The “Cash for Clunkers” program has been a “great success”, at least according to the government, and the auto industry. Within days of its kickoff, all $1 billion allocated to the program has been used up by Americans who have eagerly lined up to trade their clunkers for new vehicles. […] According to Edmunds, about 200,000 old low mileage cars would normally traded in, every 3 months, in exchange for more efficient higher mileage cars, without this program. […] If everyone qualified for $4,500 per vehicle, about 222,000 vehicles would have just taken advantage of the government’s money. At $3,500, 286,000 vehicles will have been sold. […I]f all buyers have qualified for the higher $4,500 rebate, the “cash for clunkers” program will mean a marginal increase in car sales of 22,000 this quarter. $1 billion divided by 22,000 means a net cost to the government of $45,354 per car.
If all buyers only qualify for the $3,500 rebate, it means a marginal increase in sales of about 86,000, or a net cost to the taxpayers of $11,628 per vehicle. In all likelihood, however, there will probably be a mix of vehicles qualifying for various rebates between $3,500 and $4,500. Based upon that assumption, Edmunds.com estimates that the average cost to the taxpayer will be about $20,000 per vehicle.
Even most of the marginally extra sales really represent people who were going to buy a new car eventually anyway. They are just buying a bit sooner than they expected. Old clunkers don’t last forever, and they are almost all eventually replaced. The government is shifting tomorrow’s demand to today, stealing from tomorrow to pay for today, but at great cost to the taxpayer.
The “cash for clunkers” program is yet another boondoogle – an expensive waste of precious taxpayer dollars.
Thankfully, an extra $2 billion that was just lying around was made available to keep the program going. I wonder what happens when that runs out. But who cares about the cost when the environment is at stake? Right?
While taking fuel guzzlers off the road may use less oil, scrapping working (if inefficient) cars certainly isn’t good for the environment.
Either this is environmental help in name only, or it’s an “automaker’s stimulus” to promote sales of newer cars. If I were a dealer I’d find a good way to “break” engines in a way that can be fairly easily fixed.
Opening line: The “Cash for Clunkers” program has been a “great success”, at least according to the government, and the auto industry.
So the government gives out $3,500 to $4,500 to people and they call is a great success.
Giving away money is the new White House measurement of success? If I stood outside a grocery store and handed out $10 bills to customers who bought $25 worth of native-grown, organic food, would that be considered a success?
The big winners in this hand-out are Obama’s biggest supporters and contributors: the bureaucrats who run this boondoggle and the UAW union.
One of the final comments in the article really nails it. The government is shifting tomorrow’s demand to today, stealing from tomorrow to pay for today, but at great cost to the taxpayer.
Reminds me of Wimpy in the Popeye cartoons: “I’ll gladly pay you Tuesday for a hamburger today”.
I don’t understand how this “margin” is calculated.
Based on what Edmunds said, then approximately 200,000 cars (for 3 months – 1 week) + 222,000 cars (for the 1 week of C for C) = 422,000 cars sold this quarter.
Wouldn’t that mean the marginal change in respect to the stimulus is more like 222,000 cars for the quarter?
Or to put it in other words 1Bn USD/222,000 = approx 4500 USD of the “government’s” money per car?
At the minimum, based on the quarter starting July, you would have approximately 46,100 cars for the first three weeks plus 222,000 = 266,100 for the first month of the present quarter, with a marginal change of 66,100 over what would have been expected at the end of September.
This puts everything off to a good start for the quarter, when looked at from this perspective.
It seems to me that the issue here is not about climate, but about stimulating new car buys.
If the old cars are taken out of commission, then that will mean more people will have to buy new cars or find alternate forms of transportation.
As long as people continue to buy new cars, automakers will make those new cars, and autoworkers will continue to have jobs.
I don’t know how that translates into the long-term, because the author makes a good point about “stealing from tomorrow” but I’m not sure about the “paying for today” part.
A lot of these vehicles are being bought to use as a trade in because they are completely shot. They were already headed for the junk yard. The engine and transmission being the two keys although rusted out bodies no doubt count. I’d doubt if they could pass the emissions tests in many communities. Some may have been wrecked. It doesn’t matter as long as you can get it to the car lot even if it takes a wrecker to move it. It doesn’t take much of a car to bring more than these people are getting as a trade in. The point is they can use a $100 or less pile of scrap to get several thousand dollars off.
Since in many respects this is a stupid thing for the government to do and I think discriminates against Ford and other companies making cars in America I’m not sure how long it’s going to last. Maybe long enough to put Ford into bankruptcy?
#5, Watson,
You are on the right track. The intent of the problem was three fold though.
The dealers (and manufacturers) inventory is full, most have little or no room to put any new cars. The manufacturers will not build anything new until they can clear off the lots. The automotive suppliers will remain closed until the manufacturers start producing.
The second was to get the manufacturers to build fuel efficient vehicles. Americans have traditionally shunned small vehicles in favor of huge, inefficient SUVs and trucks to haul one sorry overweight ass.
The third was a true effort to reduce our reliance on oil, and in particular, imported oil. This contributes to our huge balance of payments.
Yes the right wing nuts will disagree and say this is just a boondoggle. They would say that about anything the Obama administration does though to fix the mess created by its predecessor government. Regardless of how well the program works, these assholes only want America to fail.
This article make a lot of assumptions. But, as I am reminded occasionally, there are lies, there are damned lies, and there are lies that incorrectly use statistics to bolster a failed argument.
What I want to know is where did the $4500 and $3500 figures come from? Why not $2500 and $1500? That would have serviced far more people.
Eric #4,
Eric you are missing the point. Life has been good to you. Through pure luck, you have ended up with more and better stuff than other people in this society. You are rich. Being as lucky and as rich as you are, you probably didn’t notice that you had more than your “Fair Share”. It is part of goverment’s role to correct this imbalance so that others can be “lucky” like you. I am sure if you think about it, you will come to the same conclusion that our great leaders have come to and you will understand the fairness of redistribution.
The article is very useful. Along with the Republikans who sat around in the House, yesterday, taping their jokes about Cash for Cluckers for chicken farmers – this represents the sort of elitist ideology that I wish most working folks would take the time to examine.
Here we are with a program with funds taken from an already existing bill, nothing additional needed to be budgeted – which brought benefits to a lot of folks: people buying cars, people selling cars, people building cars. Just folks who work for a living.
The what-if crowd will spend a predictable amount of time thinking up reasons why people shouldn’t be happy about this. Ignoring the fact that anyone you know who participated, anyone interviewed who used the program – is pleased with it.
Just as in every other country bright enough to have a similar program – well before American politicians got round to it.
And who’s doing the whining? Folks who write about the machines – and apparently don’t think the humans involved in the process are important.
#6, doill
A lot of these vehicles are being bought to use as a trade in because they are completely shot. They were already headed for the junk yard.
As usual, you don’t have an effen clue what you are trying to say.
The vehicle MUST be registered and insured for at least one year prior to the trade. I don’t know how many people keep their scrap cars insured. Maybe you do, but most don’t.
I’d doubt if they could pass the emissions tests in many communities. Some may have been wrecked.
If they are insured and licensed then they may be driven. If they have been wrecked then the insurance is automatically lapsed. Did you buy insurance for a wrecked car?
The point is they can use a $100 or less pile of scarp to get several thousand dollars off.
The point is you are wrong. Scarp is a geological formation and as such is not eligible. Did you buy $100 worth of scarp you can’t dump?
If you meant “scrap” then yes, as long as the car meets the requirements and will be taken off the road. Try reading one of the links.
This is all part of the EMERGENECY stimulus program started by Bush himself after 8 years of Republican mismanagement left the country in complete financial collapse.
The cash for cars program has several goals, amongst them:
a) Sell more cars, providing some economic relief for car manufacturers, dealers, etc.
b) Reduce oil dependency by decreasing oil consumption relative to the number of cars on the road.
c) Decreasing pollution… you know, that nasty stuff that you breathe from car exhausts.
In any case, the program, as designed by the Democratic congress, was excellent. But then the compromises with the Republicans started, and the Republicans totally fuc$#ed it up. In order to support the program, the Republicans required reducing the MPG minimum of elegible new cars, made newer less polluting cars elegible as trade-ins, allowed purchases of large trucks and SUV’s as part of the program, and then dropped it from $20 billion to $1 billion.
If the Republicans had just left the program alone as originally designed, we would be getting cleaner air, less oil dependency, less traffic congestion (more smaller cars), a greater economic stimulus. Instead, in typical Republican ways, the fuc%#ed the program up and we end up with another useless economic fiasco.
Republicans: Party first, America a far second. Republicans would rather see America fail outright than work together for the better good. Republicans: the party that would rather see children die than spend some money on universal children’s healthcare. Republicans: the party of choice of the Antichrist.
This is INSANE! Our Grandchildren are going to burn us all at the stake for this. And they won’t give a dam about the CO2 levels.
#12
Are you saying that the minority party is in control? Very interesting.
As a right-wing, republican nut job, a few comments: Hasn’t Japan had a similar mandate for a very long time, even more draconian? Five years and out sort of thing? I’m all for getting older, non-historical vehicles off the road. They pollute more, most often get crappy gas mileage and are less safe.
I’m not sure the program as is is set up correctly, but it certainly proved the point that people will spend if given an incentive to do so. I think the program needs some fine-tuning, and I’m sure it’s a slippery slope to some kind of Japanese-like mandate down the road, but we need something like it. We need smaller, safer, more fuel efficient cars in the interim, and newer technologies down the road. Clean burning diesels? Bio-Diesel? Hydrogen? Natural Gas? Whatever works. Whatever gets us out of the oil import business. The sooner we stop sending money overseas to people that hate us, the sooner we can start spending more money on critical needs, like infrastructure.
And this really can’t be blamed on ‘Republicans’ or even ‘Democrats’ (I think I just threw up a little in my mouth). We can however blame greedy, entrenched politicians who have been sucking at the taxpayer teet for way too long. Term limits for everyone!
#12 – Montanaguy
Democrats are guilty of one thing, and that is of being reasonable and trying to include the views of ALL Americans in their programs. It is call ‘compromise’, and it is something that Republicans seem utterly unable to do. Republicans would rather see America fail than use policies that do not agree with their dogma. The Republican leadership (Limbaugh, Hannity, Beck and Palin) have declared that outright in their speeches.
At this point the Democratic majority should just raise their middle finger in unison to the Republican obstructionists and say “Fuc# you, enough already”… and proceed to institute policies that will fix America, instead of watering down necessary programs that Republicans are objecting to just to be obstructionist and throw around what little political weight they have remaining.
It is Republican governance and policy that has put America in the dire situation that it finds itself in, and they would rather see America fail than have ‘the others’ fix it. It will take many years to get America back on track by undoing the damage of Republican ‘governance’, but America will never be fixed if we allow the same people that took it to it’s doom to continue influencing policy.
So to all the Republicans out there: Shut the Fu%# up.. you broke it, now go sit in the corner and let the grown ups fix it.
You didn’t really answer my question. You just used it as an opportunity to go on a moronic rant. Have the democrats not been in the majority in congress for quite some time now, in fact a lot over the last decades? And the minority party is still responsible for all of the mindless spending in your opinion? Not following your logic. Bizarre.
knee jerk response #1..
so why didn’t they just do this from the getgo?
ie: make a 50billion clunker program 7-8 months ago to to fuel sales and get US Auto out of bankruptcy?
-they should have done this LAST year..not this year..(if at all)
#2 the “I’ll gladly pay you Tuesday for a hamburger today”.
-great analogy. 😀
OK, sure.. the program looks great on the surface..you got a bunch of people that still had good credit to spend a heap load of cash they probably wouldn’t have spent other wise.
-or at least get them to spend money on a new car NOW rather than maybe in January when all the year end closeout fire sales are run..
(i think it was done in part to falsely inflate 2nd/3rd quarter data]
this is going to come back and bite us in the ass in just a few months, no doubt.
what has happened is uncle sam just created a nice little Mini-Bubble to pump up July-August economic data which will no doubt be used to back up some more falsified “green-Shoots” talk of the economy is rebounding etc..
BUT..what is going to happen come Thanksgiving and X-mas when these dealers want to sell more cars and everyone has already spent their “mad money” for the year???
ok yeah, the stupid answer is: simple, just extend (read inflate) the Bubble program even more..
extending this program is a very bad idea..
its going to drain people of monies (and put them in further debt) that they are going to need to weather the economic storm coming this fall/winter..
barring that “doom&gloom outcome” -they are completely FUBARING the supply and demand balance..
extending this bubble is going to dry up demand for many medium to big ticket goods come this winter and following spring because they are causing premature maxing of credit cards.
Congress is giddy over this program because they know it’s going to go a long way in buying them votes in 2010.
They have been buying votes with unemployment raises and bonus checks for those on SSI and disability and now are firming up the middle/working class with the $8000 house credit and $4500 car credit.
it also exposes congresses complete lack of understanding of how the “free market” works.
-again..this is going to cause a huge demand imbalance come fall/winter/spring.
sadly i bet they plan to keep bubbles going with more “credit” programs like this to paper over any bad economic data between now and the 2010 mid-term elections. they know we have uber short term memories -and a check in the mail will easily make 70% of the people forget any ill will they may be harbouring.
gotta run.
-s
(ps, sorry for the scatter brained writing & grammar)
Watson, they are assuming that the vast majority of the cars that would be bought in those 3 months, are now being bought under this rebate program, so it’s not 200K+222K, it is 222K.
How is it good for the environment to scrap working car parts, requiring people to build more? This focus on CO2, a non-pollutant is doing harm to the environment. Just like with CFLs.
Eric #16
My poor attempt at humor while agreeing with your comments.
I take back what I said about you being rich. Having received my Ham license recently, I am quickly finding out that this hobby will absolutely prevent you from being rich LOL.
“And can we please stop referring to the ruling class as our “leaders?” Last time I checked, it is the House of Representatives, not House of Lords.”
Well I don’t know about you, but I haven’t felt very “represented” in a long time. I haven’t voted for a Republican or a Democrat for quite a while now yet they always seem to win. Sigh…….
This is just a preview of what a government run health care system would be like. Hope you weren’t planning on living past 60.
have any of you looked at the requirements to TURN a clunker OVER??
” * Your vehicle must be less than 25 years old on the trade-in date
* Only purchase or lease of new vehicles qualify
* Generally, trade-in vehicles must get 18 or less MPG (some very large pick-up trucks and cargo vans have different requirements)
* Trade-in vehicles must be registered and insured continuously for the full year preceding the trade-in
* You don’t need a voucher, dealers will apply a credit at purchase
* Program runs through Nov 1, 2009 or when the funds are exhausted, whichever comes first.
* The program requires the scrapping of your eligible trade-in vehicle, and that the dealer disclose to you an estimate of the scrap value of your trade-in. The scrap value, however minimal, will be in addition to the rebate, and not in place of the rebate.”
NOW..
WHAT car is..
<25 years old and does <18mpg??
so..1985 or later car/truck..
this is MOSTLY going after trucks.
NOW lets add insurance over the LAST year.
If you have been driving a CAR that does <18mpg for the last 2-3 years with insurance, YOU WERE RICH.. You could have had a trade in allowance of 1500-2000 just to GET A NEW CAR..EASILY.
Can anyone say they havnt seen the SALES on cars?? Iv see $5000 knock off sales BEFORE THIS CAME AROUND.
Iv also seen USED cars selling ABOUT 1/2 price.. which is STUPID. A 10 year old car selling at $11k.
so whats the problem?
Iv got an OLDSMOBILE from 1986 that STILL does 30mpg, and one of the RULES is that the car has to do BETTER by 10%??
Iv seen SMALL CARS(lots of them) that DONT even do 25mpg..
what happened to the promises of the 70's and 80's from the AUTO INDUSTRY??
Better cars, lighter cars…BETTER MPG??
Swapping to aluminum, SUCKED as to reinforce it made the car weigh MORE, almost as much as STEEL.. so that you could survive a Wreck.
engines were made to give you a CRUISING CAR, but you can make cars EITHER for city or for highway, but NOT BOTH.(well they didnt want to put money into a Multi speed transmission LIKE JEEP DID and other companies and DOUBLE THE PRICE).
PROFIT PROFIT PROFIT…the more money they put into a vehicle the LESS the TOP wage earners make, and you loose profit margins on STOCK HOLDERS and they RUN AWAY..
#23.
the problem with the health plan?
Easy..
300 RICH persons deciding WHAT the poor should have.. Corps and HMO, beating DOWN the bill, so they can still make money and DENY your claim.
I WISH they would go and TALK to Medicare/medicaid and ASK' THEM what would make this work and BE BETTER.
#21 MikeNsaid:
“How is it good for the environment to scrap working car parts, requiring people to build more? This focus on CO2, a non-pollutant is doing harm to the environment. Just like with CFLs.”
aww come’on Mikey, you know they were just kidding about CO2, ya?
-everyone knows the weather systems on all the planets are determined strictly by the solar / solar wind activity..(and maybe a few undersea volcanoes) and that CO2 is a trailing, not a leading indicator..right?
i mean, surely your observation of the huge parts bonanza and subsequent huge “green impact” in energy and resource savings by not having to mine and reproduce some 500,000+ tons worth of parts was calculated by the “environmentally” anal democrats and found to have zero worth or impact on ground water from the land fills they will fill.ya?
oh wait, i forgot, we send all our scrap to china to help pay off our debts to them.
-never mind.
-actually, if i may further speculate (pleease…ty)
I’m gonna project a year or two down the line and say the REAL reason for the C for C program is that they have legislation cooking in the books for a PayGo Federal Fuel tax.
They need to make sure you have a GPS enabled car with the latest “airline style” black box
so they can tax you in real time based on your mileage.
-and even though government health care will be a disaster, if uncle sam is paying for your, um health, you can bet your driving habits will be a factor in deciding whether you get that organ transplant or not. -complements of “the black box”.
Consequently, i’m sure those new UAV helicopters the Pentagon is making will be right handy in flying an automated organ extraction drone out to your car should you have an accident and die.
Biometric sensors in your car linked to the black box will notify the local Gov-Corp Organ extraction Unit that a fresh set of organs has become available and send a UAV over to extract you from your car, put you on ice and fly you to the closest congressman you voted against in need of a transplant. -just for spite. (but i digress)
-dead serious about the mileage tax though. its being tested in a few states already.
ahh yes, ..the future is so bright, ain’t it?
-s
-Government logic, isn’t.
# 17 Awake said, in part:
The problem with doing that is that it would give the GOP lots of campaign ammunition about those Dems running roughshod over their wishes and not listening to reasonable ideas, etc., etc., etc. Then the next time they have a Congressional majority (and it _will_ happen) they will happily and very quickly undo every program the Dems managed to get passed. Whereas if the Dems try very hard to get some input from all sides, it won’t be so easy. Even the constituents who voted them in would ask “Didn’t you (a few of you at least) support this? Why are you killing it now?”
– – – – –
Then # 18 Montanaguy said, in part:
Go back and read what #17 Awake just said about ‘compromise’ — it’s looking more and more like he was accurate in saying “it is something that Republicans seem utterly unable to do.”
– – – – –
Then # 25 soundwash said, in part:
That’s a very creative bit of science fiction. Expand that to 8 to 15 pages, I bet you could get it published in Analog!
Uncle Pat..
What #25 said is possible.
they also wish to use a Electronic KILL switch system, for cops to Kill your car in a chase.
They wish to install a GPS device also to monitor your driving locations.
these systems and Others are already built and ready to install.
The MAIN problem I see, is the 25 year restriction..
AT LEAST go back to the 70’s…
I’m driving a new Honda fit today because of the program instead of my old 90 dodge dakota. according to the mpg gauge in it i got 47mpg on my trip from my parent’s house to my friend’s house 70 miles away. compare that to the government estimated 15mpg of my old truck (if I was going downhill maybe… closer to 12 from my estimates).
Criticize the program all you want. I got a reliable vehicle. woot.
To bad we are paying people to buy imported cars. How about a rebate for my new Samsung TV made in China or a new Wally-China-Mart fry pan for my kitchen.
#30 Jcc.
so you went from a FULLY paid for vehicle to ONE you will be paying for the next 5+ years??
Parts?? dont make me laugh.
Fixing the old vehicle, 1/2 cheap..
Carry weight??
You cant LOAD up the car, as you could the truck. you cant even use it, MUCH, to MOVE your belongings IF you move. I hope you have a friend that has a TRUCK..
For your information..MOST trucks have a interesting READ axle. And the gearing can be changed, with a Different Gear, you can change it from LOAD bearing to a travel gear, and double the mileage..
Iv always WONDERED about people that go out and get BIG trucks, in the city, and NEVER carry anything in the back end.
EAC , I had a $10,000 cd in the bank that was going to expire in november. I got it out early for a couple hundred dollar penalty and was able to get a brand new car for 11,800 rather than wait until november and get a used car.
The truck had rust and a couple minor dents. no air conditioning, a vinyl bench seat, no airbags, a radio that didn’t even have seek on it let alone a cd or mp3 player jack. According to edmunds the sale value would have been less than $1200.
I bought the truck back in 2000 because it was 4wd and at the time i was living out in the country down a fairly lengthy driveway. Now I’m living in town and before trashing the truck I hadn’t driven it for 3 weeks because I walk everywhere. When I move I move across the state or more so I rent a moving truck anyway.
Owning a truck is nice the twice a year when I wanted to haul things. I sucked when I was running an errand and trying to park it or driving across the state every couple of months or so.