RUSH: So, folks, it's time to get happy out there, a million new jobs created or saved, the recession's over.
Ah, ah, ah, wait. Just yesterday, everything was coming up roses, right? That phony, fraud GDP figure. This from Reuters: "Consumer spending in the United States fell in September --" see? This is exactly what I told you yesterday. GDP equals CIG. Gross domestic product equals CIG: consumption by consumers, investment and growth by business, and spending by government. That's the G. And all of this growth came from G, and primarily the Cash for Clunkers debacle as well as the first time home buyers thing. This is pure government borrowing, because we don't have the money that they spent. So there was no growth in the private sector, and these numbers today prove it. "US consumer spending fell in September after four months of gains as a government program to boost auto purchases ended, adding to fears that economic growth could stumble without government support." It is government that is causing the stumble!
"The Commerce Department said on Friday consumer spending fell 0.5 percent, the largest decline since December, after a 1.4 percent increase in August," but that was all Cash for Clunkers. "'It sets up a very weak fourth quarter for consumption. It might be around flat to up 1 percent annualized in the fourth quarter,' said Ian Morris, chief economist at HSBC Securities in New York. But if inventories add --" there's no sign of that now, by the way. You know, I'm remodeling a room in one of the houses on my estate. And one of the things I'm changing, I'm getting rid of a couple chandeliers and replacing with different fixtures because I'm changing the whole look and feel of the room. So we went to the guy that we normally went to and I chose the two fixtures and he said, "We don't have them in stock." "Well, okay, go ahead and order them." "We don't have the money to order them. Can you pay up front, at least 50%?" I said, "Sure." A lot of people, inventories are down. When you go in to order something other than what you would find at a grocery store, likelihood is they're going to have to order it because they don't have the capital to keep inventory on hand. People have been dumping inventories. There is no private sector growth.
Now, I got an angry e-mail about this from a guy yesterday. Let me see if I can find it, from a website subscriber because he thinks I am ripping the American people. He thinks I am ripping the people of this country who make it work. Yeah. Here it is. Guy's name is Jason. "The GDP is not a phony number. Quit pooping on us. Americans thrive despite what's going on in Washington, trying to tear this country down. That's right. I, as a paid subscriber, am getting mad at you for dumping all over the American people who continue to work and produce and innovate. Every day you just drumbeat negative stories and I understand why, but try mixing in some positive news once in a while, huh?" I understand the complaint. But, folks, we are dealing with an administration unlike any we have ever seen.
RUSH: Pete in Davenport, Iowa, I'm glad you called, sir. You're next on the EIB Network.
CALLER: Rush, it's a pleasure to talk to you.
RUSH: Thank you, sir.
CALLER: I wanted to discuss your thoughts on the first-time home buyer tax credit first. I'll give you my impression. The way I look at it is, I'm coming from a state where Cash for Clunkers program was designed by my congressman, so obviously we're all big fans of that, let me tell you. The way I see that happening is that's more of a, you know, here's a check, here's 4,000 bucks, go buy a car. The tax credit, the way I see it, is more of a tax cut for first-time home buyers. I'm in favor of the idea behind it, but execution, as you talk about on your show has been substandard as most government programs are. What's your impression of the program overall?
RUSH: The first-time home buyer program?
RUSH: It's a scam.
CALLER: What makes it a scam?
RUSH: It's a scam. It's just a continuation of the whole subprime mortgage thing. It's putting people in homes that have no business being in them because they can't afford them. It's buying votes. It's distorting the economy. It's growing government. It's just not gonna work because if it takes $8,000 to get 'em in, at some point they're going to be defaulting on the mortgage.
CALLER: Wouldn't that be more of an issue with the lenders? The way I look at it, it is a great tool to get people out of renting into home buying if they qualify, obviously, if they qualify on their loan and that's what we've seen over here, back in Iowa we've seen a lot of people --
RUSH: Wait. Let me ask you a question, did you say that you liked the Cash for Clunkers program?
CALLER: No, God no.
RUSH: Well, then why do you like --
RUSH: Why do you like this? This is just more of the same.
CALLER: I see it as a different application. I see it more as a tax cut for these individuals. I don't necessarily agree, I don't think it's very fair. If you're going to incentivize people to buy homes why use only first-time home buyers, why not second-time home buyers, why not third-time home buyers?
RUSH: Okay, if you like it, then, let me ask you this.
RUSH: Why shouldn't the government just buy everybody a house?
CALLER: Well, that would be great, wouldn't it? Buy everybody cars. I was hoping they'd start --
RUSH: Seriously. Seriously. If they're going to have a first-time home buyer tax credit of $8,000, why not make it 16?
CALLER: Yeah, well, I guess it makes sense, yeah.
RUSH: No. It makes no sense whatsoever.
CALLER: No I'm saying your logic makes sense. I mean the way we've seen it out here and the way it's been reported, especially in the media, is it's this great tool to get people into homes, and obviously --
RUSH: See, this --
CALLER: -- selling homes it's great, too.
RUSH: He's calling from Davenport, Iowa. This is an illustration of how these kind of programs in a recession seem compassionate and nice because home ownership is part of the American dream and here's President Obama in the middle of a recession actually enabling people to buy a home, and people are being foreclosed on. It's a good program, it's a wonderful, nice program. And people who believe that, you know, get caught up in the emotion of it and do not understand the flawed aspects, the market distortions, the fact that your neighbor is giving you the eight grand. Where do you think it's coming from? Why don't you instead of having the government do it, why don't you go next door and ask your neighbor for $8,000 so that you can go buy a house? Or why don't you go through the neighborhood and ask as many people as you can for a total of $8,000? Because that's what you're doing. It's not the government giving you money. It is money being taken from people and given to others. It's just more redistribution, and it's all for the purpose of creating as much doubt in people's minds that they can do anything on their on, that they can't do anything without government. It's a stinking bad program, it sets a horrible precedent, and beyond that, it won't work.
RUSH: By the way, for the fiscal year ending on September 30th, Washington fiscal year ends on September 30th, the official end-of-year deficit hit an all-time high of $1.42 trillion. So, $1.42 trillion is a number that's hard to comprehend. It's impossible to comprehend because there's a one in it, doesn't sound that big, one trillion. It's like a thousand thousand billion billion. The bottom line is we don't have $8,000 to give people to get into houses. Folks, we are broke. We are in debt. We are in deep doo-doo if the ChiComs ever foreclose on us. The ChiComs could shut down this country from the Mississippi River all the way to the Left Coast.
Now, the Cash for Clunkers program, I had this yesterday, I reported it a little bit but it still continues to make big news out there. "A total of 690,000 new vehicles were sold under the Cash for Clunkers program last summer, but only 125,000 of those were vehicles that would not have been sold anyway." Edmunds.com has looked at this. Cars that would have been sold seasonally in the fourth quarter got moved up the third quarter, auto sales in the fourth quarter are going to plummet, the GDP is going to plummet unless they goose it again with some phony program. It ended up that the government, taxpayers, paid $24,000 per car in the Cash for Clunkers program.
"Auto sales contributed heavily to the economy's expansion." There's no economic expansion! There was government expansion. "The Cash for Clunkers program gave car buyers rebates of up to $4,500 --" which are taxable by the way, wait till people find out about that. "-- if they traded in less fuel-efficient vehicles for new vehicles that met certain fuel economy requirements. A total of $3 billion was allotted for those rebates. The average rebate was $4,000. But the overwhelming majority of sales would have taken place anyway at some time in the last half of 2009, according to Edmunds.com. That means the government ended up spending about $24,000 each for those 125,000 additional vehicle sales." They didn't spend $24,000 for all the cars sold, $24,000 for the 125,000 additional. And they wouldn't have been sold anyway, they would have bought in the fourth quarter. All kinds of blogs are weighing in on this with all the details, and here's one at AutoBlog.com: "If you believe the statistical analysis of Edmunds, perhaps the program wasn't so terrific after all. The industry research juggernaut claims that of the 690,000 vehicles sold under the program, only 125,000 of those sales went to people who weren't going to purchase a new car in 2009. The result, says Edmunds, is that the $3 billion spent for C4C ended up spurring only 125,000 sales," that would not have taken place, "at a cost of $24,000 per vehicle."
The White House is fighting back. CNNmoney.com: "'White House Fights Back on Cash for Clunkers' -- Obama administration goes to battle with Edmunds.com on Cash for Clunkers analysis, saying the program contributed heavily to last quarter's economic expansion." When the White House goes after somebody, it just makes me believe the somebody. In this case they're going after Edmunds, it makes me believe Edmunds. This is great for Edmunds. It's putting them on the map. According to the White House blog: "Edmunds.com has released a faulty analysis. This is the latest of several critical 'analyses' of the Cash for Clunkers program from Edmunds.com, which appear designed to grab headlines and get coverage on cable TV." Do you realize how threatened these people are by cable TV? By one channel. They're threatened by one channel.
But Edmunds stands by its report. "In response, Edmunds.com said Thursday that its figures were correct, and that the growth in GDP had more to do with naturally recovering auto sales and not with incentive programs." Edmunds is not backing down. And here's another, BusinessInsider.com. I can't show you this 'cause it printed out on two different pages but there's a chart here, a graph of auto sales that has been put together here from quarter three of 1979 through quarter three of '09, and what this thing shows, it's the Bureau of Economic Analysis, by the way. Motor vehicle output spiked a seasonally adjusted 157.6% quarter on quarter from Q3 to Q2 of 2009. This is completely unprecedented. Vehicle output is clearly going off a cliff next quarter because so many cars that would have been -- what Edmunds does is analyze automobile sales during the whole year. And what they've found is a bunch of sales that would normally take place in the fourth quarter got moved into the third quarter, shazam, and we got a phony, fraudulent 3.5% GDP growth. And of that I think 1.7 is Cash for Clunkers. And the other is this first-time home buyer thing, and there are some other things.
So now the White House is going to war with a website. Some people here even on the left, "What in the world are they doing?" Well, when propagandists are called on their lies, when politicians are called on their lies, whoever is doing the calling is going to pay for it when you have tyrannical type control freaks running the show. Also from BusinessInsider: "'How The Home Buyer Tax Credit Inflated The GDP Number' -- A huge portion of today's GDP number looks like it was a product of government intervention into the economy," 1.66 percentage points from Cash for Clunkers. "The National Association of Realtors says that nearly half of the jump in home sales this year was directly attributable to the tax credit. So we probably need to shave at least another 0.25% off GDP," for that because it's government growth, it is not economic growth in the private sector.