Can America BUY its way to a better future?

Here we are, about 8 months into the new Obama administration, and much is different in the Obama approach to American values, our world relations, and economic strategy. The Obama team has tried a number of things to work on everything from health care, to the economy, to the environment, and foreign affairs. I think the best we can say about most of these efforts is that they have not yielded immediate success. None are abject failures at this point either, but one program did seem to yield an unforeseen success--cash for clunkers.

Why was this program so successful? I think the answer is obvious. People in America today need REAL incentives to behave in a manner that is different from their status quo. Just about everyone wants a cleaner environment, less dependence on foreign oil, even universal health care that is first rate, affordable, and less costly. Everyone wants a balanced budget. Everyone wants peace in the world.

Okay, perhaps not 100% of Americans, but I don't think that these goals are particularly partisan in nature. The fact is, though, that most Americans aren't as partisan as the media makes them out to be. Most Americans will do just about anything offered, as long as it makes common sense, and it's either economically neutral, or benefits them.

So, back to cash for clunkers. A 10% incentive to trade in my old gas guzzler for a shiny, new fuel efficient car? Now THAT's an incentive! The problem with previous attempts has been that the incentives were too small, too hard to figure out, and on items with price tags too large to begin with. Am I really going to go solar if you offer me a discount, but only if I go with pre-approved installers, and only if I'm in a certain tax bracket, and I buy over a certain amount, and the certainty of the benefits might be 20 years from now, and...

I think an America that uses less imported oil in its cars, more efficient appliances in its homes, develops alternative energy sources that are cost competitive and efficient, goes to schools that are equipped and able to teach, and has health care that's affordable for all, is within reach. But perhaps we have learned that there is a way to do it after all. So let's see what we can learn from "cash for clunkers".

For starters, why not continue the program? I admit, recycling the entire US auto fleet into cars that get 10 MPG more than their predecessors really only translates into about 10-20 days of less fuel per YEAR than today. Not great. However, electric cars are on the way, and perhaps a $10k per vehicle incentive on Nissan or Chevy electric cars is achievable in the near future.

And can we do better than a $50-$200 credit for efficient appliances? What about helping people who want to install solar panels achieve a break even point on costs that is 5 years or less? Costs on solar installations have dropped dramatically, and a kick start on solar could really take a bite out of our dependence on home heating oil, and other costs.

And what about health care. I have been clear about supporting a public option. But more importantly, I'd really like to see a reduction in costs. I have incentives in my health plan (meager, but incentives nevertheless) to remain healthy. I can achieve up to $340/year in "gift certificates" by doing things to stay healthy (visit the dentist, get a checkup, exercise, etc). I'd love to see such incentives for more Americans. I'd love to see a $500 credit for a yearly checkup in which people's weight went DOWN from year to year.

I have offered a few options here. What we now have in America is a country used to being paid for behavior. So rather than lament such an environment, let's embrace it, and start thinking about way to use it to our advantage. To those of you who cry "socialism", I ask you whether Ford Motor Company, or its workers are crying about increased production, and sales. I'd make a point to you that we are already in the wealth redistribution business in so many ways in America. It's time to think about how to at least do it in such a way as to incent good behavior, and give people a way to find some additional bucks in their own pockets, rather than the governments. At the end of the day, we're all trying to get to the same place.