Liberals loudly trumpet the success of the Cash for Clunkers program, pointing to the three-billion-dollar handout as a successful government program. In a nation where people are still falling for the Nigerian bank e-mail scam and prostituting their moronic lives to The Jerry Springer Show for a night in a luxury hotel, getting them to take free money is not much of an accomplishment.
Success! Government got people to take free money!
What our governmental Department of Unintended Consequences ended up doing was destroying hundreds of thousands of serviceable cars, driving up the average price of a used car 10-30%. Productive human beings create wealth. Government destroys it. Literally.
Now Obama and his hallelujah chorus in the press are telling us how he saved the US Auto industry. Actually, he saved Chrysler and GM from going through the painful restructuring needed to compete in the 21st century, but who cares? And as usual, his math is off by billions.
GM still owes We The Taxpayer $24 billion, when special tax breaks are factored in, and Chrysler is in hock to us for about $5 billion.
God save us from more democrat "successes"
Worse than the loss to taxpayers was the "le etat cest moi" way Obama did it. Not by the rule of law via bankruptcy court, but by kingly fiat:
As an exercise in what Zywicki calls "state capitalism," the bailout was a procedural horror show. It was probably illegal to funnel TARP funds into the companies; they may not have been car companies worthy of the name any longer, but they certainly weren't "financial institutions."
Chrysler's creditors, who held secured bonds and were guaranteed repayment first, got forced into taking 29 cents on the dollar. In contrast, the United Auto Workers' pension plan got 40 cents on the dollar. The creditors of both Chrysler and GM were denied their usual right to have a say in the reorganizations. (Rich Lowry)
Even more outrageous, Chrysler was a privately-held company, but the owners refused to put more of their own money in to save the company. Would you invest in such a company? Add in interest-free loans, and the government strong-arming investors into taking a 70% haircut, and you see just how close to Zimbabwe we really are.
