"The recently passed “cash for clunkers” program (currently on-hold, as it ran out of funding in one week) is a perfect example of how government policy can make the economy worse. By incentivizing Americans to destroy fully paid-for cars so they can go deeper into debt buying brand new ones, the government weakens an already crippled economy. The last thing we want to do is subsidize Americans to go deeper into debt by buying more stuff. Don’t they realize that is precisely the behavior that got us into this mess?" - Peter Schiff
This program encourages poor economic decisions and uses public money to subsidize new car dealers and manufacturers while simultaneously punishing poor people and those selling used cars.
Subsidizing new cars encourages people who might otherwise purchase used cars to buy new ones instead. This gives new cars an unfair advantage, and dealers or private parties hoping to sell used cars have to lower their prices to compete.
It's also bad for poor people or those with otherwise limited car budgets. If you're driving a car worth less than $4,500, your financial situation probably doesn't support buying a brand new one to replace it. Some people simply can't afford to spend more than $4,500 on a car. This plan destroys many cars in this price range, lowering their supply. This forces people with limited car budgets to pay increased prices for a more limited selection of used cars.
Ironically, the new car dealers who were supposed to benefit from this scheme might be left holding the bag for the $4,500 payments. Congress, as it frequently does, again failed to anticipate this legislation's adverse consequences, or even how it would actually work in practice.
And these are the guys we're supposed to trust with fixing healthcare.