Aug 012009

Some of the descriptions of the the cash-for-clunkers program make it sound like an attempt to show that trickle-down economics works, after all. The money goes from the government to dealers, not from government to customers. Dealers of course use the money (or rather, the hope of getting reimbursed) as a way to lower prices and compete for customers. How much of the discount actually ends up in consumer hands will be hard to say, given that the dealer price from which a discount is taken is a squishy concept at best. But it gives them something to work with, so probably a good share of it really is trickling down to consumers.

Next thing to do: Find out how the CBO scored this program. If one billion wasn’t enough and now they need three, does that mean Obama’s health care program is quickly going to be three times as expensive as originally planned, too?