USA Today slams the “cash for clunkers” program today saying it is a “clunker” for taxpayers and is actually hurting the economy.

Could it be that in this program — which entices car buyers with credits of up to $4,500 to trade in their old gas guzzlers — the government has actually devised a smart, clever stimulus program?

 

In a word, no.

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As a way to improve mileage, the program has always been a farce. Car buyers would qualify for a $3,500 credit with trade-ins that net just four additional miles per gallon. With 10 additional mpg, they’d get $4,500. (For light trucks and SUVs the numbers are even smaller: two and five.) Since all trade-ins must get 18 miles per gallon or worse, it provides no incentive whatsoever to buy any cars getting greater than 28 miles per gallon, because that is a segment of the market where the foreign makers are strong.

 

As economic stimulus the program is bogus as well. The money allocated is enough to generate about 250,000 trade-ins. While that may seem like a lot, about 200,000 would have happened anyway industry experts say.If taxpayers are spending $1 billion for about 50,000 additional car purchases that comes to about $20,000 per car.

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So far the program has actually been de-stimulative to the economy. That’s because people in the market have stalled, in some cases since February when the idea was first floated, waiting to take advantage of the sweet deal from the taxpayer.

 

Now, with buyers pouring into showrooms, it has created an enormous spike in demand, stretching the available inventory and removing the need for dealers to offer even the most routine of incentives.

When will the government stop handing out money for cars?  Should Congress buy everyone a new car?  A Washington Post editorial asks these questions:

ABOUT A MONTH ago, we ventured a prediction about the federal government’s “Cash for Clunkers” program, which offers motorists up to $4,500 to trade in their old cars for new, more fuel-efficient models: “When the program’s initial round disappoints, as seems likely, pressure will mount to expand it.” Sure enough, Friday, with car dealers and consumers complaining because the first $1 billion in car-buying aid was about to run out after four days, the House of Representatives approved another $2 billion. The issue may move to the Senate this week.

 

Admittedly, we expected the program to be undersubscribed, not oversubscribed. But the latest turn of events hardly proves the program a “success,” as its proponents now claim. It merely shows that Washington could bribe more people into purchasing new cars than many thought possible. And the essential flaw of “Cash for Clunkers” has been confirmed: Once Congress starts passing out free money for cars, it’s hard to stop. Will the next $2 billion be the last? Or will car dealers and their customers demand even more when it runs out? Maybe the government should just buy everyone a new car. That would certainly “stimulate demand.” The washing-machine industry could use a boost, too; older models waste water and energy. So how about cash from Uncle Sam for washer upgrades?

The Washington Times has a frightening report this morning on the extensive bureaucracy Democrats have planned for America.  As I recently heard one observer explain, “If your car breaks down, who would you rather call for help: AAA or the DMV?”  We may not love our health insurance, but almost anything is better than dealing with a government bureaucracy.

The health care reform plan proposed by House Democrats would create at least a dozen new federal programs, boards and task forces, contributing to the proposal’s hefty price tag that has drawn criticism from Congress’ official scorekeeper.

 

Democrats say the bureaucratic infrastructure is necessary to administer the expansion of health care benefits to the tens of millions of uninsured Americans while creating more competition for private insurers to drive down out-of-control costs.

 

The health care reform bill, which is expected to cost roughly $1 trillion over 10 years, would create a public health insurance plan and a health insurance “exchange,” a clearinghouse where consumers will be able to shop for public or private coverage. The programs will require a massive undertaking by the federal government that analysts say likely will take years to fully implement.

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At least three boards will be set up to advise the health and human services secretary on policy. The Health Benefits Advisory Committee, for instance, will recommend the basic requirements of insurance plans. All Americans would be required to carry at least basic coverage under the bill, with exceptions for the poor.

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The House plan, which has been approved in two committees and is being held up in a third, would be funded in part by three trust or investment funds. These funds will be responsible for paying for the public health plan, collecting fees stemming from individual and employer mandates and paying for a program to help employers cover retired workers.

 

Other programs include a public health work force corps and a public health work force scholarship program, designed to encourage young people into public health careers.

 

Much of the bill’s programs would fall under the Health and Human Services Department’s new Health Choices Administration, which would be headed by a health choices commissioner. Other agencies would be impacted as well. The Internal Revenue Service, for instance, would face new responsibilities to help the government track who has insurance on federal tax forms.

Robert Samuelson has a must-read on healthcare “reform” in today’s Washington Post.  He explains that unless we control costs first, universal healthcare will be a long-term burden for America.

The health-care conundrum involves a contradiction that the administration steadfastly obscures: In the short run — meaning four to eight years — government cannot both insure the uninsured and rein in health spending. Here’s why. The notion that the uninsured get little or no care is a myth: They now receive about 50 to 70 percent as much health care as the insured. If they become insured, they would use more health care, possibly as much as today’s insured. That would increase both government and private health spending, depending on how the insurance is provided.

 

Until health-care costs are better controlled, expanding insurance coverage will be expensive. The president talks endlessly about the need to limit spending and eliminate waste. These are worthy goals. But changing the way medical care is delivered and paid for would take years and involve disruptive and unpopular measures. Patient co-payments might increase; networks of doctors and hospitals might displace individual practices; the tax exclusion for employer-paid health insurance might be curbed. Obama downplays the obstacles. His “reform” isn’t likely to compel needed changes, partly because it’s not clear what will work.

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The administration had to make choices; it could emphasize expanded insurance coverage (”access”) or cost control, but not both. It chose coverage, embracing the long-standing liberal grail of “universal” insurance. Millions of Americans would receive more health care, though how much their health would improve is uncertain (the administration can’t logically argue that much health care is wasteful and also that the uninsured will automatically benefit from more of it). Many with insurance would gain the peace of mind that they won’t lose it.

 

But what helps many Americans as individuals may hurt society as a whole. That’s the paradox. Unchecked health spending is depressing take-home pay, squeezing other government programs — state and local programs as well as federal — and driving up taxes and budget deficits. The president has said all of this; he simply isn’t doing much about it. He offers the illusion of “reform” while perpetuating the status quo of four decades: expand benefits, talk about controlling costs. The press should put “reform” in quote marks, because this is one “reform” that might leave the country worse off.

The Associated Press yesterday scrutinized Obama’s claims during his Wednesday night news conference.  Now, FactCheck.org has a more detailed analysis.  Many of Obama’s statements are complete fiction.  Here are the highlights:

    *  Obama promised once again that a health care overhaul “will be paid for.” But congressional budget experts say the bills they’ve seen so far would add hundreds of billions of dollars to the deficit over the next decade.

 

    * He said the plan “that I put forward” would cover at least 97 percent of all Americans. Actually, the plan he campaigned on would cover far less than that, and only one of the bills now being considered in Congress would do that.

 

    * He said the “average American family is paying thousands” as part of their premiums to cover uncompensated care for the uninsured, implying that expanded coverage will slash insurance costs. But the nonpartisan Kaiser Family Foundation puts the cost per family figure at $200.

 

    * Obama claimed his budget “reduced federal spending over the next 10 years by $2.2 trillion” compared with where it was headed before. Not true. Even figures from his own budget experts don’t support that. The Congressional Budget Office projects a $2.7 trillion increase, not a $2.2 trillion cut.

 

    * The president said that the United States spends $6,000 more on average than other countries on health care. Actually, U.S. per capita spending is about $2,500 more than the next highest-spending country. Obama’s figure was a White House-calculated per-family estimate.

John Fund has a must-read column in today’s Wall Street Journal highlighting the dangerous costs that Democrats will impose on average people through their healthcare overhaul.  Nancy Pelosi and Barack Obama tell voters that only millionaires will pay for reform, but in reality, costs will fall on young people, small businesses, HSA holders, and minority seniors.  Here’s why:

• Young people. If the government mandates that everyone must have health insurance, healthy young people will have to buy policies that don’t reflect the low risk they have of getting sick. The House and Senate bills do let insurers set premiums based on age, but only up to a 2-to-1 ratio, versus a real-world ratio of 5 to 1. This means lower prices for older (and wealthier) folks, but high prices for the young. “They’ll have sticker shock,” says Rep. Paul Ryan, ranking Republican on the Budget Committee.

• Small Businesses. Employers who don’t provide coverage will have to pay a tax up to 8% of their payroll. Yet those who do provide coverage also have to pay the tax—if the law says their coverage is not “adequate.” Amazingly, even if a small business provides adequate insurance but its employees choose coverage in another plan offered through the government, the employer still must pay.

•  Health Savings Account (HSA) holders. Eight million Americans, according to the Treasury Department, are covered by plans with low-cost premiums and high deductibles that are designed for large, unexpected medical costs. … Nearly a third of new HSA users, according to Treasury figures, previously had no insurance or bought coverage on their own. … The Senate plan says a policy deemed “acceptable” must have insurance (rather than the individual) pay out at least 76% of the benefits. The House plan is pegged at 70%. That’s not the way these plans are set up to work.

• Medicare Advantage users. Mr. Obama and Congressional Democrats want to cut back this program—care provided by private companies and subsidized by the government. Medicare Advantage grew by 15% last year; 10.5 million seniors, or 22% of all Medicare patients, are now enrolled.

 

The program is especially popular with those in badly served urban areas and with those who can’t afford the premiums for Medicare supplemental (MediGap) policies. A total of 54% of Hispanics on Medicare have chosen Medicare Advantage, as have 40% of African-Americans, according to the Centers for Medicare and Medicaid Services at the Department of Health and Human Services.

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The $156 billion in Medicare Advantage cuts over the next decade proposed by Mr. Obama will force many seniors to go back to traditional Medicare at greater expense. A new study for the Florida Association of Health Plans found that because Medicare Advantage plans have richer benefits and lower deductibles and copayments than traditional Medicare, seniors in that state would face dramatically higher payments if forced to give up their Medicare Advantage plans. Cost increases would range from $2,214 a year in Jacksonville to $3,714 a year in Miami.

Last night, President Obama made bold claims about his healthcare plan.  Democrats believe that the American people will take them at their word and as they rush a healthcare bill through Congress.  National Review sums up the “snake oil” Obama peddled during the news conference:

President Obama’s press conference Wednesday night offered an ideal encapsulation of the Democrats’ case for their health-care-reform proposals: outlandish promises about benefits and patently dishonest denials of the costs. He said essentially all of the uninsured would be covered, the insured could keep their existing coverage and would be guaranteed to keep it if they lost or changed jobs, the quality of care would rise, waste and fraud would be slashed, the deficit would decline, and no one would have to pay a price for all this except a few millionaires. Oh, and by the way, the plan would also “keep government out of health-care decisions.”

 

If the president can persuade the American public of all that, then maybe we don’t even need medical care — we can just have him tell us all we’re perfectly healthy and we’ll go on our way.

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The cost of the health-care bills now coming out of the key congressional committees is staggering, and the Congressional Budget Office has said these bills will not reduce health-care-cost inflation in the long run, so that even the trillion-dollar ten-year cost estimates do not begin to describe the full burdens taxpayers will assume. The notion, again repeated by the president, that anyone who is happy with his health insurance now will be able to keep it is patently at odds with every study and analysis of the Democrats’ proposals, all of which foresee many millions displaced. And even the president himself seems no longer to believe that only the rich will pay a price: His language Wednesday night was carefully calibrated. He said reform should not be “completely shouldered on the backs of middle-class families,” or “primarily funded through taxing middle-class families.”

 

But the greatest weakness of the Democrats’ plans, and the most important concern regarding their implementation, has to do with the rationing of care and the centralization of treatment decisions. While President Obama claimed, preposterously, that the proposals he supports would limit the government’s role, he also made clear that decisions about the availability of care — especially for the elderly at first, but for all in the long run — would be made by a panel of experts in Washington, setting one-size-fits-all rules that would govern doctors’ decisions. This was held up as a model of efficiency, but it is a recipe for disaster, as the public seems increasingly to understand.

Robert Samuelson has a must-read column in today’s Washington Post discussing the flaws in the stimulus package.

It’s not surprising that the much-ballyhooed “economic stimulus” hasn’t done much stimulating. President Obama and his aides argue that it’s too early to expect startling results. They have a point. A $14 trillion economy won’t revive in a nanosecond. But the defects of the $787 billion package go deeper and won’t be cured by time. The program crafted by Obama and the Democratic Congress wasn’t engineered to maximize its economic impact. It was mostly a political exercise, designed to claim credit for any recovery, shower benefits on favored constituencies and signal support for fashionable causes.

 

As a result, much of the stimulus’s potential benefit has been squandered. Spending increases and tax cuts are sprinkled in too many places and, all too often, are too delayed to do much good now. Nor do they concentrate on reviving the economy’s most depressed sectors: state and local governments; the housing and auto industries. None of this means the stimulus won’t help or precludes a recovery, but the help will be weaker than necessary.

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There are growing demands for another Obama “stimulus” on the grounds that the first was too small. Wrong. The problem with the first stimulus was more its composition than its size. With budget deficits for 2009 and 2010 estimated by the CBO at $1.8 trillion and $1.4 trillion (respectively, 13 and 9.9 percent of gross domestic product), it’s hard to argue they’re too tiny. Obama and congressional Democrats sacrificed real economic stimulus to promote parochial political interests. Any new “stimulus” should be financed by culling some of the old.

 

Here, as elsewhere, there’s a gap between Obama’s high-minded rhetoric and his performance. In February, Obama denounced “politics as usual” in constructing the stimulus. But that’s what we got, and Obama likes the result. Interviewed recently by ABC’s Jake Tapper, he was asked whether he would change anything. Obama seemed to invoke a doctrine of presidential infallibility. “There’s nothing that we would have done differently,” he said.