moonshine

In today’s Washington Post, education secretary Arne Duncan describes the administration’s $4.5 billion “Race to the Top” fund as “education reform’s moon shot” — a watershed undertaking that will transform the way children learn and dramatically improve outcomes. No doubt he believes that. But since he also seems to believe that he brought about dramatic academic gains in Chicago — something that I and others have shown is not the case — the secretary’s beliefs should be taken with a grain of salt.

“Race to the Top” funds will be used to reward states that pursue education policies favored by Duncan and President Obama, and, by extension, to punish states that don’t. It is obedience training writ large. States that Duncan felt were going in the wrong direction in recent weeks, like Rhode Island, were rapped on the nose: keep it up, and we’ll withhold millions in education funding kibbles, they were told. States like Colorado have already been brought to heel. “We all know Colorado needs this money,” Lt. Gov. Barbara O’Brien told the Washington Post, and she and other state officials have poured over Duncan’s every word to ensure that they follow his commands to the letter.

And what commands Duncan and Obama are giving! High on their agenda is bringing the nation’s schools into lock step when it comes to standards and testing. They promise, with little evidence, that this will drive educational excellence. Meanwhile, just this month, British schools secretary Ed Balls terminated that nation’s decade-long national math and reading strategies, saying that: “I think the right thing for us to do now is to move away from what has historically been a rather central view of school improvement through national strategies.” If central planning were a panacea for education, why are the Brits — who have years of experience with it — turning away from it?

And if the president and his education secretary really cared about evidence-driven education reform, they would not have decided to kill the D.C. opportunity scholarships program that gives low income families in the nation’s capital access to private schools. Children in that program for three years read two grade levels ahead of their peers who remained in public schools. And that’s according to Duncan’s own Department of Education.

Obama and Duncan may well train state education leaders to follow their commands, but there’s no reason to believe those commands will improve American schools.

My Question for the President

President Obama will hold a press conference tonight to answer questions about his health care reform proposal. This is what I would ask him:

Mr. President, during your campaign, you said, “I can make a firm pledge…Under my plan, no family making less than $250,000 a year will see any form of tax increase.”  You also said that “no one will pay higher tax rates than they paid in the 1990s.”

Your National Economic Council chairman, Larry Summers, has written that employer mandates “are like public programs financed by benefit taxes.”  Under the House health reform bill, an uninsured worker earning $50,000 per year, with no offer of coverage from her employer, would face a 15.3-percent federal payroll tax, a 25-percent federal marginal income tax rate, an 8-percent reduction in her wages (to pay the employer penalty), plus a 2.5 percent uninsured tax.  In total, her effective marginal federal tax rate would reach 50.8 percent.

Do you stand by those pledges, and would you therefore veto any employer mandate or individual mandate as a tax on the middle class?

(Add it to the questions I posed here and here.)

Senate Votes to End Production of F-22 Raptor

As I have written previously, President Obama and the members of Congress who voted to kill funding for the F-22 did the right thing.

The Washington Post reports:

The Senate voted Tuesday to kill the nation’s premier fighter-jet program, embracing by a 58 to 40 margin the argument of President Obama and his top military advisers that more F-22s are not needed for the nation’s defense and would be a costly drag on the Pentagon’s budget in an era of small wars and counterinsurgency efforts.

While this vote marks a step in the right direction, the fight isn’t over. The F-22’s supporters in the House inserted additional monies in the defense authorization bill, and the differences will need to be reconciled in conference. But the vote for the Levin-McCain amendment signals that Congress will take seriously President Obama and Secretary Gates’ intent to bring some measure of rationality to defense budgeting.

The Raptor’s whopping price tag— nearly $350 million per aircraft counting costs over the life of the program— and its poor air-to-ground capabilities always undermined the case for building more than the 187 already programmed.

In the past week, Congress has learned more about the F-22’s poor maintenance record, which has driven the operating costs well above those of any comparable fighter. And, of course, the plane hasn’t seen action over either Iraq or Afghanistan, and likely never will.

Beyond the F-22 and the Joint Strike Fighter, we need a renewed emphasis in military procurement on cost containment. This can only occur within an environment of shrinking defense budgets. Defense contractors who are best able to meet stringent cost and quality standards will win the privilege of providing our military with the necessary tools, but at far less expense to the taxpayers. And those who cannot will have to find other business.