Charles Krupa, Associated Press

D.J. Tice: The great American bailout: Got yours?

  • Article by: D.J. Tice
  • Star Tribune
  • August 10, 2009 - 11:18 AM

In the nurseries, the Elementary Class Consciousness lesson was over; the voices were adapting future demand to future industrial supply. ... "I do love having new clothes ..." continued the untiring whisper. "We always throw away old clothes. Ending is better than mending. ... The more stitches, the less riches ...""Brave New World," Aldous Huxley (1932)

When I first heard about the cash-for-clunkers program, I thought perhaps the Great American Bailout had finally hit home for me. My qualifications appeared impeccable. I bought my clunker back when it still seemed possible that a sweeping health care reform plan might actually be enacted -- the Clinton health care reform plan. My clunker has done its duty, and it shows.

But then I heard more details about the program. My clunker gets more than 18 miles to the gallon, thereby falling short of the exacting standard of clunkiness a vehicle must meet to earn federally subsidized retirement.

Much debated, cash for clunkers isn't even a rounding error in today's supersized federal budget. Yet in some ways the program seems, at least in one's darker moments, to embody America's entire response to its current economic miseries.

Wall Street shadow bankers who constructed a doomed financial Tower of Babel that literally no one understood? That was pretty clunky -- and in return they got taxpayers' cash.

General Motors and Chrysler, executives and workers together, who over decades put their companies securely on course for the scrapheap? Another clunk that unleashed federal cash.

Homebuyers who spent beyond their means, refinanced for spending money, speculated (however naively) on the proposition that home prices could never fall? There are programs (however inadequate) for some of those clunkers, too.

And now come subsidies for buying a new car, but only if you've earned it by previously owning a gas hog, doing exactly the clunkiest automotive thing possible, at least according to today's energy-conserving ethos.

Of course, cash for clunkers is a smashing success, so much so that Washington is sinking more money into it to keep it running -- a temptation millions of clunker owners can understand.

President Obama even declared the other day that the program "has succeeded well beyond our expectations."

Now this is the second way cash for clunkers captures the weird moment we're in, a moment when elementary facts of life have become surprises.

If you are determined to give people money, you may confidently expect volunteers to come forward. There are challenges more daunting than inducing Americans to buy stuff -- and to throw stuff away. One of the strict requirements of cash for clunkers is that the traded-in vehicles have to be scrapped, even though many of them retain some value.

Yes, this will get some gas-guzzlers off the road. But taken as a whole, the program's essentials make an improbable diagnosis of the change America needs. Did we get into this mess because government and consumer debt levels weren't high enough, and America just wasn't enough of a disposable society?

Keynesian economic doctrine, never more triumphant, holds that heavy government spending is needed to boost demand in a spooked and paralyzed economy. Lord Keynes took his faith in this remedy very far. He wrote, four years after "Brave New World'' was published, that in sufficiently desperate circumstances, it would be better than nothing "if the Treasury were to fill old bottles with bank-notes, bury them at suitable depths ... and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again ..."

Cash for clunkers isn't quite like that. For one thing, Keynes may have been kidding and we're not. But to dig into taxpayers' pockets to subsidize new-car purchases that either would have happened anyway (if perhaps not so soon) or else are extravagances -- and to bury the trade-in vehicles involved so deep that they'll never be disinterred -- well, it has the scent of desperation and blind faith about it.

This is the last, most important, way cash for clunkers expresses the dubious mood of the hour. Conservatives too readily argue that government can't do anything right, a strange assertion from people so often at ease with the fearsome discretionary powers of the military and the police. But now the still-stranger fashionable view is that almost anything government comes up with is likely be right, or at least an improvement. We just need to hurry.

In the aftermath of the subprime mortgage meltdown, which went critical right under the noses of all the great minds of Washington and Wall Street and Harvard and all the rest, an outbreak of humility would have been understandable. It would have seemed natural to see caution among innovators follow from the realization that we don't understand, nearly so well as we thought we did, how the economy works and how public policy affects it.

Instead, a vivid illustration of the limits of our understanding has instantly inspired a breathtakingly confident and comprehensive project to transform America's economy and society. Trillions have already been spent in hastily fabricated bailouts and stimulus plans. A large swath of the auto industry has been occupied by the federal government. Radical surgery on health care, one-sixth of the economy, is being hustled forward so we can get on with a plan to revolutionize the use and production of energy, cutting carbon emissions by four-fifths over 40 years.

It's an odd time for our leaders to be so very sure of themselves, which is seldom a good thing to be. A few more clunkers, and we may run out of cash.

D.J. Tice is at


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