Conservatives and libertarians often complain about the Nanny State.
This isn't a reference to actress Fran Drescher considering a run for Congress. It's about the tendency of government to try to take care of every possible problem and encourage what it defines as proper behavior by citizens.
They decide what's good for us and bad for us and then use public policy to push us in the right direction. Or, as the politicians put it, "incentivize" us. But then, if we continue to disappoint them, they bail us out so we don't suffer any consequences.
It's a big contradiction. They preach personal responsibility but make sure there are no consequences. Government smothers citizens the way helicopter parents descend to insulate their kids from every threat.
And what are the results? Those who try to do the right thing before it qualifies for a tax credit, are suckers. Those who go through life figuring that it is always government's fault, it is always society's fault, are rewarded.
Our Great Recession has exacerbated all this. Banks pile up risky loans? We help them. Investors try to get rich with securities they don't understand? We step in. Homeowners buy too much house with too little income? What can we do for you?
Now comes Cash for Clunkers for all those folks who thought they'd look great behind the wheel of a Hummer, regardless of gas prices, regardless of the amount of junk they spew. When gas prices rose and no one wanted their hulks in trade, Congress stepped in to help.
The program was first intended to spur the auto industry and get gas-guzzlers off the roads. But it has ended up as something else, mostly a means of helping well-off Americans buy cars with only marginal increases in fuel efficiency.
How marginal? A consumer with an SUV that gets 18 miles per gallon (the maximum allowed under the program) and buys a new SUV that gets 20 miles per gallon would be eligible for a $3,500 government check. Passenger-car buyers would have to improve their mileage by just 4 mpg to get the same check.
A bigger check – $4,500 – would go to SUV buyers who improve their mileage by 5 mpg and sedan buyers who gain 10 mpg. If you already have a fuel-efficient car, you get nothing, even if you buy an even-higher-mileage car.
Buyers who do qualify get a check but no trade-in. That means anyone with a car worth more than $3,500 is better off taking a trade-in.
The New York Times presented two scenarios. A 2003 Chevy Trailblazer that gets 16 mpg qualifies, but the owner is unlikely to take part in the program because it is worth more than $4,500. A 1992 Honda Civic is worth a few hundred dollars but isn't eligible because the car gets more than 18 mpg.
Because only new cars can be purchased, the program won't be much help for poor folks who might need to get out of expensive gas hogs. Only those who can afford a new car and who ignored suggestions that they care about fuel use get help. Politicians have gone from turning up their noses at such people to giving them government checks.
Conversely, those who bought smaller cars that use less gas get nothing, just like those who settled for a smaller house because they felt safer in a fixed-rate, traditional mortgage. (I don't want to sound all holier-than-thou but … wait a minute, of course I do.)
So the next time the economy booms, home prices climb, gas prices moderate and you’re tempted to splurge on the big car and the big house, go ahead. Don't worry about it. Because if it turns out to be the wrong decision, blame the government and wait for a check.
That is, unless the Nanny finally decides it is time for some tough love.