Monday, August 3, 2009

Cash for Clunkers -- A Teaching Moment

"Cash for clunkers" is working in the sense that auto sales are booming and auto inventories are dropping. Why does this work? Because people have an economic incentive to buy cars. Is anyone in the Obama Administration listening? Incentives work.

Of course, "cash for clunkers" is a stupid idea. There is simply no reason to subsidize the auto industry. The industry should fend for itself like every other industry. But, it does show that incentives work.

How about giving employers a tax incentive to hire workers? Why not try that? What about a $ 1,000 tax credit for every employee hired? Why not try that one? We spent $ 800 billion paying off Obama supporters in the package that passed Congress earlier this year (calling it a stimulus package). There was no stimulus in that package. It is instructive to note that "cash of clunkers" was not part of the so-called stimulus package. There are no incentives to hire anyone in the stimulus package.

Here's a "teaching moment" for our president. Try giving employers an incentive to hire someone instead of providing numerous incentives for employers to shed as many employees as possible. Incentives do work.