…is already broke, after less than a week. It was supposed to have enough money to last through October.
Yeah, let’s put these people in charge of health care.
25 thoughts on “Cash For Clunkers”
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…is already broke, after less than a week. It was supposed to have enough money to last through October.
Yeah, let’s put these people in charge of health care.
Comments are closed.
The program’s done exactly what it was supposed to do, just more quickly than expected. Since when is it a bad thing to introduce popular, effective programs?
This program just irks me. Though it may be effective at stimulating new car dealerships, what about used car dealerships? How could an upscale used car dealership possibly compete under this? For those just below the threshold of being able to afford a new car, buying a quality used car is a very viable option. But now, they can turn in their old car, regardless of condition and get $4500(of taxpayer money) to buy a new car. This removes used car dealerships most lucrative market completely. Who would possibly buy a ~10 grand used car?
Then there’s the aftermarket auto parts industry. They exist on people fixing their used cars, rather than buying new ones. So this program will hurt them as well.
Then there is the part where it hurts poor people. There are millions of people who can’t afford a new car, even with cash for clunkers, and must buy a cheap used car. If this program is successful and most of the used cars are destroyed, what will these people drive?
THEN, there’s the part where it puts tons and tons of pollution into the environment to produce a new car, so it’s not like it’s that helpful to the environment to build a ton of new cars.
THEN theres the part that this program is using tax dollars to essentially destroy things of value. On the news today I saw a ‘clunker’ late 90s jeep Cherokee in beautiful condition getting ripped into scrap metal. This car had 20+ great years left in it and is in no way a ‘gas guzzler’. This is insane, how is this helpful?
I couldn’t believe it when I saw my own supposedly conservative rep(Fred Upton) saying how successful this program was. This is nothing but large government intervention into the marketplace to shovel money from the bad lobbiers to the good lobbiers, period. Kill it.
You really are a mindless partisan aren’t you?
It shows poorly on their ability to predict a budget. As they ran out of money faster than they thought they would.
And by your logic a Healthcare system that is very popular (or at least takes on more people than planned) and, let’s throw you a bone and say, effective that it goes through resources much more quickly than expected.
So, it ends up spending money about an order of magnitude faster than planned. Would that be good?
Or would it show that the people making the plan and setting the expectations have no clue what they’re doing.
Though it may be effective at stimulating new car dealerships, what about used car dealerships?
Hasn’t the program increased the value of all the clunkers on used car lots?
And by your logic a Healthcare system that is very popular (or at least takes on more people than planned) and, let’s throw you a bone and say, effective that it goes through resources much more quickly than expected.
Apples and oranges. Cash for clunkers isn’t supposed to break even: its costs grow linear with popularity, and that’s why it’s a while-supplies-last offer.
Who exactly has been harmed by the popularity of cash for clunkers?
Who exactly has been harmed by the popularity of cash for clunkers?
People who will now have to pay more for clunkers because the supply has been reduced. Not to mention the taxpayer, who paid for it, or the citizens whose currency will inflate as a result of the increased debt.
I thought Jim was asking who was harmed by the unexpectedly high level of popularity, since that surprise was what provoked your blog post.
I thought Jim was asking who was harmed by the unexpectedly high level of popularity
The people who planned on getting the deal, but couldn’t because it ran out of money. Not to mention some dealers who got left holding the bag.
Ahhh, and once again Jim ignores the facts that don’t fit his narrative.
Just like the Stimulus, who cares if the program’s performance was wildly out of line from what the politicians said would happen.
The question of “What harm?” is a classic strawman. It deflects from the failure or these programs to be effective (Stimulus) or follow the planed cost structure (Clunkers).
If one assigns Group X a series of projects (A to D) and they screw up on A (lack of effect on a company metric as predicted (unemployment) and B (predicted rate of expenditures) why would you trust their judgment and predictions on the much larger and more influential projects C and D?
What’s different? If Congress can’t figure out these projects, why would they preform any better on bigger ones?
Successful while-supplies-last offers almost always involve demand exceeding supply. And no dealers got left holding the bag — the government will honor all valid deals prior to the suspension of the program, with more of our money of course. From the article you linked to: “If you have a “Clunkers” deal in the works, don’t worry. The government said Thursday any transactions already made between dealers and consumers will be honored.”
The people who planned on getting the deal, but couldn’t because it ran out of money.
And how are they harmed, exactly? The popularity of the program has maximized the number of people helped.
Not to mention some dealers who got left holding the bag.
What bag?
“Hasn’t the program increased the value of all the clunkers on used car lots?”
For people actually looking to buy a vehicle to drive and keep long term, this program pushes them towards new cars rather than used cars. The value is only raised to a car shopper who plans to buy a used car, then turn it in to buy a new car, thereby scamming the system and making off with taxpayer money in the process. Is this what you want in a government program?
“Who exactly has been harmed by the popularity of cash for clunkers?”
I believe I listed several: used car dealers, any person or business that supplies parts or services for old cars, and taxpayers for having to pay for this crap.
But who wins? The automakers, unions and their dealers. Just watch the government turn those companies around when they totally skew the system in their favor.
“I believe I listed several: used car dealers, any person or business that supplies parts or services for old cars, and taxpayers for having to pay for this crap.”
And add poor people who can only afford clunkers to that list
Most people are just rushing out to trade in their current car for a piece of crap new one that has been sitting on the lot for who knows how long and already has been marked down several thousand from MSRP (which will negate the depreciation from driving off the lot). Then, they are just going to turn around and sell the car using the CfC money to boast their profit margin.
That’s probably why it is so popular.
http://www.cato-at-liberty.org/2009/07/29/using-cash-for-clunkers-money-to-buy-a-muscle-car/
Congress thought the billion dollars of borrowed money would last for months. It ran out in a week. They predict health care will cost $1 trillion over 10 years. How can I have confidence in their ability to predict costs on a massively complicated health care program when they so obviously failed to predict costs on a simple program like “cash for clunkers.”
They’re reportedly rushing to add another $2 billion of borrowed money to extend the program. How long will that money last? Will they be coming back in a couple weeks to borrow more money for this subsidy program?
House approves $2B more for ‘cash for clunkers’
A few billion here, a few billion there… Soon we’ll be talking about real money.
This program is economic insanity.
Why is the U.S. government spending money to destroy produced material wealth, i.e. a functioning automobile?
Next thing you know they’ll be paying people to fill in ditches so that the next man in line can dig them out again.
When the mis-government is offering above market value for older cars no one with a brain should be surprised of people coming out in mass numbers chasing the offer. In classic big mis-government short sightedness congress neglected to consider how people would react.
“And how are they harmed, exactly? The popularity of the program has maximized the number of people helped.”
Wow. I thought that one of the guiding principles of Liberalism was some sense of social and legal equanimity and equality in place of some strict utilitarian argument of the number of people helped.
First of all, the idea for Cash for Clunkers came straight out of corporate boardrooms, and “Engine Charlie’s what is good for the country is good for GM . . . and vice versa”, most often misquoted as “what is good for GM is good for the country” has long been anathama to Liberal thought on good social policy.
I first heard of this Cash for Clunkers Concept long before there was any political buzz — I heard it from William Clay “Billy” Ford, Jr. writing on Ford World Magazine: the young Ford scion thought it would be good for Ford and hence for the rest of us.
He got the idea from how Ford Europe benefited from some such policy in Germany. Keep in mind that they have a rigorous system of vehicle taxation, licensing and inspection “over there” under which half the cars on the road in America would flunk, and as to poor people being denied servicable used cars, they have more extensive public transportation.
So Billy’s Brainstorm goes through the sausage grinder of the Democratic Caucus and the US Congress and gets signed by the President (was it part of the Afghanistan War appropriation?).
One of the features of “fiscal policy” in response to an economic emergency (collapse of the financial system, collapse of 2 out of 3 US auto companies) that regardless of the President’s exhortations to simply hurry up, implementing Cash for Clunkers took some weeks and months where various proposals and counterproposals were debated, and once the law was passed, a government agency had to scramble to get the program running.
So what is “wrong” with the program and why should a Liberal find anything to complain about?
First of all, the program is about scrapping what are considered to be “old” cars and replace them with “new” and “better” or perhaps “more energy efficient cars.” When I worked at Ford more years ago than I care to admit, my Uncle Laszlo told me about a kind of “food chain” of car ownership, with a class of people buying new cars, another class buying “near new” used cars, yet another buying “good used” cars, and below that, a poor/young class buying junkers.
So here is the government handing out fat subsidies, and the primary beneficiaries are new car purchasers, that is, the more well off in society. California had a program for taking junker “polluter” cars of the road (it was an environmental trade for allowing oil refinaries to stay, and may have even been funded by the oil companies), and a much smaller amount (about 700 dollars) was offered to turn in real junkers, which in concept could benefit the working poor class driving junkers, that they would have $700 downpayment on the next-step-up “good used car.”
Of course that system would have only a “trickle up” effect on new car sales, so we need the “trickle down” economic model of subsidizing the purchase of new cars by wealthy people.
OK, this system is put in place, and it is strictly “means tested” — your trade-in can get no more than 18 MPG on a modern revision of the old EPA test data at the time your car was built. This mileage needs to be computed out to four decimal places and then rounded to the nearest integer MPG. Your ride is rated (as of July 2009, not when you bought it) at 18.51 MPG — no rebate for you! Next! And of course the gummint managed to get that part wrong, changing some cars to “Qualified” and others to “Disqualified.”
Next, this program was talked, and talked, and talked about for weeks or even months, and the $4500 rebate seemed like a sweet deal to those with a qualified trade-in (an arbitrary minority of car owners, and a segment of car owners who bought gas guzzlers when gas was cheap instead of looking to the future). Only the details of the program and what qualified and how it would work were sketchy until last week Friday.
So a starter gun was fired at the Oklahoma border last Friday, only there were Sooners who jumped the gun on car purchases on the notion that there was July 1 retroactivity to the law, and then there were the highly motivated who were “off to the races” which apparently were called to a finish this Friday.
Now what principle of Liberal thought regarding consumer protection reasons that consumers should be given 5 business days to consider and execute a car purchase? Who knew there would be such demand? Isn’t government supposed to have wonks who study this sort of thing and carefully craft laws?
Furthermore, an anecdotal and unscientific survey of car dealers suggests that the dealers have yet to be paid on 90 percent of the car sales, and the gummit suspended the program when they couldn’t figure out how much they were on the hook for reimbursement relative to the allocated money. Run the program until the money runs out? Heck, no one seems to know if the money has run out or not.
C’mon Jim, you are only “for” this program because your bud Mr. Obama is for this program and if Mr. Bush was for this program, you would be agin’ it. At least our esteemed host Rand has the excuse that he would be agin’ it if Bush did it and he is agin’ it that Obama is doing it.
Furthermore Jim, your man Obama is against the outcome you are for (car buyers through this slap-dash self-selection process got fat trade-in allowances, and if more than 250,000 people want this deal, than tough tires). The Adminstration and Congress are scrambling to come up with another couple billion to keep this thing going a while longer — largely out of the sense that consumers were expecting this “deal”, and to pull it so soon would get the Attorney Generals of 50 states breathing down the necks of any private business for “bait and switch”, regardless of what the fine print said about limited supply.
So if this projected 1 billion program grows to 3 or more total billions to maintain the Liberal principles of fairness of what was promised to consumers, what does this say about a proposed 1 trillion spending on subsidies to allow people to have health insurance?
Who is harmed? The car dealerships for now.
So far, they have been approved for reimbursement at 1/10th the money that was made available. The reason for the interruption was because car dealerships said they had over 20,000 transactions that had not gone through, which would represent the remaining budget.
And here’s the trick of it all: the government will honor all valid deals. What’s valid? I talked to several car dealerships, most didn’t know there was a list of cars that qualified. They only knew of the 5mpg to 10 mpg improvement. You can say that’s their fault, except we have legislators who wrote the bill admitting they haven’t read it and didn’t have time to understand it. So now, the citizen is left trying to interpret the law. If 90% of a dealership’s revenue is questionable, then they can’t do business.
Then there is the cash flow issue. The limited government resources for managing the plan is only capable of handling 1/10th the demand. And that’s just the approval process. When can the car dealerships expect to be reinbursed? Will the government give them the money in time to make payroll?
In the interim, car dealerships are in a quagmire. They have payed for effective advertising for a goverment program. People are coming to their lots. But they can’t offer the deal, because there is no money left. Government officials say more money is on the way, but only a fool would continue trying to sell cars via the program when Congress hasn’t yet acted. So people hoping to get a great deal, told they could get a deal, are now being told no deal is available.
We will ignore for a moment what happened in the housing market when individuals jumped at “good government deals” before considering the long term issues of financing. We will ignore that issue, just like we are ignoring those taxpayers who purchased fuel efficient cars without government social engineering, and thus do not qualify for the government hand out. I’m sure you’re assuming they think that this is just fair.
I wonder how much fraud occurred? When money goes this fast, it’s likely that a lot of people figured out ahead of time how to milk it. How hard would it be to get a few thousand fake people with paper ownership of a clunker? Note that what we’re hearing is generic government promises to pay out. They don’t know what’s going on.
Moving on, I’m directly harmed by something like this since I don’t buy new cars. For example, California’s laws have kept used cars at or above $1,000. If you can drive a car to a disposal site and provide the registration, you get something like $1,000, no real questions asked. Nobody shows any care for the people for which a $1,000 car is a major purchase. My first car was a $200 (late 60s?) Chevy Impala that I bought in the mid 80’s when I was in high school. With that car, I maintained a fast food job and drove to school.
The additional pollution from that car would be nothing next to the benefits. That would have cut into my savings significantly if I had to spend $500 ($1000 in 1985 dollars) instead. I believe I managed to save a bit over $3000, the summer before I went to college so it’d be almost 10% of my savings.
Holy Unintended Economic Consequences of Casually Thought Out Social Policies, Batman!
I hadn’t really thought about California Clunkers establishing a floor under used car prices, but now that I think of it, it is pure Econ 101.
Well the cheap cars, there still be plenty of Econobox junkers that don’t qualify for this, 8x-9x honda civics, 4 cylinder accords/camries don’t qualify. But a low income family looking for a suv/van will be out of luck, or the high school kid looking to buy a junker sporty/muscle car like a old Z, maxima, mustang will be out.
Dave,
You clearly don’t understand. Low income families shouldn’t *have* families, because they can’t afford them, see?
The obvious solution was covered in detail quite some time ago, by some dead white male with a surname of “Swift”.
I just got back from visiting a friend in Las Vegas today. Every channel was running Cash for Clunkers commercials with different dealerships trying to one up each other. The best deal seemed to be an extra $9k on top of the $4.5k but with all cars qualifying with no restrictions. So if your car didn’t qualify you’d get $9k, but if it did you get $13.5k. No money left. What a hoot.
My $500 junk yard car probably wouldn’t qualify for the government program anyway. I got 45 mpg from my worn out 4 cylinder. 115 degree weather both ways and no A/C. I miss my Avalon.
Who is harmed by the gov. passing out tax money? How about the entire economy since these imbeciles in congress have no chance of outperforming millions of individual decision makers motivated by self interest.
Isn’t the 10th Amendment harmed by this law?
Or is it so dead and buried that nobody even notices when the body is dug up and violated?