The New New Deal

Previously the federal government developed and executed the "cash for Clunkers Program" which has been seen by some as a success and by others as a failure for it's lack of long-term impact and short-term nature.

Now, the federal government is pushing through new programs aimed at stimulating the economy in other related fields... this time, the appliance, battery and weather-proofing industry.

Unfortunately, where the previous program was large, broad, well-funded and consistent, the newest program to take to the streets of American communities and shopping centers is none of those.

Within the upcoming months, the Federal government will begin funding state-rebates for energy efficient appliances that will be granted to states on a basis of population. Under this plan, each state will be granted the equivalent of $1 per person with the minimum state/territorial award being $100,000, for a grand total of $300 million in federal funding.

As a result, the state-by-state awarding system will varying greatly throughout the nation making it increasingly difficult for companies to market their products and the rebate system which will greatly limit the success of the new program.

On top of that, there is the added issue that more people will be able to afford and purchase these products in comparison to those who bought new cars after trading in their old ones meaning that there is a significantly greater chance that the funds will run out long before the program is set to end.

Regardless, there are still other plans awaiting implementation: the weatherization of low-income housing and the subsidizing of fuel cell battery technology in the US.


What I don't understand is why we are spending this money to provide short-term stimulus when we should be funding long-term investment geared at solving the root cause of the current economic crisis: providing extremely low-interest loans for people with good credit scores to purchase foreclosed properties which in the long run would help stabilize housing valuations.

A low-interest loan for investors and similar programs to the "Cash for Clunkers Program" will stimulate demand and encourage spending rather than leading to the usual occurrence with rebates: increased savings.

Unfortunately, politicians are usually motivated by short-term gains at the cost of future economic stability.



For more information, check out the following FORBES article:
http://www.forbes.com/2009/09/09/rebates-appliances-government-intelligent-investing-clunkers.html?partner=yahootix