If you believe that the recession is related to people not spending money, and that if they spend money then it will help end the recession, then the program is helpful.
First Point: The argument that "spending money is what got us into this mess in the first place," a talking point for the opposition, sounds reasonable, but is irrelevant. Around here controlled burns reduce the fuel load and prevent damaging forest fires. Is it a valid argument that fire should not be used to prevent fires? Sounds logical, but it is wrong.
If I almost drown, and when I recover in the hospital I ask for a glass of water, should the nurse say, "Whoa, buddy, water is what got you into this mess in the first place!"
So my first point is that even if the recession were caused by spending, it doesn't mean that spending can't be part of the solution.
Second Point: Reasonable spending did not get us into this mess. Wild overspending, borrowing, bad loans, complicated derivatives and the subprime mortgage crisis did. Currently some people are being almost as frugal as I am. Good for them, but bad for the economy. If they would start spending at a reasonable level, it would help the economy.
Third Point: "The program doesn't have much of a spread between old and new MPG." I agree with this. Several senators didn't want to approve more money unless the spread was increased. But they changed their mind. Why?
Because it turns out that many of the participants are getting new cars with much better mileage than required by the program. That is, they're turning in big SUVs and getting small, fuel-efficient cars.
Fourth Point: "It's not fair, since it targets only one industry and select individuals." Who cares? If it helps end the recession, everyone benefits. If they had a program that only gave money to red-headed people, but it ended the recession, I wouldn't care. I stopped requiring fairness when I was six.
Fifth and Final Point: It's expensive -- where is this money going to come from? Answer: from the recovery. Tax revenues are way down:
If programs such as these end the recession sooner, then revenues will increase sooner. I don't know if it will work out that way, but to say "Where does the money come from?" is ignoring the entire point of the program.
SUMMARY: Saying "Spending got us into this mess, so it can't help us get out" like "If it doesn't fit, you must acquit," sounds logical, but many economists agree that increased spending will in fact help. But in any case, reasonable spending did not get us into this mess, other factors did.
Although the program is poorly designed in that the required increased MPG is small, it turns out that many buyers purchase cars with significantly better mileage anyway (
22 percent better than that of all new cars sold last year).
Because it unfairly targets one industry is irrelevant to whether it can help, and although it costs money, ending the recession will improve tax revenues.
Frankly, I actually don't think the program is that great (gas tax would be better), but I decided to say something after seeing all the faulty arguments against it.