America\’s return to growth is largely down to its fiscal stimulus, and particularly its \”cash for clunkers\” programme.
Look, you can say many things about cash for clunkers. That it was a destruction of wealth for example (see M. Bastiat). Or that it was incredibly expensive ($24,000 an extra sale according to Edmunds). Or that it causes the White House to proffer the most gloriously stupid lies:
The Edmunds analysis is based on two implausible assumptions:
1. The Edmunds’ analysis rests on the assumption that the market for cars that didn’t qualify for Cash for Clunkers was completely unaffected by this program.
In other words, all the other cars were being sold on Mars, while the rest of the country was caught up in the excitement of the Cash for Clunkers program. This analysis ignores not only the price impacts that a program like Cash for Clunkers has on the rest of the vehicle market, but the reports from across the country that people were drawn into dealerships by the Cash for Clunkers program and ended up buying cars even though their old car was not eligible for the program.
They want to try and argue that a discount creates sales of cars which don\’t get the discount? Seriously?
But the one thing you cannot do is claim that a $3 billion program turned around a $14 trillion economy. Not even the most vapid of Keynesians is going to try and advance that argument, that the multiplier is that damn high.
Politicians might make such a claim of course, but not someone capable of talking out of one side of their mouth at a time.