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The much-maligned federal government's "cash-for-clunkers" program, is, nevertheless, stimulating the U.S. economy.
True, it may take new cars sales that would normally occur in 2010 and bring them forward to 2009, but that fact, combined with the extra customer traffic the program has created in the nation's auto showrooms, has bumped up auto sales -- providing a slight tailwind for the U.S. economy.
Again, we won't definitively know how much the clunkers program has positively affected U.S. GDP until we get the official data from both auto manufacturers and the U.S. Commerce Department months from now, but suffice it to say that, given the depth and length of this awful U.S. downturn, the nation will take any constructive, progressive program -- private or public -- that increases commercial activity.
La théorie de l'état positif vie (The theory of the positive state lives)
Further, the above is an example of Keynesian economics and of the theory of the positive state -- the state as an agent for good actions. (But that's just academic bookkeeping.)
From an investor standpoint, the obvious question is, why not pass a cash for clunkers appliances program?
Given the "frugal consumer" trend, the nation's economy could use another incentive to tip those on-the-fence citizens who would otherwise buy an appliance into the nation's appliance stores and outlets.
Further, the cash for appliances rebate would not have to be as large, in rebate coupon terms, as the vehicle program, perhaps a $200-$1000 sliding rebate, based on the cost of the appliance/durable good. Congress could limit the program to a modest amount, say $10-25 billion, with an option for an additional outlay, if it proves to be as successful as the auto rebate.
Comment: Yes, it's government intervention in the U.S. economy. Yes, it's a form of socialism: so are billion-dollar subsidies to American farmers. But it will further boost the U.S. economy. And you don't have to be an economist in FDR's New Deal administration to know that.
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Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
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Reader Comments (Page 5 of 5)
8-19-2009 @ 6:12PM
George said...
Just read an article that said of 411,000 CFC cars sold as of last Tuesday, eight of the top ten were foreign. Only the Ford Focus and Ford SUV Hybrid made the top ten. No sight of Chevy or Chrysler in the mix. People are voting with their wallets, I think they have had enough of the GM & Chrysler foolishness.
8-19-2009 @ 6:41PM
Anita said...
My biggest beef with the "Cash for Clunkers" program is I think it should be limited to buying only domestic vehicles. Why should people be allowed to buy imports with taxpayer money. Let's keep the American car companies viable, and let the imports fight for business.
8-19-2009 @ 6:49PM
George said...
The "Cash for Clunkers" included all brands for the simple fact that some foreign brands are assembled in the U.S. If foreign brands were excluded the Senators and Congressmen in the Southern states would have voted down funding the CFC program. Congress must apporve funding for the CFC program. Also there are many foreign car dealerships which exerted their influence. So, as it turns out, it is either everybody or nobody.
8-19-2009 @ 7:00PM
Jben0142 said...
What stimulus? What will happen when money runs out. Nobody will have the incentive to buy a car. gm created this problem when they first started 0% financing and then had to keep doing it until they went broke.
8-20-2009 @ 4:53PM
kevin said...
although most app. are made outside the u.s.,we do make some parts still here in mich for Whirlpool
8-21-2009 @ 11:53AM
DueDiligence said...
The Department of Energy announced the Cash-for-Clunkers, the Appliances Edition over a month ago -- http://www.energy.gov/news2009/7634.htm
8-22-2009 @ 1:48PM
Richard said...
How about a Cash for Shacks program? The government offers $15,000 for the downpayment of a new energy efficient home and in exchange the old home is burned down?
8-24-2009 @ 10:44AM
timO said...
A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it's probably not enough to lift companies such as Whirlpool (NYSE:WHR - News) and Electrolux out of the worst down cycle in the sector's history.
http://news.yahoo.com/s/bw/20090824/bs_bw/aug2009db20090821304909
8-26-2009 @ 10:52AM
Brian said...
Brad, a very large percentage of Whirlpool appliances are built in the USA. Whirlpools product lines include Kitchen Aid,Maytag,Jen air,and Roper.Many of these are currently made in USA and Whirlpool is plannig on moving alot of the ones that are made in other countries to the USA in the very near future. Jeff, while I agree that front load washers use far less water and energy than old top load style washers, the top loaders do not use 80 gallons of water. They use approx 40 to 45. Also, changing water heaters over to tankless is not as easy as it sounds. The tankless water heaters require pretty substantial changes in the electrical wiring and breaker boxes.