CASH FOR CLUNKERS: THE "$800 TOILET SEAT" OF THE BAILOUT

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According to Avery Goodman, at Seeking Alpha, Edmunds.com has calculated that the $1,000,000,000.00 in borrowed money that the federal government has blown on the Ca$h for Clunker$ welfare/bailout program will yield a net increase in sales of between 22,000 and 86,000 units.

Remember, payout of welfare vouchers for vehicles that would have sold anyway does not yield any net benefit to sales. Thus, only sales that would not have occurred but for the bailout cash on-the-hood are the true measure of the program's effects.

In other words, the cost to the taxpayers for each one of those additional sales is between $45,354.00 to $11,628.00 per car!

Goodman posits that a $20,000.00 per additional unit sold (over what ordinarily would have been sold without the CARS welfare voucher) is a reliable estimate.

But, it's not clear that all of these sales increases are true increases (i.e. cars that would never have been bought but for the welfare voucher). Some of the sales are undoubtedly canabalized from future sales that would have occurred regardless.

The sales last month from the federal incentives may result in fewer buyers later this year after the program ends, George Pipas, Ford’s sales analyst, told CNBC today.

Thus, the cost-per-additional-sale could possibly be even higher.

Goodman concludes:

The "cash for clunkers" program is yet another boondoogle - an expensive waste of precious taxpayer dollars. Government spending should be reined in, in light of the multi-trillion dollar unsustainable deficits that this nation now faces. However, if we must increase government spending, the money would be better spent on infrastructure and education improvements that might help bring jobs back to America, and encourage long term growth, rather than cosmetic improvements to the short term earnings of makers of high mileage automobiles, many of which are foreign companies.

This government is, unfortunately, a reflection of the current state of economic immaturity that prevails in America. The vast majority of people, including most people in Congress, do not understand the forces that drive the real economy, and see only the short term view. That is how they get manipulated into allowing the Federal Reserve to behave like a slush fund for big banks, passing programs like TARP into law, and enacting programs like "cash for clunkers" which all abuse the taxpayers.