February Car Sales Numbers Out

February Car Sales Numbers Out

And they are dismal. Not just the Big Three, but the Japanese car companies in America aren't much better. I was a little frustrated at the amount of criticism of the Big Three over the last few months, because it wasn't their cars that were the major problem. Yes, UAW's labor rates are part of the problem, but the biggest problem is that the economy is collapsing, and people just aren't buying cars--not even Japanese cars.

Cars and houses are among the major drivers of our economy. What causes people to buy cars and houses? Low interest rates (we've got that now), confidence that their job isn't going to go away, and money in their pocket. The best action that our government could have taken in response to this crisis would have been:

1. Allow the larger financial institutions to go under.

2. Reduce tax rates, especially in the lower brackets.

3. Reduce spending. That may seem difficult. No, it isn't. There are necessities; luxuries; and useless programs that no amount of budget surplus should fund. No farmer making more than $100,000 a year deserves any government support through the farm price support program. The National Endowment for the Arts? A luxury. The National Endowment for the Humanities? A luxury. The space program? A luxury. These are programs that, if the economy were in good shape, and we were running a budget surplus, we could discuss their merits. In some cases, there are existing programs operating that can't be shut off (some of the space probes currently out there). But in times of crisis, you cut off the luxuries, so that the economy can focus on necessities.

If the billionaires that funded Obama's campaign really wanted to do something to save the economy right now, and avoid the inevitable Republican takeover of Congress in 2010, they would take the money they are spending on fuel for their private jets, and start doing some income redistribution of their own. Every billionaire has at least $50 million a year in interest income (much of it exempt from income tax, unless they are very, very stupid). If they cut back their spending, they should be able to live on $5 million a year. (Yeah, I know, it'll be tough for them to do that.) With the remaining $45 million, each billionaire could buy 1500 $30,000 cars a year, and give them away to the masses, solving the car maker's short-term problems, and giving a lot of ordinary people a new car, with a warranty. A lot of those ordinary people could sell or give away their old heap--helping someone us down the food chain. (I'll take a new Corvette, please!)

If all the billionaires who backed Obama did this, they could easily move 150,000 cars off the lots, and get the economy moving again. There's only one little problem: that would require billionaires who funded Obama to get income redistributed upward to be willing to short-term redistribute income downward. Somehow, I don't think that's going to happen.