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.
ADDENDUM:
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.

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Tommy Cranston
Tommy Cranston
11 years ago

Hey geniuses:
Since 1934 you have continually elected “da party of da workin people”.
Workin people like the Pells, Caprio’s, Lynch’s, Whitehouse, Segal, Michaelson, Jerzyk, De Ramel, Murphy, Sundlun, Sissyline etc.
You have EARNED your reward-6 grand a year in taxes on your modest homes, 2 grand in sales taxes to buy a very average new car and now another $1500 or so a year in car property taxes.
Keep up the good work in November.

Warrington Faust
Warrington Faust
11 years ago

Having a few old cars, I spend some time in junkyards. I was sometimes amazed at the quality of cars turned in under “cash for cluinkers”.

Warrington Faust
Warrington Faust
11 years ago

“Hey geniuses:
Since 1934 you have continually elected “da party of da workin people”.”
The politicians well know this, that is why blogs such as these do not effect their thinking.
Things continue to go their way. The only reason RI has not shown a “shrink” in population is the large influx of illegals. Since these people are not from “working” democracies, the politicians expect little trouble with them.

Ken
Ken
11 years ago

In my new state there is no property tax on cars, trucks, motorcycles or boats so the cash for clunkers fed program had no effect on our tax rates except increased General Excise tax on car sales adding to state income revenue.
Our Republican Governor however did balance the two year state fiscal budget (2010/2011 and 2011/2012) by raising certain taxes especially one on imported oil ($5/barrel upped to $105/barrel) which caused gasoline to go up 2 cents a gallon.

Ken
Ken
11 years ago

In my new state there is no property tax on cars, trucks, motorcycles or boats so the cash for clunkers fed program had no effect on our tax rates except increased General Excise tax on car sales adding to state income revenue.
Our Republican Governor however did balance the two year state fiscal budget (2010/2011 and 2011/2012) by raising certain taxes especially one on imported oil ($5/barrel upped to $105/barrel) which caused gasoline to go up 2 cents a gallon.

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