Friday, June 26, 2009

Bad behavior rewarded--again

Congress and the President are trying to extricate the country from what historians may one day call the Era of Big Rewards for Bad Behavior.

In the process, Congress needs to avoid falling into the trap of rewarding bad behavior because it's convenient or popular.

For example, yesterday President Obama signed a bill containing what's being called the Cash for Clunkers program. Senators voted 91-5 for the program, which was part of a war-spending bill.

So, between now and Oct. 1, Congress will fork out up to $1 billion for the program. Buyers of new cars will get vouchers worth $3,500 to $4,500 if they trade in a "clunker" from 1984 or newer and purchase a car that gets at least 4 miles per gallon more than the "clunker."

People who purchase a car that gets 10 mpg more would get the biggest voucher.

SUV, minivan and truck owners would have to buy a vehicle that gets at least 2 mpg more. The largest $4,500 vouchers would go to those who purchase a new vehicle that gets at least 5 mpg more.

Sounds good doesn't it? Win-win-win.

Car dealers will sell more cars with an estimated increase in sales of 250,000.

The nation will reduce gasoline consumption, reduce dependence on foreign oil and clean up the air in congested cities.

Car buyers will get screaming deals.

So why shouldn't everyone be jumping for joy? Because the program rewards bad behavior.

People who purchased gas guzzlers with no thought of their political or environmental impacts will be rewarded with the tax dollars of other people who bought fuel-efficient cars. No one has proposed sending these fine patriots a voucher for anything—not even a tank of gas. Hybrid-vehicle buyers get a tax deduction, but that's a reward for good behavior.

Adding insult to injury, the Cash for Clunkers carrot doesn't come with a stick. The Congress that is ostensibly doing this for America's own good has also steadfastly refused to impose higher gas taxes.

The high gas prices of last summer proved beyond doubt that that's what it will take for Americans and their companies to relentlessly focus on figuring out how to end our addiction to foreign oil.

Gas prices that are too low put the nation at risk of greater oil crises in the future. They keep it wedded to regimes like Iran's that has been beating and jailing its own people to stamp out post-election protests.

Given America's taxpayer-funded bailouts of banks, investment houses and automakers, the nation risks de facto adoption of a new motto: Good behavior is its own reward. Bad behavior deserves cash.

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