Cash For Clunkers: Enabling Debt Addicts Nationwide

Before I begin my rant, let me remind you that many politicians of both parties originally thought that this was a good idea. That is what we get for electing lawyers with no background in fundamental economics.

Here is a scenario:
You notice that an acquaintance is obviously shaking. He/she tells you that they are experiencing withdrawal symptoms. They admit to you that the are an alcoholic and that they have just begun the Alcoholics Anonymous program. They have admitted the problem and have taken steps to correct the problem.

Do you
1) Congratulate them and offer to help in a productive way.
or,
2) Pull out your flask (because you too are an addict) and offer them a drink to calm their nerves.

The answer seems simple, but our government has chosen option #2 with the Cash For Clunkers program.

Economists agree that systemic deficit spending, and the subsequent compounding debt, is a major cause of our current economic woes. My issue with the highly publicized program is not its obviously underestimated appeal and underfunding, but I oppose the very premise of the program. As a nation and as a population, we have been a people that have been addicted to debt for several decades. That is why our national debt and annual deficits have grown. It is also why, according to the Bureau of Economic Analysis (BEA), the savings rate of U.S. households has been below 4% since 1994 and went into negative territory in 2005. In 2009, the BEA reported that the U.S. savings rate had risen, but was still far below the 1950 - 1992 average of 8.6% of disposable income. This was a sign that U.S. households had admitted the problem and began to take corrective steps. Then the U.S. Congress passes a Cash for Clunkers plan that offers the recovering addict another drink. Sure, take on more debt. You need a new car. Not because the Congress wants more fuel efficient cars on the road, but because Congress needs the tax revenue generated from your purchase to feed their own spending addiction. Don't worry, we'll subsidize your purchase with money from some fiscally responsible tax payer. How silly of us not to spend every dollar we have (and then some). Keep the party rolling someone else will pay the bills. Right??? What happens when the band stops playing? Who will pay? You again? Remember this when you vote.