Bad arguments for bad policy, ctd.

Speaking of the Homebuyers Tax Credit, regular Athens Banner-Herald commenter 'Tumbleweed' exercises some of the worst logic I've seen in retort to my column on the inefficiency of the program ...

Johnathan McGinty, divide 690 thousand into the $1.6 billion that went into Cash for clunkers and then tell me how successful the program was. You could not compare two variables if your life depended on it. You write stuff simply to fill a column.
Name one homebuyer that would turn down $8000 offered to them when they made the purchase. If you want to see a more receptive response to the incentive, simply double the amount. Cash for clunkers was money handed to the dealer while the homebuyers credit is in tax incentives not hard cash.

Fortunately my life doesn't depend on it - though, to be fair, he/she is partially correct in observing that I 'write stuff to simply fill a column' since, you know, that's the whole point of writing a column - but if you follow his/her advice we find that 690,000 into $1.6 billion equals $2,318, which is right on par with the actual cost of the cash voucher provided for 'Cash For Clunkers.'

However, when you take the existing economic analysis and run the math on the HTC, we find that the cost of the subsidy is significantly higher for that program than CFC ...

The tax credit is very poorly targeted. Approximately 1.9 million buyers are expected to receive the credit, but more than 85 percent of these would have bought a home without the credit. This suggests a price tax of about $15 billion – which is twice what Congress intended – for approximately 350,000 additional home sales. At $43,000 per new home sale, this is a very expensive subsidy.

Anyway, it's the last point that shows how insane the policy is. Of course people are going to take the $8,000 when they arrive at the closing. That, however, is not incentivizing a purchase as much as it is just handing out free cash. The whole argument against the HTC is that it's not encouraging new sales, but merely subsidizing the usual behavior of already willing buyers.