The “Stimulus” in Miniature… or Hatchback
It appears that many residents’ car tax bills will offer an early illustration of the consequence of the big-spending stimulus pursued by Congress and the White House:
A number of cars, which normally lose value each passing year, have increased in value this year as a result of several economic forces hitting the used car market. …
“There are less used vehicles out there for people to buy,” said [state Vehicle Value Commission Chairwoman Linda] Cwiek, who also is the tax assessor in North Kingstown. She placed blame for the short supply of used cars on the federal “Cash-for-Clunkers” program.
To stimulate a sagging automotive economy and to aid the environment, the federal program offered financial incentives to turn in older vehicles in favor of buying more fuel-efficient models. In all, the program removed 677,842 vehicles from the road and sent them to the shredder. That prevented them from entering the used-car market.
Not only does the government have to take money out of the economy to put money into it (even if it takes from the future), but distortions of the marketplace will ripple. In this case, the effect was exacerbated by the environmentalist lunacy of destroying the cars. Many of us observed at the time that the government was essentially paying out money to ensure that used cars would be more expensive.
On a broader scale, big government-initiated spending only works as a stimulus if the economy is already headed for a breakthrough. Softening the interim with public debt is a gamble that’s best hedged, and Obama and the Democrats went all in, mostly in order to prevent government entities from having to contract.
By the way, it looks as if I wasn’t so unreasonable to question the General Assembly’s change of law allowing vehicle assessments to go up for the purposes of taxation.