Gray Column: Cashing in on short-term gain

I find it hard to believe that my 2003 Mercury LeSable is a clunker. It only has about 78,000 miles on it, which in my minds says I’m just breaking it in. But that would be my opinion and not the federal
governments. According to the new government program dubbed Cash for Clunkers, my car is most likely a clunker and so too might yours be, and the government will give you money to get rid of it. But
hold on just a second.

Lets think really hard about what this program is all about.

Congress says they want you to get rid of your gas guzzling, air polluting car. And to do so the government will give you a credit of $3,500 to $4,500 towards a new car. I use that word “give” loosely since
the money comes from taxpayers.

The program has been so popular that the funds, $1 billion, were gone in one week.

So, late last week the Senate voted to add an additional $2 billion dollars to keep the buying going. Here’s how the program works in a nutshell. Any cars bought after July 1 could be eligible for refund
vouchers worth $3,500 to $4,500 on traded-in gas guzzlers. The trade-in vehicle has to get a combined city and highway fuel economy rating of 18 miles per gallon or less — then it is classified as a
clunker.

At face value the program seems like a good idea for everyone — car dealers, automakers, the consumer and the environment.

So everyone is a winner, right? Wrong.

Last I checked, wasn’t fast and easy money in the form of credit the reason we got into a recession in the first place? I could be wrong but I do think that had something to do with it.

Lets just ponder on that thought for a minute. Here you have the government giving car buyers, who chances are wouldn’t be car buyers, up to $4,500. When I looked on pricequotes.com, the price of a
hybrid sedan was roughly $22,000. Hybrids seem to be the purchase of choice right now. That means someone, if they were getting that sedan, would be incurring a debt of $17,500 to pay off. That is a
hefty debt to bring on in the middle of a recession.

At the same time the government is also trying to assist homeowners who are in trouble of foreclosing on their homes, which in my opinion is a much better program to be reinforcing right now.

So what you have is the ultimate oxymoron of government spending. At a time when the government is offering assistance to struggling homeowners who might lose their home, we can also give billions
of dollars for a car that can get you to that home.

Now you might say, Davon don’t be such a pessimist. The Cash for Clunkers program is a great way for people to get new automobiles and pump new money into the economy.

In the short term, maybe you are right. But at best the government can only keep this program going for a few more weeks; then what?

Wouldn’t these millions be better spent reinforcing unemployment benefits that are running out for some folks here in Virginia? Or, here is an even better idea, just don’t spend the money. We do have this
thing called a deficit on our backs like an 800 pound gorilla.

Yes, maybe in the short term it does seem right, but just like that new car smell you get after purchase, it will wear off.

While our members of Congress are out on break, maybe we should remind them that we can’t print (with money) our way out of this recession.

The country can’t get sucked into the thinking that more spending will end the recession and lower our national deficit all at the same time. It’s a great thought, and yes, it would be nice to help out those
poor car salesmen who are just as much victims of this recession as everyone, but we must get a long-term way of thinking on spending.

Finally, I have to ask: Has that ever happened before? Have we ever, as consumers or through government spending, just spent our way out of a recession without long-term problems? I think you know
the answer to that question.

That way of thinking is like betting everything on a race horse that has never won a race. The odds are stacked against you and therefore it just doesn’t make sense.

Davon Gray works in Washington, D.C., and resides in Woodbridge. Contact him at davongray@verizon.net.