By:  Charles Benninghoff
RMC PAC Editor

Rancho Cucamonga, CA - So Obama is now claiming his economic voodoo has boosted the economy, specifically citing the Cash for Clunkers Program and the First Time Home Buyers Tax Credit.  If this is what ol' Barry is hanging his chaps on, he is indeed in big trouble according to a major automobile industry analysis company and an academic group.

The Mythical Housing Credit:  The academics, MIT Sloan Professor Simon Johnson and Yale law student James Kwak, who both blog about economics at The BaseLine Scenario, wrote on October 27,  "First, There are many arguments against the [First Time Home Buyer] tax credit. One argument we make is that the tax credit is a benefit for sellers of houses more than for buyers of houses. This is simplest to see if you imagine  a permanent credit available for all buyers: “Imagine the credit were expanded to all home buyers and made permanent. This would simply boost housing prices at the low end of the market by close to $8,000, since all buyers would be willing to pay $8,000 more. (Prices would rise by a little less than $8,000 because at higher prices, more people would be willing to sell.)”

Thus, instead of helping first time home buyers Obama is hurting them by (on the average) cobbling them with an additional market adjusted $8,000 in debt for 30 years, including interest which (at 5.5%) equals a total cost of $16,352 over the life of the mortgage.  Thanks, Barry!

The complete report of Johnson and Kwak is revealing, but the summary of their conclusions (augmented by my argument that the true cost include a lifetime of interest payments) is as stated. The report concludes with this ominous statement:

The net effect is that the buyer pays an inflated price for a house, which will get deflated when the tax credit prop gets taken away. I believe in some places you can effectively use the tax credit as your down payment; this means you will have close to zero equity when the credit goes away, unless housing prices rise.

The Cash for Clunkers Lunacy:  There are two major automobile industry price and profit analysts - Kelly and Edmunds.  Both do the same thing, they tell you what your car is worth and how many of them were sold in the last 25 minutes, days, months or years.  In 1963, when my father Frank bought my first car for me, I vividly remember the salesman at Smith Chevrolet in Ontario, California, pulling out his miniature Kelly Blue Book in a sales-charade of "...how low can I go..." while telling my father what the true value of my long-desired 1952 Chevrolet Coupe was worth.  Edmunds has been around as long and is just as venerable.

The record shows that the Clunkers program was dreamed up by chief idiot and tax cheat Timothy Geithner, a man who has raided every employer he worked for including the Federal Reserve, lined the pockets of his Wall Street cronies at the expense of American taxpayers and crafted the General Motors plan to rip off literally millions of Americans 501K investment in GM stock so that the company could be given lock, stock and barrel to the United Auto Workers Union - the very union whose unfair labor practices have driven the American auto industry into virtual ruination.

So, armed with the foreknowledge that know-nothing Obama (who has never even taken an economics class) and embezzler Geithner crafted the Clunkers program, I suppose that the far-left media expect everyone to buy the administration's line - that the Clunkers program (of course, in combination with the house rebate) have catapulted our economy into a growth phase.  Hardly!

At least, so say the PhDs and staticians at Edmunds who have proven that every car sold under the Clunkers Lunacy cost American taxpayers $24,000, or more than more of the cars sold for in the first place.

NOTE:  Before I go into Edmunds undeniably true analysis, let me lay a foundation:  Edmunds missed the single greatest element of the cost to taxpayers because (while PhDs and statisticians made the figures) Edmunds failed to include a cost accounting expert, thus the true "dollar" impact of 'Bama's Lunacy goes unreported except, of course, by me!

The summary of the Edmunds report is:

The ultra-socialist MSNBC (which even White House Advisor Jarrett admits is leftwing) reports that 61% of the total sales of some 690,000 cars went to foreign automakers, as follows:

The biggest industry beneficiaries were Japanese automakers Toyota, Honda and Nissan, which accounted for 41 percent of the new vehicle sales. That outpaced Detroit automakers General Motors, Ford and Chrysler, which had a share of nearly 39 percent. Toyota Motor Corp. led the industry with 19.4 percent of new sales, followed by General Motors Co. with 17.6 percent and Ford Motor Co. with 14.4 percent.

That means that (let me get out the calculator) 421,000 of the sold cars were made by foreign firms.  Now comes in the accounting part.  In every manufactured product there are two cost components - the direct costs and the indirect costs.  Direct costs are, say, for Toyota's USA manufacturing plants, what the parts, USA labor and real estate add up to.  The indirect costs are what the fatcats in Japan make, their overhead and operating expenses.  Typically, 40% of the total cost goes to indirect expenses.  Add on top of that the profit from the sale of 421,000 being sucked offshore and out of the pocketbooks of Americans and you have quite a figure... let me get out the calculator again...

Aha, 421,000 cars X $26,915 sales price X .4 indirect Japanese cost outflows = $4,532,486,000, a sum that is 152% greater than the total of the entire rebate budget.  Now, assuming the Japanese earn a miserly 10% profit on the sale of each car (their profit margins are far higher than USA automakers due to the fact of the USA public perception of high value and quality for Japanese makes) then another $1,133,121,500 in profits also flowed directly to Japan.  Thus, the true cost to the American taxpayer (total cash outflows divided by domestic automaker production only) is...

$21,000 - without consideration of Edmunds amount which states that the Clunkers rebate was paid to people who would have bought anyway.  If the Edmunds amount is included in the total, then the per-car cost is actually $45,000!

For Obama to claim that the lunacy of shipping $5,665,607,500 in greenbacks to Japanese banks, on top of paying $4,500 to car buyers who would have bought anyway, makes any economic sense is like John "The Traitor" Kerry's statement that "I voted for the bill before I voted against it".

Obama will never find the brains he wasn't born with and, after surrounding himself with the worst assortment of crooks, swindlers and tax cheats in the history of the United States, America will not survive unless we throw him and his cohorts out of office.