Cash for clunkers: Will it help or hurt the economy?

help

1 of 1

by Joseph Whalen

• 

Write now Print Invite a writer™ Add to Favorites RSS Feed Contact this writer

The economic ramifications of this revolutionary program are already being seen in the market. Having drained the first billion dollars allocated to the fund, congress has re-appropriated economic relief for this economic relief method. If the prophesying of the brilliant economic minds leading the nations charge back from the worst recession in recent memory are even remotely on the mark then dumping billions of dollars back into the economy through the sale of automobiles can only help the economy. However, many people attribute our current economic dilemma to the same brilliant minds we are trusting with our recovery, so clearly nothing is a guarantee.

Given the decimated state of the American auto industry after the recent restructuring of the top two auto companies, the Cash for Clunkers program can only be seen as a much need shot in the arm. With the loss of countless dealerships and corresponding jobs associated with them and the manufacturing facilities that were pared down its questionable whether or not the cash for clunkers program will have an immediate impact on this population. The short term effects of the program are becoming evident as we see increased sales of automobiles for both foreign and domestic models. This infusion of cash into the economy is helping to stabilize the markets and providing an almost forgotten up-tick trend in stocks.

While the government automobile program cannot be credited with a full economic recovery, it has certainly had a positive impact. However this short term impact does have long term implications that many people have chosen to ignore at present time. The biggest drawback to the program is the undeniable fact that someone has to pay for this three billion dollar program. Unlike the bailout for the financial institutions there is no guarantee payback that will replenish these funds. As such the American public can be expected to shoulder the tax burden of what amounts to a very expensive marketing program for the auto industry.

Once the dust settles from this economic crisis the experts will no doubt be scouring the resulting impact of such a revolutionary social program. In the long term the cash for clunkers program might amount to no more than a break even deal for the economy as we struggle to repay the debt of buying cars for so many tax payers. However in the short term it is proving to be the boost to the economy needed to restore public confidence around the country. It is through this renewed economic confidence that we will rise above the crisis and emerge stronger and more financially sound. We as tax payers must ask ourselves if that net result is worth the increased taxes which will certainly come our way once we've crossed this latest financial hurdle. Only time will tell in the long run, but as of right now the program is doing what it is expected to, it is helping the economy recover.

Learn more about this author, Joseph Whalen.
Click here to send this author comments or questions.