Barack Obama has self-nullifying plans for stimulating the small-business sector that creates most new jobs. He has just endorsed tax relief for such businesses but opposes extension of the Bush tax cuts for high-income filers, who include small businesses with 48 percent of that sector's earnings. The stance of other Democrats seems to be that the Bush cuts were wicked in conception, reckless in execution -- and should be largely, and perhaps entirely, extended.Remember when the Democratic line was that all Bush did was cut taxes for the millionaires and billionaires? And now we find that the great majority of those tax cuts were for those who aren't high-income earners.
Will goes on to echo Jeff Jacoby's description of the ridiculous Cash for Clunkers approach to economics.
The used-car market is an important mechanism for redistributing wealth to low-income persons: The price of a car drops when it is driven out of the dealership, but much of its transportation value remains when it enters the used-car market. Unfortunately for low-income people, the average price of a three-year-old automobile has increased more than 10 percent since last summer. This is largely because the Car Allowance Rebate System, aka "Cash for Clunkers," which ended in August 2009, cut the supply of used cars.Now that the Democrats have determined that we can't afford to keep the Bush tax cuts were those earning over $200,000, how long before they decide that we can't afford to keep the Reagan tax cuts? When Obama is in control of the agenda, nothing is beyond his grasp.
Cash for Clunkers provided up to $4,500 to persons who traded in a car in order to purchase a new car with better gas mileage, but it stipulated that the used car had to be scrapped. The Boston Globe's Jeff Jacoby reports that a study by Edmunds.com shows that all but 125,000 of the 700,000 cars sold during the clunkers program would have been bought even if no subsidy had been available. If this is so, each incremental sale cost taxpayers $24,000.
Even on environmental grounds the program was, Jacoby argues, "an exorbitant dud": The reduction in carbon dioxide from removing older cars from the road cost, according to research at the University of California at Davis, $237 a ton (the international market prices carbon emissions credits at about $20 a ton) and the new higher-mileage cars mean a reduction of carbon dioxide emissions of less than what Americans emit every hour.
Obama is desperately urging consumers and investors to have confidence in his understanding of economics. They may, however, remember his characteristic certitude that "cash for clunkers" was "successful beyond anybody's imagination."