I think I've made it pretty clear where I stand on Cash for Clunkers.
I'm more sympathetic to the first camp. This isn't really about the environment. No, the program
isn't exactly LEED-certified -- the economist who devised it is disappointed
-- but $3 billion of rebates isn't about saving the world, it's about
selling cars (that don't pollute it as much). And it appears that we
are selling cars that don't pollute as much. Mickey Kaus leads me to this list on our right of the top ten clunker sales, and they all have very attractive mileage numbers.So my main problem with the program, I'll say again, is that I don't think it's a real stimulus. But Derek, the money ran out in a matter of days! It's the greatest stimulus ever made! Here's why I disagree:
1) There is overwhelming evidence of an historic pent-up demand for car purchases. The average age of our current fleet is at an all-time high, and as early as March, economists were predicting a surge in late-2009 car purchases. It seems very likely to me that what we're seeing is a mad-rush of car buyers moving their third/fourth quarter purchases into the one week in which the government has agreed to pay them $4500 if they buy RIGHT NOW. If I'm right, we'll see a dramatic fall-off in the auto market in the fourth quarter (and I'll be thrilled to declare myself wrong if cars continue to sell gangbusters for the next six months). I've received lots of comments and emails from people who say they weren't going to sell their car any time soon but were really, truly incentivized to trade up for a hybrid. And to that I have a second point:
2) I think there's a good argument to be made that we shouldn't be paying people to destroy productive capital. The cars being traded in must be insured for a more than a year, which means that we're destroying working vehicles for money. That sounds to me like the definition of waste. Dealers are required to destroy the engine, which makes fewer car parts salvageable for recyclers. But if these cars still have good years in them, and there is obviously a demand for used vehicles, it's an incredible waste for the government to be spending money to force dealers to destroy them.
3) Finally, speaking of used cars, I think Time's Justin Fox makes a great point here. The used-car market is being sidelined in C4C, which is a clear blow to efficient markets:
A cash-for-scrappage program--which is what Blinder was suggesting a year ago--could potentially be a boon to poor people who could replace their clunkers with less-polluting and more fuel-efficient but still cheap used cars. In the interest of boosting the beleaguered auto industry, the current cash for clunkers program requires that those who turn in old cars buy brand-new ones. No help for the poor there.
I didn't notice any mention on where the money came from? They pulled it from loan guarantees for renewable energy. Kind of ironic? Stealing candy from the baby to feed the yapping dog.
Interesting how loan guarantees aren't considered money spent (just ask Ben Bernanke) when the government downplays the magnitude of the cost of their stimuli, yet when a loan guarantee is re-allocated to actually spending the money on something else it is considered a wash?
Interesting how loan guarantees aren't considered money spent (just ask Ben Bernanke) when the government downplays the magnitude of the cost of their stimuli, yet when a loan guarantee is re-allocated to actually spending the money on something else it is considered a wash?
I've been driving a 1992 Lexus 300ES, bought used 7 years ago and a 1998 4Runner. The Lexus started making a noise a couple of weeks ago, it was ready for new tires and an oil change. I planned to keep it till the noise and Cash 4 Clunkers became effective at the same time. So I purchased a 2010 Camry and received $ 3500 credit for a car that was pretty worthless at that point. Without C4C, I would have looked for a used car and salvaged the Lexus for whatever I could get for it. I'll get a little better gas mileage and I have a great car that will last for a long time, but I don't think C4C is right for the country. The $3500 I received for a worthless car I figure is my own tax money that won't go to someone else, but the whole program makes no sense in the whole scheme of the economy. New car dealers win - the government GAVE them a $1 billion dollar experiment and it worked - Now it's time for the new car dealers to take it over. Why $2 more billion that will only increase new car dealer profits?
"I'll get a little better gas mileage and I have a great car that will last for a long time, but I don't think C4C is right for the country. "
I have never heard a more accurate assessment of the entire Republican platform. It's good for you, but not good for the country so you'll take advantage of it and at the same time complain about it.
If it's not good for the country and you are knowningly living through one the lowest points in our country's financial histroy and you think this will only further harm the country why would you do it... because it's good for you.
Nothing could be more republican than to only think of yourself and frame it as though you actually care about the good of others.
You forget one key thing. The money is already allocated to be spent. So if he didn't take advantage of it, someone else would have.
So for example, if you were going to spend 1000 bucks, and you garenteed you would be spending it, would it matter if someone "took advantage" of the situation that you were going to spend that money?
It isn't good for the country, but when the money is already allocated, and it will be spent, why would you not try to get a piece of that pie? What puts the needs of someone else over the needs of myself, when both need it equally?
So maybe it is republican, but it is a smart move. To not take advantage of money already spent would be a path to being poor.
Interesting automatic assumption that I'm republican - I also take allowable tax deductions on my tax return each year - I don't necessarily believe they are good for the country or make sense, but they're legal - why wouldn't I use them? The $ 3500 credit I received would have gone to someone - I met the requirements, so I used the credit. Since it worked so well, how about the car companies using the free marketing idea they received and continue it on their own - instead they'll continue to profit from the government's contribution - seems like a liberal wouldn't want that? Nothing could be more liberal than to pretend that you're thinking of everyone else, when you're actually working to make them dependent rather than self sufficient and accountable, so they can have pride in themselves. The used car dealers in the area would appreciate your concern as well.
You know you are a republican. In fact you know that you voted for George bush twice. After all you did type this sentence:
"The $3500 I received for a worthless car I figure is MY own tax money that won't go to someone else".
Taking advantage of an oppotunity to save money is smart. Taking advantage of an opportunity to save money that is already spent (as you put it) because you are fearful someone else will get to it before you is excatly what republicans do every time.
You want to keep your religion in other people's bedrooms and your money out of other people's pockets.
You've had plenty many years of ruining everything for the rest of us with your greed and me first attitudes.
Wow - essohkay - you caught me! I actually was for Obama when he started his campaign, but as I saw him making promises I knew he couldn't keep, I lost interest. Yes, I do pay my taxes and feel that the $ 3500 I got for my worthless car was my own money, NOT someone elses, what's wrong with that? I don't remember bringing up religion and I give alot of my own money and time directly to people and organizations who need it. According to Robert Gibbs in his WH press conference yesterday, the recession started in Jan, 2007.Seems like that's when the Dems took over Congress and were going to fix everything - it's only gotten much, much worse. You know, we can disagree on our ideas, but there's no reason to be so hateful. You ought to read this - http://bighollywood.breitbart.com/obean/2009/08/05/orson-post-gates/ - might help you feel better.
BTW, I have a client who was very high up in the Obama campaign - he left right after the election when he realized that Obama didn't intend to keep the "promises" that got him elected.
PJONE47 -
I guess I'm run out of options replying to your tread.
"Yes, I do pay my taxes and feel that the $ 3500 I got for my worthless car was my own money, NOT someone elses, what's wrong with that?"
What's wrong with that is when you pay YOUR taxes it's no longer YOUR money. Its OUR money. To put it another way - I didn't trade in a car, I didn't receive $3,500 but I did vote for Obama who then determined that a good way to help the ailing economy and reduce a collective dependance of oil (foreign or otherwise) and decrease our national impact on the envrioment was to give you some of OUR (mine, yours and everyone else's) money to you to replace YOUR car.
I guess perhaps I should be complaining about the $915 Billion dollars YOUR president spent of OUR money on HIS war in Iraq.
Thank you for your contribution to the purchase of my car. Why do dems feel the need to continue to bring up Bush when they're defending Obama? You got your wish - Bush is no longer in office - move on. Obama is our current president - we're talking about his policies. While Bush was in office, I didn't notice the downturn of the economy till the Democrats took over Congress 2 years ago. It's been going down since - most of them are still in office, along with more Dems, I'm still waiting for them to turn things around. Again, thank you for your contribution to the purchase of my car that you think is a good thing for taxpayers to pay for. I'm helping the economy, saving oil (I work from my home, so I don't drive much) and helping the environment. My clients who sell used cars don't feel represented by our current President and Congress and then to have it tripled, so their downturn in business is extended to 3 times what it would have been by the $ 1 billion dollar program. Alot of them voted for Obama as well. The new car dealers, however, are ecstatic.
Just so we're clear - you feel we should put the needs of others BEFORE our own?
That's the core value behind communism - the many are more important than the individual.
Just so we're clear.
When I (and my family and those I care about) have it good, I am able to freely and with energy share with those around me. But if there's no bread on my table, I can't share it. And we all wait for everybody to have the same amount of bread as we do, we'll all starve waiting for the world to be "ungreedy."
Have fun playing with the other children at summer camp.
Hey Capitalist
When America proposers Capitalism prospers. When only capitalism proposers America fails. Clearly the last 10 months of your life ought to have taught you that lesson.
Two more things Capitalist:
1) I didn't say put the needs of others before your own... I suggested that one might consider the needs of others before making decisions that impact them. If it's good for you and good for America then you are doing the right thing. If it's good for you but bad for America then you are doing the Republican thing.
2) You also may want to consider this:
NEW YORK - Does the president affect your portfolio? Candidates would certainly like you to think that the answer is yes, and that the particular candidate doing the talking is better than the other guy.
Over the years, several studies have shown that the stock market has fared markedly better under Democrats than Republicans. (see: "The Presidential Portfolio") The difference, according to Pedro Santa-Clara and Rossen Valkanov, both professors at the University of California Los Angeles Anderson School of Business, is much too large to be random and cannot be explained by fluctuations in the business cycle. Nor can it be explained by higher interest rates in Republican administrations.
The UCLA professors looked at data going back to 1927. Our own study of the post-World War II presidencies confirms their results. We found that the S&P 500 has averaged a total return of 14.1% per year under Democratic presidents since April 1945, and 11.8% under Republicans. The best total returns--17.4% per year--were under Bill Clinton, whose presidency ranked first in economic results. (see: "Presidents And Prosperity") Gerald R. Ford ranks second, followed by Harry S. Truman.
"It's good for you, but not good for the country so you'll take advantage of it and at the same time complain about it."
How revealing of the left. When they give you money, they expect it to buy your political opinions, too. If there was any doubt about it, we now know their spending programs have only one objective: political hegemony.
Good article Derek. As a Canadian, we do not have these types of programs because most Canadians feel that these plants either swim or sink. My question relating to your story is "How is it a car such as a Jeep Cheroke be deemed a Clunker when they still produce them? If they are clunkers, should they be outlawed as a road worthy/fuel efficent vehicle?" Reward them for taking them off the road and reward them to produce them... doesn't make sense but then again, none of it does. The US Gov't would have been better to give every man, woman and child $2500 to do as they wish as a 1 time bailout as you will get those who say the do not drive so how does it benefit them? Those who lose their homes will now be able to live in a new car..Cool... Thanks!
Derek, you've nailed it on multiple points.
The "green" component of the "Cash for Clunkers" CARS Act is defective and is just a decoration to help pass the hand-out to the auto industry. Before the U.S. Senate votes to extend the CARS Act, it should be amended. The amendment should allow traded-in vehicles to be upgraded with available, cost-effective, clean energy technologies. Existing technologies can raise the MPG significantly above the 18 MPG threshold used for the "cash for clunkers" rebate.
I will be installing a prototype hydrogen assist fuel cell in my own car within the next couple weeks. I'm the first person in the U.S. to have this particular prototype. It has already increased MPG for gas vehicles by about 30-40% with comparable reductions in emissions in tests in Asia.
Surely there are also other technologies on the market or ready soon that can transform gas-guzzling vehicles targeted by the "cash for clunkers" program into vehicles with higher mileage than even some of the new vehicles being purchased with tax-funded rebates.
Such a simple amendment would be far more consistent with the "reduce, reuse, and recycle" principles of sound environmental stewardship. It would also better achieve the environmental goals of the CARS Act.
This simple fix for the Cars Act only needs to allow 6-12 months for American ingenuity and entrepreneurial spirit to upgrade the fuel efficiency of these cars that would otherwise be destroyed, scrapped, and destined to be another burden on the environment. A key part of such amendment would be to simply require that the traded-in vehicles be upgraded before they can get back on the road. Then, destroy only the terminally fuel-inefficient and "untreatable" vehicles.
That will remove the fuel-inefficiency problem of the vehicles which is allegedly a real target of the CARS Act and transform the vehicles so that they are no longer the gas-guzzling vehicles that need to be taken off the road. The result will be a stimulus to new and small clean energy businesses, used car sales, more vehicles donated to non-profits who are being hurt by the vehicle destruction provision of the CARS Act, and more fuel-efficient used vehicles that still have years of useful life.
This amendment would cost nothing but will open a vast opportunity for getting more benefit for the buck from a government program that currently has a serious defect. It's time for real innovation and not just more politics and rhetoric.
To not revise the CARS Act with such a simple fix would just prove that C4C was never really about improving the environment but just another bailout probably orchestrated by auto industry lobbyists.
> I will be installing a prototype hydrogen assist fuel cell in my own car
Nice idea, but get back to me when you can refine, transport and distribute enough hydrogen to replace a dollar's worth of gasoline for less than $4. You would be far-better off converting to run on natural gas as T.Boone recommends... at least *some* NG fueling stations already exist. Or all-electric... you can already drive as far on 25 cents worth of electricity as you can on $1+ worth of gasoline.
In the meantime, the senators should block this. Do NOT take it out of the RE funds; take it out of TARP or somewhere else. So what if the house has to come back next week to reconcile... like they're going to get something more-important done during their 4 week vacations?
The maximum rebate on imports should be $2000... to qualify for the $3500 or $4500 amounts the vehicle should have to be assembled in north america - CAN, USA or MEX.
Unfortunately, do to various international trade agreements, to which the US is party, that can not be done.
Yes, all those Prius sales to to C4C have subsidized the jobs of Japanese car factory workers - same for every other import bought as a result of C4C.
I don't think so... the last I heard the Prius was made in China.
Once all our industrial capacity is gone, good luck getting CN to build/sell us bombs, guns and ammo when they decide to take over north america.
And to exactly what trade agreement are you referring? NAFTA is 'north america ...', not north atlantic (nor north pacific).
ITO
I am happy to see others are starting to see the point about them destroying perfectly fine cars that could be possibly sold to others and lower income.
Last week I wrote an article titled "Cash for Clunkers, a Flawed System." here is some of it talking about my feelings of the program:
Many of the cars being turned in as “Clunkers” to this program are still perfectly fine and are being turned in just so the owner can get a new car, but because the car is required to be destroyed hundreds maybe even thousands of cars are being destroyed. But is this really the best way to get people to buy new cars? Why go to the effort to destroy perfectly fine cars that may only be 4-5 years old.
Let’s say all the cars that went to the program that were newer then say 1998 were taken into a low income car program, helping get the “real clunkers” off the road.
It could work as follows:
The total household income is less then a certain level.
Each household would qualify for only one vehicle trade.
The traded vehicle must need more then $500 in repairs to qualify.
The car must be less then 35 years old, but mileage does not matter.
The car must be owned for the last year but is not required to be registered or smogged.
This would help get the “real clunkers” and unsafe cars off the road and help clean up the roads. But why was this not the way the Cash for Clunkers program was designed? We can only guess that it has to do with the fact that the Government has recently bailed out both GM and Chrysler. By requiring people to purchase a new vehicle they are protecting there investments.
Another theory about why they don’t want to have a low income program is “Keep Them Stupid and Poor” consperacy that has been floating around the internet. I think the government has been brainwashing the population, there is so many stupid laws and programs right now and the majority of the population appears to be going along with it.
Does this remind anyone of the scenes from the Great Depression of farmers pouring out milk onto the ground as part of a genius government program to stabilze food prices? The only differenc is that this time people are destroying cars engines that actually work.
Did the bright boys in the government calculate in the pollution created from destroying the old vehicle and building a new one? It probably takes quite a few miles of driving to save as much pollution as was produced to manufacure the new car and its components.
Or how about the car purchases that would have been made in a year or two of even cleaner and more fuel efficient cars? Maybe there should be a government incentive program to get car owners to hold off purchasing new vehicles until superior, more fuel efficient technology is commercially available from the car manufacturers, especially the American manufacturers now trying to catch up.
The listing of vehicles and mileage is strange. I have a 2 yr old Civic Hybrid and get around 39-42 in the city and 53.5 on highway trips. Another person in the office has a 5-speed civic and she gets 34 in city and 46 on highway.
I don't consider older cars as productive capital. Yes second hand cars have a market but if the car is older and gets poor gas mileage, the point was to get rid of the gas guzzlers. I gets what upsets me about the Cash 4 Clunkers.......the rules weren't strict enough. A person with a huge truck can trade for a smaller truck. I have seen neighbors trade the old vans for smaller vans and big SUVs for Small SUVs. Point being that in order to conserve gas would like to have seen had to trade for vehicle with 29 miles to gallon or better.
To all you stimulus doubters out there: I bought a car under CFC. I would never, ever consider buying a new car unless the government subsidized my depreciation, which is what it is effectively doing. QED.
Ok - what else do you not consider buying? Don't we owe every industry stimulus - a new refrigerator, new clothes, new furniture, new tv - where does it end?
I could use some new shoes and a flat panel TV. My kitchen cabinets are really old. My stove is well over 20 years old. If I bought new ALL those industries would be "stimulated".
So I assume that you thing that Obama should send me a check for that stuff?
no, I'm trying to make my point that C4C is not the way to go to fix our economy - we've left alot of other industries out. Why is Congress and Obama targeting only the purchase of new cars to subsidize? No industry should be singled out like that.
I was not replying to you. I was replying to abraitberg.
We're on the same side on this one.
Thanks, Ed - I realized that after I hit send!
What Would April, May, and June auto sales numbers looked like if C4C had not been coming up? How many owners of older vehicles delayed their car purchase until C4C licked in? If you had a vehicle with a 500 or 1000 trade in value, would you hold off trading it in for a few months if you could then get $4500? You'd be crazy not to.
Edmunds.com did some crunching and estimated that about 60 to 70 thousand "clunkers" get traded in every month anyway and came up with the TRUE cost of the GAIN in clunker trade ins would 20 GRAND PER CAR.
"How is this possible? Edmunds.com's research shows that typically 200,000 vehicles worth less than $4,500 are traded in for new vehicles every three months. At best the current Cash for Clunkers program will fund 250,000 such transactions in the same time period — a gain of only 50,000 vehicles. Given that this program is budgeted to cost $1,000,000,000, this increase will come at the cost of $20,000 per extra sale."
http://www.edmunds.com/help/about/press/153566/article.html
Hmmm...lets see...government pushing to sell currently overstocked automobiles that no one is otherwise interested in buying...government just bought a automotive manufacturer...and the government is forking out another $1.2 billion to start a battery manufacturing facility in MI. Seems to me that Government Moters is setting themselves up nicely to be in a position to sell cars. And all this at our expense...My $.02
Mike
> Seems to me that Government Moters is setting
> themselves up nicely to be in a position to sell cars.
Apparently you didn't look at the top 10 list in the article. The only GM (for clarity, since GMC is also one of their remaining brands) vehicle in the list is built at a plant in OH that is slated to be closed.
How long will we allow the BLACK PUNK FLY-SWATTER-n-CHIEF RACIAL PROFILER 'the OBAMA' to destroy the WEALTH of AMERIKA with ridiculous programs like 'Cash-for-Clunkers'??? A scam enabling buyers to 'turn-in' supposed gas-guzzlers for a #3500-4500 rebate from our TAX MONIES for schiestboxes approved by 'the OBAMA' and his group of MARXIST MORONS. WHEN WILL THIS GIVE-AWAY STOP OR TO SELL CARS IN OBAMALAND IS THIS WHAT WE HAVE TO LOOK FORWARD TOO - OUR TAX MONIES SUBSIDIZING CAR SALES FOREVER???!!! What is next 'Cash-for-Washers/Dryers' or how about 'Cash-for-Boats' or how about 'Cash-for-Segways'??? When will we have to give-away 'Cash-for-Bread/Butter/Eggs/Milk??? WHY NOT JUST DUMP LOADS OF $20 DOLLAR BILLS - AND LET THE 'MOB' FIGHT OVER WHO TAKES THE BIGGER SHARE??? Restore the HEALTH&WEALTH of AMERIKA - remove 'the OBAMA' and his gang of DUMB MARXIST's moneymen masquerading as DEMBHOLE-DOUCHESBAGS now!!! REFUSE TO GIVE-AWAY AMERIKA ANYMORE!!!
I suspect we've got ourselves an Obamanite troll here.
Not a(n) 'the OBAMA' troll just someone who has enough sentient thought to recognize a MARXIST MORON + HUCKSTER despite his 'prestigious' learning and realizes he is a CUNNING LINGUIST and a LIAR!!! HOW DOES IT FEEL BEING A DEMBHOLE-DOUCHESBAG BORG[a single brain cell controling millions of USEFUL IDIOTS]??? Ha.
People say it is a good idea to negotiate the new car price before you tell the dealer that you have a clunker!
Jimhenry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info
There is a fourth problem with c4c. It is hurting charity car donation since the amount of the voucher is so much greater than the amount of the tax deduction a person receives when they donate a car to charity.
http://www.cars4charities.org