What's the theory behind "cash for clunkers"? Of course, the same flawed economic logic that is behind every government debacle.
Allegedly, the government will steal $4,500 from taxpayers and give it to a person in exchange for their car, which is a piece of crap or "clunker".
After that transaction, the taxpayers will have $4,500 less to save or spend thus depriving a business somewhere of vitally needed investment capital or depriving another business from obtaining revenue from the purchase that will never take place.
Meanwhile, the person with the clunker will obtain $4,500 which they did not earn in order to buy a new car.
So, in summary, taxpayers who earned the money and businesses that are deprived of productive capital and revenue will transfer wealth to car makers, auto dealers, and the guy with a crappy car.
Can someone please explain how this will benefit the economy?
If it were logically possible for this idea to work - why wouldn't the government simply buy our garbage? Under this program, "Cash for Garbage", before you throw a wrapper or dirty diaper away, you could bring it to the Ministry of Cash, and they would exchange the garbage for cash.
I better be quiet - Obama might be reading...