Greg Hull: Smart friends
I've asked several of my friends if they would give me $5,500 out of their savings so I can go buy a new pickup truck. To a person, they have all said "no."
Some might wonder what kind of friends I have. I'd call them all smart. Really smart, in that most of them didn't even pause to think it over.
Today our national debt is over $11 trillion dollars. That comes to more than $37,000 for every man, woman and child in the country. And that debt load is growing bigger every day.
So Congress, in another act of its financial management wisdom, just borrowed another three billion dollars to give to car buyers. It isn't that they had the original billion sitting in the bank and just wanted to give it back to taxpayers. Or that they had the next two billion in coffee cans under the front porch.
They didn't have any of it. So they borrowed the money.
Every single person I've ever talked to about the national debt thinks it's a travesty. Everyone decries the terrible things that Congress is doing, mortgaging both our, as well as our children's', future by running up incomprehensible debt. No one thinks it's a good idea.
Until they can get some cash for themselves. Then the justifications begin to flow. "I couldn't have gotten a new car without the program." "If I didn't take it, someone else would." "What's a few billion more dollars out of the trillions we owe?"
Folks have been lining up in droves to trade in their old vehicles, and get new ones, with the $4,500 subsidy from the rest of us. So many folks in fact, that Congress had to borrow three times the amount they originally planned on.
I know the arguments that were given as to why this is a great idea: it will be a boost to our own beleaguered car industry and save jobs; it will get gas guzzlers off the road and reduce our dependence on foreign oil; it will motivate the US consumer to spend.
It certainly seems to be doing the last - but evidences on the other shows a different picture.
Of the vehicles being turned in, Ford Explorers top the list. Out of the top 10 vehicles being purchased - foreign cars account for five of them. So much for helping the US car industry. As for the argument that even those cars are built here - well, they may be. But does the money, over the cost of manufacturing, stay here? Or does it go back to corporate headquarters? This is as big a boon for the foreign car industry as it is for the US car makers, and maybe even bigger for them than us.
Will this really help the car industry? All of these vehicles being sold are coming out of inventory built up over the recent years. So all we're really doing is reducing inventory, not making new vehicles. The way the car companies did their accounting had them take the profit from each unit when it was made, not when it was sold. So which jobs are we saving? Which profits are we bolstering?
Whatever pent-up demand that is being satisfying by selling all of these cars, it won't continue. It can't. There is a market saturation point. The auto industry needs to build its companies on sustainable sales, not on artificially elevated ones. As for gas savings - while the "experts" vary, the consensus is that the gas savings are going to be far less than the testimony before Congress asserted. We probably could have saved as much fuel by running on properly inflated tires and tuning our engines up more often. Plus, some estimate it will take five years of increased mileage just to off-set the carbon emissions that resulted in the building of the car. So much for helping the environment.
The fact is we will all be worse off as a result of this program. It will cost much more than the $4,500 per vehicle than is given out. There will be the administrative overhead on the management of the program. There will be the interest paid on the borrowed funds and $5,500 is certainly a low estimate of what that money actually cost us.
Some have criticized me for not having a larger sense of community responsibility, and hypocritically promoting personal responsibility. But both personal and community responsibility is exactly what I am preaching - even if it does make me sound like "Father Hull of the Mill." We keep electing the same people back to Congress who have indebted us and future generations. We need to stop voting for candidates whose primary qualification is the amount of money they get for us.
There are other times when we can take a stand against the fiscal and moral mismanagement of Congress by refusing to take what they offer. Just because it might be good for me in the short-term, doesn't mean it will be good for me, or anyone else, in the long-term. This is clearly (at least to me) one of those cases.
This explains why I (and all of my like-minded friends) am still driving old cars.
Greg Hull is Owner and Operator of Hull's Sawmill. He drives a 13-year-old Ford pickup truck. He is not now, nor has he ever been, a Catholic priest. His email is firstname.lastname@example.org.