If you regularly watch or read interviews with Peter Schiff, you'll know he has long predicted a 'dough-for-dumps' program. Like many of the other successes he's had in forecasting the economic situation we are in, it appears his dough-for-dumps scenario may be realized to an extent. Expect to see it announced next week by the President.
...the economy still needs help. So White House officials are looking at creating a new version of cash for clunkers — this time for home weatherization.
John Doerr, the Silicon Valley venture capitalist, and former President Bill Clinton have separately suggested versions of the idea to the White House. Mr. Doerr calls his proposal, which would give households money to pay for weatherization projects, “cash for caulkers.” Rahm Emanuel, President Obama’s chief of staff, told me, “It’s one of the top things he’s looking at.”
While the Cash for Clunkers program spent a total of around $3 billion; or $24,500 per car, the Doerr plan would cost $23 billion over two years. That $23 billion would be well spent according to the author of the editorialized article, David Leonhardt:
Done right, cash for caulkers would be precisely the kind of stimulus that makes the most sense: spending money now to save money later.
Perhaps you can help me attempt to educate Mr. Leonhardt and others on the simple economic theory of the broken window fallacy by posting it on your facebook and twitter feeds?
In my opinion, this isn't an example of the broken window fallacy. It's not like the old houses are being knocked down and rebuilt, they are simply being weatherized, which does have some economic benefits. Really though, the whole idea is stupid. Let individuals weatherize their homes themselves. Many people who do not need the weatherization will likely take advantage of it because it is 'free' (they are likely to forget that their tax dollars are funding the program).
You're right Joseph - it's more of a related than direct example of the broken window fallacy, but it does take funds (that belong to the tax payer) and subsidize a bureaucratized operation that is un-necessary and will not do what House Speaker Nancy Pelosi promised (which was to pay down the defecit with remaining stimulus funds and those funds which were re-paid to the treasury as a reslut of the 'bailout').
Very true. By the way, good post. I was unaware that this program was being proposed. No doubt, it will be passed. :-[
I'm just curious that if people can't even afford to make payments on their homes in the first place, how are they going to afford to "weatherize" them?
It's easy really. We'll just print the money out of thin air! :-]
I kindly ask everyone - that means uncles named Sam too - to kindly keep out of my business. This includes window caulking.
For christ's steak.
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