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  • Cash for Clunkers Failed to Create Auto Jobs

    Congress passed the Cash for Clunkers program in order to increase automobile employment and save jobs. As Michigan Sen. Debbie Stabenow – a key supporter of the law – put it, “This is a jobs program first.” Cash for Clunkers has done many things. It has given hundreds of thousands of Americans vouchers worth between $3,500 and $4,500. It has encouraged many Americans to trade in old cars now instead of waiting a few years. It has destroyed valuable used cars that dealers would have resold to low-income Americans. It has added $3 billion to the national debt. But the new jobs report shows that Cash for Clunkers has not done the one thing Congress intended it to do: create jobs.

    The employment report shows that – despite the Cash for Clunkers craze, and the $2 billion Congress added to the program at the end of July – motor vehicles and parts manufactures shed 15,000 jobs in August. That erased half of the jobs gained in July and continued the yearlong downward trend. The Commerce Department separately reported that spending on automobiles increased between June and July when Cash for Clunkers kicked in. However, while spending on cars went up, spending on other goods and services fell. Handing out taxpayer dollars is popular, but that does not make it good – or effective – policy.

    Posted in Economics [slideshow_deploy]

    15 Responses to Cash for Clunkers Failed to Create Auto Jobs

    1. Mark, Virginia says:

      Cash for Clunkers Trashed $3 Billon. I estimate half of it was wasted by overpaying individuals for the cars it purchased. The second half, $1.5 Billon was sent to the juck yard. It created no new jobs; becuase the demand for new vehicles was shifted from months/years in the future till now. So it has a slowing affect on future sales. We would be further ahead if the government gave $3 Billion in cash to the electric company to burn in their coal power plants.

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    5. Bobbie Jay says:

      It did create unnecessary, government make-work just to drain more revenue!

    6. Steve Selengut, Kiaw says:

      How To Create More Jobs America

      My recent survey produced a variety of ideas, but most of them had these common elements: replace the Internal Revenue Code with a simpler model, encourage businesses to increase employment, and insist upon tort reform everywhere.

      It also brought two disturbing realities into focus: We are painfully apathetic (less than 1% of the people I contacted took the time to respond) and, although we have great problem-solving ideas, few to none of them are included in any of the reforms being considered by congress.

      For those who participated, thank you again. I hope that you will appreciate how I've synthesized your thoughts and suggestions into the commentary. I also hope that you will find the time to address some of these issues more aggressively with blogs, networks, and elected officials.

      Major changes are being proposed in six inter-related areas. All the dots cannot be connected in one article. Government revenue is cut in this article and the next without a hint about a replacement plan. I'll get to that later, and painlessly for all of us.

      So how do we create more jobs?

      Perhaps the first step in creating more jobs is to take a giant step backwards and define what a job is. In the simplest of terms, your job is the principal moneymaking activity in your life.

      The more qualifications and skills you have (physical, technical, intellectual, etc.) the more valuable you are to employers, customers, and clients. Thus, more practical, job specific, education becomes a vital part of the jobs picture.

      For the self-employed, the amount of effort expended, marketing skills, and the product or service itself is as important as the qualifications. But the objective of the job, the career, and the company, is to make money.

      Government jobs are of a service, regulatory, and social problem solving nature— unquestionably necessary, but the primary motive is not to create personal wealth or economic gain, hence the thousand-dollar toilet seat scenario. These jobs are paid for by taxes collected from all employed people— except our friends in the "underground economy", who pay virtually no taxes at all.

      The more government jobs, the more taxation; the more government regulation, the more need for cost analysis of the regulations spewed forth. Consumers ultimately pay all of the costs of compliance, everywhere.

      Most self-employed people start off working for others; large or small really doesn't matter. What matters is that employers hire these people to make the enterprise more productive, safer, more efficient, and more profitable.

      In theory, employees must contribute to profitability, and each is compensated based on his or her contribution, as determined by the owners of the enterprise. In larger organizations self-serving executives are able to pillage the profits of the enterprise, to the detriment of both owners and employees.

      Employee benefit programs (health & dental insurance, pension & savings programs, investment education plans) were originally implemented to attract and retain the best employees.

      Today, employers are reluctant to create jobs because the mandated non-productive "overhead" associated with each worker adds significantly to the cost of running the business— worker's compensation, unemployment insurance, OSHA compliance, liability insurance, social security contributions, minimum wage/union pay scales, etc.

      No job deserves to exist economically if it doesn't add to the profitability of the business. The more costs per employee, the fewer jobs get created. So how do we create more jobs in this environment?

      Corporate Income and Nuisance Taxes.

      Politicians have succeeded in demonizing the large corporation by exploiting the greed of obscenely overpaid executives and employees, while ignoring their own complicity in the conflicts of interest and lobbyist graft that steer the legislation they produce.

      What Congress, a long line of Presidents, and much of the population have lost sight of is the fact that even the dirtier businesses are job providers. They must be pampered, not pummeled; supervised and reined in but not tethered and broken.

      Business income taxes are 100% inflationary; costs associated with employees (yes, even the minimum wage, which some suggest is the cause of our illegal alien problems) result in fewer employees hired. Period. Capitalism is not broken— its success formula has been compromised.

      Repealing the corporate income tax, and prohibiting any and all levies, fees, charges, and taxes on any form of business could instantly produce millions of job openings, lower prices, and create new business opportunities throughout the economy.

      Repealing business income taxes would instantly make export products more competitive in world markets, as businesses reduce prices while maintaining profit margins. Greater profits should translate into growth in economic activity.

      Finally, the elimination of these taxes would make all businesses run more effectively because there would be no need to spend money (or create losing transactions) just to cut the tax bill.

      Government Programs:

      Tax dollars can create jobs when they are used to: protect consumers and businesses from fraudulent and disruptive forces, fund infrastructure repairs and improvements, protect shareholders from greedy officers and directors, provide free education to the most talented students in all fields, and provide seed capital for new public interest development projects.

      I'm still looking for your ideas on: growing consumer spending, lowering health care costs, helping the environment, reducing the size of government, and producing a fairer tax environment.

      Steve Selengut

      sanserve (at) aol.com

      Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"

    7. PFLEET says:

      So now the 'Cash for Clunkers' program has ended, it will be interesting to compare with Australia's approach – specifically the tax rebate for new machinery (including cars)

    8. skeptic says:

      um, why is that employment report from 2008?

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