Does anyone really think that Cash for Clunkers is going to help the economy? What a laugh. I happened to be out last week trying to help my mom trade in two cars and buy a better car for her, so I got to see the Cash for Clunkers program first hand and in full swing at as many dealerships as we could handle going to in order to shop her potential trade ins and get a good deal on a new vehicle. No doubt about it, the salespeople at all the dealers we visited were busy because of the program. We saw and talked to a whole bunch of car salesmen that were having a really good week.
So they basically spent a billion dollars on tax payer funded rebates to boost sales for a week and now they may come with another two billion to boost sales for what, another two weeks??? Maybe. Funny thing is, in all that we saw and all the salespeople and dealership owners we talked to, nobody thinks for one second that the dealers are going to hire more salespeople, service people, managers, receptionists or anything else because of this 1 week or potentially 3 week boost in sales. Ask any of them if they think GM, or Toyota, or any of the other Automakers are going to hire more people because of the big influx of sales from this program. Ha! Not a chance. So the Dealers and the Salespeople are going to make a big trip to Walmart this month, or Disney World, or they might pay off a credit card or buy a new lawn tractor. This is going to drive retail sales and economic activity through the roof......for a week....or maybe a month......and then what? The same thing that happens with all these dumb government stimulus programs. Sales in the subsequent months will suffer because you took the supply of buyers out of the market. The guy who traded in his barely moving crap automobile that wouldn't have lasted another few months anyway and bought a new Lexus for $45,500 instead of $50,000 won't be shopping over the next few months for the new vehicle he needed because he already has it. More importantly, nobody will be hired because of this so nobody will have a permanent income boost that can really drive prosperity and drive the economy making things better for all companies involved.
I have a better plan for Congress and our President. Can the Cash for Clunkers thing. You're wasting money. Pump that money into Cash for Candidates. Give the $3 billion (original $1 billion and the additional $2 billion) to companies for immediate Recruiting Fee Rebates. Tell the companies that they can hire whatever employees they need to improve their business and even go hire recruiters to find the best people available to fill those needs. The Gov will give them $25,000 per hire to pass along to the recruiters for the fees. Many of the recruiting fees will be covered completely by the $25,000 but they could hire someone who warrants a $50,000 fee and it would only cost them $25k because the Gov foots the other $25k. For $1 billion, they will get 40,000 rebates, 40,000 new key hires, 40,000 recruiting fees paid. For the whole $3 billion that will add up to 120,000 key hires, 120,000 rebates so the companies will aggressively hire the best people they can as quickly as they can in order to grow their business. Who's going to have a good week or two and go shopping at Walmart or off to Disney World????? Me, and all my TPR friends. We'll handle the 1 week boost to the economy shopping with our little extra income. I know that sounds short lived, but maybe, just maybe, as the companies start growing and pushing forward, they'll come back to us for more key hires to continue growing.
What's better for the economy? Cash for Clunkers or Cash for Candidates? It's not even close.
Todd Kmiec & Associates
Follow me on Twitter http://twitter.com/toddkmiec
Connect with me on Facebook www.facebook.com/toddkmiec