William Murchison / Aug. 4, 2009

Clink, Clank, Clunker

You can’t make this stuff up. First, the name of the program – Cash for Clunkers. Then the origin, the fountainhead – to wit, the U.S. Congress. Then the results: unexpected demand for participation, unanticipated shortages of cash, bureaucratic unresponsiveness, public and congressional consternation.

Many of the politicians who designed Cash for Clunkers want now to re-design the American health care system. Oh, yeah?

The private sector of the economy, manned as it is by fallible humans, has its faults and shortcomings. Yet, when it comes to stumbles and misfires, nothing exceeds government, with its built-in immunity to pressure from the operations of the marketplace. Witness Cash for Clunkers, aka the Car Allowance Rebate System (CARS).

If you’re driving a gas-guzzling clunker, you qualify – supposedly – for a federal subsidy of up to $4500 on purchase of a new vehicle. Away goes the clunker. Vroom, vroom – here comes the cleaner-fueled car you buy as a replacement, incidentally aiding hard-pressed dealers.

Last week, to widespread derision as well as irritation, the Transportation Department put the clunkers program up on blocks. Congress had voted only $1 billion for the program. With three months to go, and nearly a tenth of the money spent by July 29, future funding prospects looked shaky indeed. Who could have forseen it? Nobody in Congress, apparently.

Mass confusion descended, concerning which the New York Times provided one arresting account: “Barry Magnus, the general manager at DCCH Paramus Honda in New Jersey, said he had sold more than two dozen new cars under the program but was still owed more than $80,000. The government had said it would take 10 days to reimburse dealers, and that was before the program ran out of money. The government Web site on which dealers were supposed to register their deals crashed, and many dealers have not been able to update their information.”

Hustling off for the August recess, House members conjured up another $2 billion and threw it into the clunkers cashbox, leaving the Senate to tidy up. Not your prettiest picture of Politics in Action, especially given the Democrats’ August back-home mission of selling the country on pending plans to let the federal government manage health care.

Health care, to be sure, isn’t the same as a comparatively piddling car rebate program. It’s infinitely more important and complex. What you realize with CARS is the narrowness of Congress’ attention span – the inability or unwillingness, if not both at the same time, of our representatives to foresee and plan and execute in a manner consistent with, well, good sense.

Government does a few things incomparably well, such as train armies, and a few things less conspicuously well, such as assist the poor and jobless. What government fails to do with any success at all is harmonize the billions of economic decisions that millions make every day, from what kind of coffee to drink to how many new units of thus-and-so to manufacture for public consumption, and how to price them.

Nancy Pelosi’s and Henry Waxman’s House of Representatives – with encouragement from the White House – thinks it knows exactly how to arrange the multitudinous moving parts that make up the health care industry. What gall! They haven’t got a clue. They’re projecting instead their ideological notions of what’s good for whom, not even knowing where all the money is going to come from in the end.

The cash for clunkers mess, limited though its short-term consequences may prove, is instructive as to the built-in defects of government management. At their worst, markets respond to what customers tell them. Not so elected politicians and the unelected tenants of the bureaucracy, where no incentive exists to profit from service. Rather, the incentive is to amass and conserve institutional power.

If the prudent and sensible this summer know what’s what, they’ll slap an appropriate label on the legislative abortion shaping up as health care “reform.” There’s only one thing to call that project – a clunker.


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