Obama-speak in Cash for Clunkers

It seemed like a no-brainer.

Why doesn't the Obama administration want to pour even more federal stimulus money into the Cash for Clunkers program? It has been wildly successful, swallowing the first $1 billion chunk of federal money in one big, ravenous, consumer-driven gulp.

The program now is getting ready to chomp throw $2 billion more that passed into law this week to keep the popular program and the flagging auto industry afloat. But Valerie Jarrett, senior adviser to President Barack Obama, said it's not that simple.

Sure the program has been successful in luring recession wounded consumers back into auto show rooms. They've been more than eager to combine their precious dollars with the $3,500 to $4,500 rebate for trading in their gas guzzlers for new fuel efficient cars.

That no-brainer is easy money for cash-strapped and scared consumers. The program also gets petrified people to spend money again, which puts badly needed cash back into circulation in the near comatose U.S. economy.

But what's not so easy is the political calculus behind the seemingly simple move. The Cash for Clunkers program adds to the federal budget deficit, which is projected to be about $2 trillion this year.

People are dead set against government giveaways that they will have to pay for - especially when they see the benefits going to someone else.

But what's worse is the Cash for Clunkers program causes people who might buy cars later in the year to do it now. The federal stimulus acceleration now is likely to stall out car sales later. Car and other sales need to be able to start and accelerate on their own. Government intervention just muddles things.

So even though lawmakers and Obama are the heroes of the economy today, they could be the goats tomorrow if the fast start flops long before a good economic finish for the year can come into view. That's the caution flag that Jarrett and others are seeing that many people wanting more Cash for Clunkers cash are blowing through.


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