Recently, the Times West Virginian ran a poll question on its Web site asking readers what they felt could bring this nation out of recession.
Overwhelmingly, those readers said that time was the only thing that would help the economy. Time heals all wounds, it’s true, even financial ones.
But it isn’t just time alone that will heal financial wounds — it is time that allows some programs put in place to work. There’s no financial magic wand that you can wave that would fix this fractured economy overnight. But we do believe there are some programs with magical properties.
Any program that serves to boost consumer confidence and spend cash is a program that is going to make things better for the United States in the long run.
Two programs, specifically, have done just that. And we believe that they should be extended in order for more families to take advantage of them.
The first was the $3 billion Car Allowance Rebate System (CARS), or as it was more commonly referred to, Cash for Clunkers, which offered consumers between $2,500 and $4,500 for trading in old cars for more fuel-efficient new models. The initial $1 billion appropriated for the program was exhausted within a month as consumers ran to their local dealers to take advantage of the program. While Congress put another $2 billion into the program, those funds were used up long before the Nov. 1, 2009, deadline.
This program was two-pronged — save the economy by encouraging people to purchase new cars and save the world by putting more fuel-efficient vehicles on the roadways. A recent study by The Associated Press found that the program didn’t have much impact on the environment — it seemed that the majority of funds went toward the purchase of new pickup trucks that offered only minimal fuel-efficiency improvement.
But score one for the economy. A recent study found that only 125,000 of the 690,000 car purchases would have been made without the financial incentive.
Cars purchased helps local car dealers, injecting money into the local economies. It helps banks and lenders, who started to feel the effects of the sinking economy long before the rest of the country. It helps the automotive industry, which has suffered greatly over the past couple of years.
Let’s have a 2010 CARS bill. Much like the economy, we won’t fix the environment overnight. The impact on the economy, which is much more emergent than the environment, justifies the program. The impact on the environment, even minimal, is icing on the cake.
The second effective program that has consumers opening their pockets is the Homebuyer Tax Credit. Essentially, if you purchase a home between Jan. 1 and Dec. 1, you’ll get an $8,000 tax credit. Talk about making ripples. This program again serves to boost financial institutions, which benefits everyone. But more importantly, this puts more money into the pockets of Americans.
You buy a new home, you need new furniture. You want to make some home improvements. Department and specialty stores benefit, which boosts the local economy.
And then come tax time, you’re putting even more money in the pockets of Americans, which almost guarantees big-ticket purchases.
Score another one for the economy.
These aren’t overnight fixes, but we believe that these programs will make a deep impact on a recovering nation. Spending is the key that’s going to unlock this economy.
