After pouring unprecedented amounts of money down the drain in a largely failed bailout, Democrats are pushing hard to pour more money into the "Cash for Clunkers" program, which the WSJ does a fine job of tearing apart:
On the other hand, this is crackpot economics. The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years.
The CNN article above goes on:
Both Geithner and Greenspan, appearing on the same show, insisted that the economy would not collapse. But emergency steps -- including the bailout plan last year and the economic stimulus bill -- are expanding the federal budget deficit to unsustainable levels, both said.
"We will not get this economy back on track, recovery will not be strong and sustained, unless we ... can convince the American people that we're going to have the will to bring these deficits down once recovery is firmly established," Geithner said.
Somehow the administration seems to think that by going massively into debt, they can pull the deficit back under control. Isn't this the definition of cognitive dissonance?
Here's that famous graph: