[Illustrations, footnotes and references available in PDF version]
This past summer the United States introduced its "cash for clunkers" program in an attempt to rejuvenate the failing auto sector. Originally slated to cost US taxpayers $1 billion, the program soon ballooned to $3 billion in payouts and administrative costs. The idea was simple; bring in your older vehicle and receive a cash injection towards the purchase of a new automobile.
But it’s not all roses in this socialist auto-utopia. Following the end of the program, car sales in the US crashed by 27% in September 2009 (reported by AFP), and buyer’s remorse is now setting-in as new car owners are faced with making payments during an economic downturn. Remember, the "clunkers" may have been older vehicles, but they were paid for. But it’s not only car buyers who will have to make payments. Just like other government handouts, the actual cost will be carried forward and remain on the books for years to come – another burden to the nation’s taxpayer.