Obama's “Cash for Clunkers” scam…

[Bob Blaylock]

I was thinking, a few days ago, about the “Cash for Clunkers” scam.

The idea is to help the economy by encouraging people to buy new cars. To this end, the scam is based on giving a value for older cars meeting certain criteria, to be applied to the purchase of new cars. The old cars are bought up and destroyed.

Ok, so new wealth is being created, in the form of new cars being manufactured and sold. This is good for the economy.

However, the older cars, for the most part, represent a considerable amount of wealth as well. Any car, no matter how old or inefficient, that runs reliably, is valuable, and constitutes a significant amount of wealth.

Perfectly fine automobiles are being bought at taxpayer expense, and destroyed. WEALTH IS BEING DESTROYED! This is *BAD* for the economy. In fact, I would bet that more wealth is being destroyed, in the form of these older cars, than is being created in manufacturing the new cars to replace them.

Big Brother has just wasted A BILLION DOLLARS on this scam, and is about to waste TWO BILLION more.


Not that I think government should be spending our money in such a manner in any event, but if we were to have a program, ostensibly to boost the economy, that involves buying up older cars and encouraging the manufacture and sale of newer cars, it simply doesn't make sense, then to destroy the older cars along with the wealth that they represent.

Surely there are plenty of people who either cannot afford a car at all, or who are driving around in cars that are even older, more polluting, and less efficient than the cars that are being bought up and destroyed, and who cannot, even with Obama's scam, afford to buy a newer car. Why not make the older cars that were bought up under this program available, at reduced cost, to those who would benefit from them—perhaps as a straight trade for whatever even worse cars they might already be driving? Instead of destroying a 1980s or 1990s vehicle that is still in good condition, perhaps it could be traded for some old barely-running, gross-polluting 1960s or 1970s gas guzzler, which would do a lot more good to get it off the road than it ever did to get that 1980s/1990s car off the road in exchange for a 2000s car.

[boloboffin]

Google the term "planned obsolescence". Report back when you have a proportionate amount of rage for that as this program.

[Tricky]

I was thinking, a few days ago, about the “Cash for Clunkers” scam.

The idea is to help the economy by encouraging people to buy new cars. To this end, the scam is based on giving a value for older cars meeting certain criteria, to be applied to the purchase of new cars. The old cars are bought up and destroyed.

Ok, so new wealth is being created, in the form of new cars being manufactured and sold. This is good for the economy.

However, the older cars, for the most part, represent a considerable amount of wealth as well. Any car, no matter how old or inefficient, that runs reliably, is valuable, and constitutes a significant amount of wealth.

Perfectly fine automobiles are being bought at taxpayer expense, and destroyed. WEALTH IS BEING DESTROYED! This is *BAD* for the economy. In fact, I would bet that more wealth is being destroyed, in the form of these older cars, than is being created in manufacturing the new cars to replace them.

Big Brother has just wasted A BILLION DOLLARS on this scam, and is about to waste TWO BILLION more.


Not that I think government should be spending our money in such a manner in any event, but if we were to have a program, ostensibly to boost the economy, that involves buying up older cars and encouraging the manufacture and sale of newer cars, it simply doesn't make sense, then to destroy the older cars along with the wealth that they represent.

Surely there are plenty of people who either cannot afford a car at all, or who are driving around in cars that are even older, more polluting, and less efficient than the cars that are being bought up and destroyed, and who cannot, even with Obama's scam, afford to buy a newer car. Why not make the older cars that were bought up under this program available, at reduced cost, to those who would benefit from them—perhaps as a straight trade for whatever even worse cars they might already be driving? Instead of destroying a 1980s or 1990s vehicle that is still in good condition, perhaps it could be traded for some old barely-running, gross-polluting 1960s or 1970s gas guzzler, which would do a lot more good to get it off the road than it ever did to get that 1980s/1990s car off the road in exchange for a 2000s car.
You have GOT to be kidding. The "cash for clunkers" is arguably the best use of stimulus money ever. It works on three levels. It helps support the US automobile industry, one of the nation's largest employers. It helps cash-strapped families by a newer and more efficient car, saving them repair and gas money. It also reduces emissions by getting clunkers off the street.

There is one drawback, I suppose, but really, it fulfills the thing you're talking about. Though I don't know the details of the program, I suspect that the "clunkers" are not destroyed. Clunkers traditionally get sold to second and third-world nations where they continue to run and pollute. Possibly, because these nations don't have as much "rush hour" traffic, they run and pollute less, but they're still going to be driven until they won't run any more. True, poor people are less likely to buy gas guzzlers, so a significant number of clunkers are liable to wind up on the junk heap. That's just the way the economy works.

But overall, I don't really get your objection to this program. Maybe it's about spending your hard-earned taxes to help slackers by new cars. Maybe not. But I'm having a hard time buying your rationalizations of why it's bad.

[Thunder]

sounds like a Conspiracy Theory.

[applecorped]

My washer leaks.........................Goddamn Democrats!!!!!!!!!!!!!!!!

[tyr_13]

Many of the clunkers are worth more as scrap, even in this very poor scrap market. My two Dodge Intrepids, both from 1995, which is much newer than the clunkers, were worth more as scrap than as cars.

Besides, 'scraping' a car does not mean melting the damn thing whole. The parts that are usable are stripped if they are worth the labor time to get them off.

The only problems I can see with this program are that one, some dealers are tricking people into believing they will get the aid when they don't qualify, and two, some richer people who have third cars that are 'clunkers' take the money towards high end cars.

Other than that, I think it's a damn fine program.

[Tricky]

The only problems I can see with this program are that one, some dealers are tricking people into believing they will get the aid when they don't qualify...
Interesting. I think it depends on where you are. I heard a radio ad for cars a couple of days ago that wanted to tell people that the deal was not counting on no gawd-dang money from that ijjit Obama. But this is Texas. Go figure.

[Cleon]

You have GOT to be kidding. The "cash for clunkers" is arguably the best use of stimulus money ever. It works on three levels. It helps support the US automobile industry, one of the nation's largest employers. It helps cash-strapped families by a newer and more efficient car, saving them repair and gas money. It also reduces emissions by getting clunkers off the street.

There is one drawback, I suppose, but really, it fulfills the thing you're talking about. Though I don't know the details of the program, I suspect that the "clunkers" are not destroyed. Clunkers traditionally get sold to second and third-world nations where they continue to run and pollute. Possibly, because these nations don't have as much "rush hour" traffic, they run and pollute less, but they're still going to be driven until they won't run any more. True, poor people are less likely to buy gas guzzlers, so a significant number of clunkers are liable to wind up on the junk heap. That's just the way the economy works.

But overall, I don't really get your objection to this program. Maybe it's about spending your hard-earned taxes to help slackers by new cars. Maybe not. But I'm having a hard time buying your rationalizations of why it's bad.

You're forgetting one important thing; it gets banks lending again. Few people buy a new car without financing at least part of it.

[Bob Blaylock]

There is one drawback, I suppose, but really, it fulfills the thing you're talking about. Though I don't know the details of the program, I suspect that the "clunkers" are not destroyed. Clunkers traditionally get sold to second and third-world nations where they continue to run and pollute. Possibly, because these nations don't have as much "rush hour" traffic, they run and pollute less, but they're still going to be driven until they won't run any more. True, poor people are less likely to buy gas guzzlers, so a significant number of clunkers are liable to wind up on the junk heap. That's just the way the economy works.


Per the Wikipedia article (http://en.wikipedia.org/wiki/Car_Allowance_Rebate_System#Engine_disablement_and _scrappage_criteria) on the subject:To ensure that vehicles traded-in under "Cash For Clunkers" will not be resold by dealers, the program outlines a procedure for destructively disabling the engine (and thus also precluding the possibility that any mechanical engine components might be salvaged to be used in the repair of any other vehicles): the oil is drained and replaced with a sodium silicate solution, and the engine is then started and run until the dehydrating solution causes engine internals to abrade and ultimately seize. In addition, the salvage or scrap facility which acquires the vehicle cannot sell any powertrain components from the scrap vehicle. This includes the disabled engine (most specifically the long block components), the transmission/transaxle, and in some cases the axle assemblies.



But overall, I don't really get your objection to this program. Maybe it's about spending your hard-earned taxes to help slackers by new cars. Maybe not. But I'm having a hard time buying your rationalizations of why it's bad.


Perhaps my original point got lost in all my ranting. It's about the destruction of wealth, at taxpayer expense. Tax money is used to buy valuable assets, which are then gratuitously destroyed. This is about the most wasteful possible use of taxpayer money that I can imagine.

Creating wealth is good for the economy. Destroying wealth is bad for the economy. The “Cash for Clunkers” scam destroys more wealth than it creates. It's that simple.

Now if a private citizen his own money to buy cars, or other valuable items, and destroy them, that's one thing. His money, his right to do with it what he will. Anyone who does that is an idiot, of course, but one has the right to be an idiot with his own money. But as a taxpayer, it's *MY* money that is being wasted in this manner.

[jnelso99]

Worked on me. Traded in a 1999 Explorer that was starting to have expensive problems. Got a 2009 Toyota RAV4.

Leave it to the Right to find a dark lining in every silver cloud...

[Cleon]

Ford seems to be doing rather well, (http://www.cnn.com/2009/US/08/02/ford.gain/index.html) and they're attributing it to the program.

[Tricky]

Per the Wikipedia article (http://en.wikipedia.org/wiki/Car_Allowance_Rebate_System#Engine_disablement_and _scrappage_criteria) on the subject:
To ensure that vehicles traded-in under "Cash For Clunkers" will not be resold by dealers, the program outlines a procedure for destructively disabling the engine (and thus also precluding the possibility that any mechanical engine components might be salvaged to be used in the repair of any other vehicles): the oil is drained and replaced with a sodium silicate solution, and the engine is then started and run until the dehydrating solution causes engine internals to abrade and ultimately seize. In addition, the salvage or scrap facility which acquires the vehicle cannot sell any powertrain components from the scrap vehicle. This includes the disabled engine (most specifically the long block components), the transmission/transaxle, and in some cases the axle assemblies.

Then I was wrong about that. My apologies.

Perhaps my original point got lost in all my ranting. It's about the destruction of wealth, at taxpayer expense. Tax money is used to buy valuable assets, which are then gratuitously destroyed. This is about the most wasteful possible use of taxpayer money that I can imagine.

I still don't find it so. The "wealth" you are talking about is minimal at best. The gains from destroying them may far outweigh the losses. I don't think you paid enough attention to those gains, but focused instead on the losses.

Creating wealth is good for the economy. Destroying wealth is bad for the economy. The “Cash for Clunkers” scam destroys more wealth than it creates. It's that simple.
I think it is simple that just the opposite is true. Clunkers are not significant wealth. In fact, I know many a person who hung on to a clunker that was in need of repair all the time because they couldn't come up with the money for a new car. In truth, the repairs far outweighed the worth of the car, but there was no other choice for a person with limited resources.

In fact, I've been there myself.

Now if a private citizen his own money to buy cars, or other valuable items, and destroy them, that's one thing. His money, his right to do with it what he will. Anyone who does that is an idiot, of course, but one has the right to be an idiot with his own money. But as a taxpayer, it's *MY* money that is being wasted in this manner.
I think "your" money is being spent wisely, possibly as wisely as government has ever spent money. I honestly do not see a down-side to this program. If it saves us from having to bail out the auto companies in the future, that is good. It supports the average American, those working in the factories and those who need but can't afford a new, fuel-efficient car. It does not deposit money directly in the pockets of the CEOs like some bailouts, but makes them work for it by forcing them to make a car that consumers want and that is eco-friendly.

[tyr_13]

Interesting. I think it depends on where you are. I heard a radio ad for cars a couple of days ago that wanted to tell people that the deal was not counting on no gawd-dang money from that ijjit Obama. But this is Texas. Go figure.

There are some ads around here that also make the point that they will take money off the deal even if you don't qualify. However, I have also heard some conservative car dealers joking about, "Government money? Don't worry, we can add that onto the price for you." They go on about how they are the ones turning things around. Sorry to put it this way, but, morons. They're the same people who were complaining about how their customers were idiots for letting the deals, the same people speaking, sell them cars they couldn't actually afford. It's amazing what you can learn by keeping your ears open.

No, my comment stems from some local ads showing vehicles traded in as 'clunkers' that clearly do not qualify for the clunker program.

We actually wanted to trade in my brother's falling apart, difficult as hell to work on, expensive parts piece of German engineering, his standard diesel Jetta. However, it gets 48mpg.

(Off topic, the VW ads are some of my most hated of logical fallacy ads out there. Why the hell would an autoban tuned suspension be useful outside of Germany? Japan doesn't have an autoban, and neither does the freaking US! We don't have any roads at all kept up to those standards so an autoban tuned suspension is one of the last things you want.)

[lionking]

Not about cars, but our First Home Buyers Grant, where people can get $14,000 or even more when buying their first home has kept countless builders employed and contributed to the fact that Australia has not suffered a recession so far.

I think cash for clunkers is a great idea.

[Bob Klase]

(Off topic, the VW ads are some of my most hated of logical fallacy ads out there. Why the hell would an autoban tuned suspension be useful outside of Germany? Japan doesn't have an autoban, and neither does the freaking US! We don't have any roads at all kept up to those standards so an autoban tuned suspension is one of the last things you want.)

I doubt that your suspension notices any difference between autobahn and interstate, except perhaps the sections of interstate that have unfilled potholes..

[corplinx]

I think its great. People who bought gas efficient vehicles like me get squat while the irresponsible people get a boon. That's awesome.

And all of our kids get stuck with the bill!

I think the environmental agenda behind the bill rings hollow when we still aren't rolling out federal nuclear plants to replace the coal burning ones. Coal plants are so emission friendly.

Cash for clunkers was just another auto industry bailout thinly veiled with an environmental banner. I think the program is a model of the kind of inefficiency that government is famous for.

And now Alan Greenspan is pointing out the obvious, the program is a success because the economy is on the way back up, not the other way around.

I don't think the program is a "scam" at all though. It is just another inefficient income redistribution. Instead of the rich to the poor, its from our babies to the people who owned gas guzzling cars. Somehow, income redistribution has gotten even more retarded.

[Cain]

This is idiotic policy. Obama's attempting to juice the numbers. This works as propaganda because people buy shiny new things they can talk about and television cameras can film.

See:
http://www.economist.com/blogs/freeexchange/2009/07/congress_just_buying_people_ca.cfm

And from an eco-conscious European who has observed similar programs:

http://www.treehugger.com/files/2009/05/car-swap-terrific-waste-of-money.php

Whatever happened the mantra "reduce, reuse, recycle" in that order. There are options for reducing vehicle use (a gas tax, investing in public transportation). As for reusing, I'm not sure if Tricky's cash-strapped "average American" should be purchasing a new car. This program encourages waste and destroys value.

[KoihimeNakamura]

It doesn't really destroy value per se. That said, it's also badly misaimed. (Were I Obama, I'd have pushed strongly retooling plants and boosting public transit options. But.. eh.)

[Oliver]

Big Brother has just wasted A BILLION DOLLARS on this scam, and is about to waste TWO BILLION more.


I don't know about the status of the American CFC-program, but here in Germany a lot of people were all excited about it:

Cash for Clunkers: Germany's Lessons ... (http://www.spiegel.de/international/business/0,1518,623362,00.html)

[Rolfe]

I've got my 1998 Peugeot registered for our version of the scheme.

I have reservations. I love my car. I've had it from new. It runs fine. It gets over 30mpg. But it's over 11 years old, it has done nearly 120,000 miles, and it was starting to develop expensive problems. OK, delete "starting". Its aircon hasn't worked for nearly 3 years, it's slipping out of the odd-numbered gears, and its passenger seat slides around like a fairground ride. And it had various bodywork blemishes that aren't worth fixing.

I was dead set against putting it into the scrappage scheme. It's a "performance car" (it's a GTi), and I always thought it would make some boy racer very happy. But when I saw half a dozen identical cars on eBay not exactly walking off the shelves at less than £800, and the trade mags valued the car at £500 to £600 (not taking the faults into account) I realised the scrappage deal might be better for me. And as the deal is finite (likely to end in the autumn and certainly by early spring), it was now or never.

So, this is on order.

http://www.vetpath.co.uk/jref/golf.jpg

Problems? Well, nice of Gordon Brown to give me some money to stimulate the economy of Lower Saxony. And the car probably had another 20,000 to 30,000 miles in it, for an owner that didn't mind the faults, so it is a waste of a resource that still has value in it.

Also, I was talking to a friend with an even older car, and she said her car dealer believed she'd get just as good a deal on a new car next year, after the scrappage deal is over. Then I read an article in the motoring press saying the same thing - basically, new cars as going to be hard to sell one the scrappage deal is over, and good discounts might be easy to come by.

I think Obama was right in putting that mpg restriction in place, because these are the cars he wants off the road. Might also have been worth putting a mileage restriction in place, so that low-mileage cars with a lot of service still in them were excluded. Also, I wonder why they didn't consider mandating the purchase of a new car with better than average fuel economy and or emissions? But here, the scrappage car just has to be over 10 years old, that's all. You can scrap a well-maintained, economical low-mileage 10-year-old car and buy a Porsche, if that's what you want.

I'm really quite sad about my car, but all good things come to an end, leather seats and all, and I'm looking forward to the new one.

Rolfe.

[SezMe]

This is about the most wasteful possible use of taxpayer money that I can imagine.
Really? What an impoverished imagination you have. Iraq. Afghanistan. The F-22. Etc. Was that a brain fart or would you like to reconsider?

[icerat]

Bob,
The problem is you've got a very limited definition of "wealth" and are ignoring externalities. I haven't studied the program fully but it appears to me overall it creates wealth.

[Ryokan]

We've had this in Norway for years and years. Obviously, our society has not collapsed yet.

[Rolfe]

We've had this in Norway for years and years. Obviously, our society has not collapsed yet.


The "years and years" bit is interesting. Here, we know that it's a limited offer. That's what's making people like me scrap their cars now, rather than waiting till next year or the year after. If I knew the deal would still be there next year, I might have hung on to Ariel for another 12 months, and got another 10,000 miles out of the hardware.

Rolfe.

[Ryokan]

The "years and years" bit is interesting.

I said years and years as I didn't really know when it was introduced. But I did some googling and it seems it was introduced in 1978, with the intention of getting older cars off the streets and get people into newer, more environmentally friendly cars. As a side effect, it has helped the car industry sell more cars.

[rwguinn]

I predict a huge upswing in the "Repo-man" Industry within the next 6 months...

[Rolfe]

I said years and years as I didn't really know when it was introduced. But I did some googling and it seems it was introduced in 1978, with the intention of getting older cars off the streets and get people into newer, more environmentally friendly cars. As a side effect, it has helped the car industry sell more cars.


Norway. Ahead of the curve once again.

The problem with the British scheme (well, one of the problems) is that it's known to be very temporary. Therefore, if you have an old car with a bit of life in it yet, you're motivated to get rid of it now rather than next year, because next year the money won't be there.

I also think if they'd had half the sense they should have been born with, they'd have mandated the purchase of better-than-average economy and emissions cars within the scheme.

Rolfe.

[Tricky]

I think its great. People who bought gas efficient vehicles like me get squat while the irresponsible people get a boon. That's awesome.
That's me too. I've driven small, high mileage cars for years. (My Honda Civic is fifteen years old). But just because a person drives a low-mileage car doesn't make them irresponsible. Sometimes in life, you have to take what you can get. Also, the possibility that they have only lately become responsible is not a bad thing. I think improvement should be rewarded.

Sometimes it is not all about "what's in it for me." If the steps improve the economy, people's lives and the environment, I'm satisfied with "squat". YMMV.

And all of our kids get stuck with the bill!
Yes, taxes are payed by citizens and some are scheduled for our kids. But "the bill" is not the only issue. Cutting our dependence on imported oil is likely to pay off for us in the long run, even though it costs cash up front.


I think the environmental agenda behind the bill rings hollow when we still aren't rolling out federal nuclear plants to replace the coal burning ones. Coal plants are so emission friendly.
Because they are expensive and controversial. But it is a complete red herring to bring up an unrelated program and say, "look, you're not environmental because you're not doing X". The "cash for clunkers" is a fast and easy way to make some difference.

And now Alan Greenspan is pointing out the obvious, the program is a success because the economy is on the way back up, not the other way around.
That may be true, although I'm betting the program would be popular in almost any economy. But even if true, that doesn't make it a bad program.

I don't think the program is a "scam" at all though. It is just another inefficient income redistribution. Instead of the rich to the poor, its from our babies to the people who owned gas guzzling cars. Somehow, income redistribution has gotten even more retarded.
Is it "retarded" to give people tax breaks for building energy efficient homes? Frankly, all of your objections seem short-sighted and self-serving. I don't think you care any more for "our kids" than I do. I think we have different ideas on what is best for the future. Yours seems to mostly talk about money. While that is important, I don't think it should be our only focus.

[JoeTheJuggler]

My only problem with the program is a "sour grapes" sort of issue: I don't qualify because my old clunker (97 Escort Wagon) is too fuel efficient. (I paid less than the clunker-trade-in incentive for it.) I don't like that the program rewards people who made stupid car buying decisions previously. (As if gasoline wasn't a fossil fuel, and emissions weren't a problem 10 years ago when gasoline was cheap.)

But I understand it's an effective economic stimulus and serves to get a few of the dirtiest gas-guzzlers off the road.

ETA: On another note: since the program was so popular it went through the budgeted $1 billion almost right away, there's some uncertainty as to how to proceed while the $2 billion extension awaits passage in Congress. Can't they add language to the contract that says basically this contract can be voided if the government money doesn't come through? (I think you can give the buyer the option of picking up the added cost or walking away from the deal.) It seems pretty certain to pass, so why not just sell more cars with whatever language is necessary in the contract to protect dealers from getting stuck?

[corplinx]

Frankly, all of your objections seem short-sighted and self-serving. I don't think you care any more for "our kids" than I do. I think we have different ideas on what is best for the future. Yours seems to mostly talk about money. While that is important, I don't think it should be our only focus.

I'm not short sighted at all. The program has already run through its budget. Is the air around you any cleaner?

If someone gets a fuel efficient car, it allows them to drive more for the same amount of money. There isn't always a net gain from a cash for clunkers swap.

Its typical government inefficiency and a bailout in disguise.

[Rolfe]

Well, I dunno. I expect many people drive the distance they want to drive, to do the things they want to do, and that's it. If they change to a car doing 45 mpg from a car doing 15mpg, there's a pretty clear benefit. And I don't think human senses are very good at detecting how "clean" the air is in the terms under discussion.

Rolfe.

[JoeTheJuggler]

Its [sic] typical government inefficiency and a bailout in disguise.

What disguise? It's overtly meant to stimulate the auto industry.

[Dr Adequate]

YMMV. Ouch.

[corplinx]

What disguise? It's overtly meant to stimulate the auto industry.

And I guess for balance, I should point out that I actually prefer "cash for clunkers" to redirecting tarp loans to Chrysler/GM. Of the auto-bailout methods, only cash for clunkers would help with the issue of depleting inventory.

[JoeTheJuggler]

Perhaps my original point got lost in all my ranting. It's about the destruction of wealth, at taxpayer expense. Tax money is used to buy valuable assets, which are then gratuitously destroyed. This is about the most wasteful possible use of taxpayer money that I can imagine.

Creating wealth is good for the economy. Destroying wealth is bad for the economy. The “Cash for Clunkers” scam destroys more wealth than it creates. It's that simple.

Even taking this on in your own terms: surely making and selling a new car creates more wealth than scrapping (even destructively) an old car.

By your approach (destroying wealth is always bad for the economy), every building demolition is bad for the economy. Surely you realize that often a building demolition can be good for the economy? Can you think of situations where that might be true? Can you compare those situations to the cash for clunkers situation and see how that "destruction of wealth" can have a net effect of creating more wealth?

[johnny karate]

If someone gets a fuel efficient car, it allows them to drive more for the same amount of money.

Well, I dunno. I expect many people drive the distance they want to drive, to do the things they want to do, and that's it.

I'll have to agree with corplinx's unassailable logic here. Since I got my new, more fuel-efficient car, I just drive around in circles for no reason at all.

[Richard Masters]

Bob,
The problem is you've got a very limited definition of "wealth" and are ignoring externalities. I haven't studied the program fully but it appears to me overall it creates wealth.

Doubtful. I strongly suggest you stop listening to "The Secret" and Amway tapes.

A gentle reminder to keep it civil.

[Tricky]

I'm not short sighted at all. The program has already run through its budget. Is the air around you any cleaner?

Are you seriously suggesting that a couple of months of driving is going to make a noticible difference? I suspect this was meant as a joke though, so just remember the smilies next time.:boggled:

If someone gets a fuel efficient car, it allows them to drive more for the same amount of money. There isn't always a net gain from a cash for clunkers swap.
That's ludicrous. Most people drive until they get where they need to go. They don't drive until they run out of money. Or am I missing the joke again?

Its typical government inefficiency and a bailout in disguise.
It is in fact a bailout, but unlike most bailouts, it goes to the average Joe. Sure the automakers benefit too, but ya know, I'm kinda in favor of preventing one of our main industries from going completely bankrupt. They hire a lot of people.

[Oliver]

It is in fact a bailout, but unlike most bailouts, it goes to the average Joe. Sure the automakers benefit too, but ya know, I'm kinda in favor of preventing one of our main industries from going completely bankrupt. They hire a lot of people.


And that does include the auto-industries suppliers and their suppliers. The downside is that whenever people finally decide to buy a new Car thanks to the CFC-program, they don't spend the money anywhere else within the economy and repair shops have a hard time as a result of all the new vehicles as well.

Another aspect, as in Germany, will be that people buy foreign cars, so the CFC-program may not be able to stimulate the car-industry and their suppliers as much as intended - given the fact that those cars are manufactured outside the US.

[Biscuit]

The “Cash for Clunkers” scam destroys more wealth than it creates. It's that simple.


Really? Care to actually prove that?

[pgwenthold]

And that does include the auto-industries suppliers and their suppliers.

My neighbors will attest to that. Well, the ones who are still around. A good number have lost their jobs, and the ones who are still working are taking mandatory leaves of absence.

My city is one that relies on auto-manufacturing, so when that goes in the tubes, places all over town consequently fail.

So service people stay afloat, too. Auto-manufacturers go out of business, and veterinarians lose their jobs.

[Oliver]

My neighbors will attest to that. Well, the ones who are still around. A good number have lost their jobs, and the ones who are still working are taking mandatory leaves of absence.

My city is one that relies on auto-manufacturing, so when that goes in the tubes, places all over town consequently fail.

So service people stay afloat, too. Auto-manufacturers go out of business, and veterinarians lose their jobs.


Well, if many suppliers went out of business already, the step of enabling the CFC-program comes - to put it mildly - at a pretty late point in time, thanks to all the whining that was supposed to be a problem of multi-party systems.

[Beeyon]

The following quote was in one of Cain's links, and it bears being pointed out directly.

A spokesperson for the Environmental Transport Association (ETA) said: ... “Car scrapping schemes are good for boosting new car sales – they have very little to do with the environment and to suggest otherwise is not just greenwash, it is hogwash.”
http://www.eta.co.uk/%C2%A32%2C000-car-scrappage-scheme-launches-next-month/node/12017

This was mostly just pandering to the automobile industry and the middle class.

[Mark6]

You have GOT to be kidding. The "cash for clunkers" is arguably the best use of stimulus money ever. It works on three levels. It helps support the US automobile industry, one of the nation's largest employers. It helps cash-strapped families by a newer and more efficient car, saving them repair and gas money.
I have to disagree with that last sentence. A family which is truly "cash-strapped" cannot afford a new car even with a $4500 discount, which represents at most 1/4 value of a new car. Main beneficiaries of "cash for clunkers" are people who were in a position to buy a 1-2 year old car to begin with, and suddenly found themselves in a position to buy a NEW car.

If "cash for clunkers" could be used to buy fuel-efficient used cars (which it cannot), then it would really helps cash-strapped families.

[Cain]

Well, I dunno. I expect many people drive the distance they want to drive, to do the things they want to do, and that's it. If they change to a car doing 45 mpg from a car doing 15mpg, there's a pretty clear benefit. And I don't think human senses are very good at detecting how "clean" the air is in the terms under discussion.

Not necessarily; it depends on how many miles they drive. If you do not drive much at all, then it's more environmentally friendly to continue trucking around in an old Suburban than buying a brand new Prius. "Cash for Clunkers" is politically astute; a triumph in a language framing: who wants a "clunker" on the road? Who doesn't want to drive a trendier, more eco-conscious car? And yet the program does not impose impressive standards for fuel economy -- anyone care to guess why?

Rika:
It doesn't really destroy value per se.

How do you figure? Not only do the cars still have life in them, but in order to prevent fraud the government requires dealerships use "engine grenade."

Rgwinn predicts "a huge upswing in the 'Repo-man' Industry within the next 6 months..." A good point. If somebody has a horrible "clunker" that they haven't been able to replace due to lack of funds, should they be out buying a new car? Oh, but why not(!) do for cars what's already happened with houses... Buying things you can't afford is so wonderfully American. I love the corporate awakening to "Green" consumption.

If we want to reduce negative externalities, then impose a gas tax (and offset it with a cut in payroll taxes). To his credit Obama was actually the only one between Hillary and McCain who opposed the ridiculous "gas tax holiday." Of course, getting the hike that makes economic sense is politically foolish: people will see and feel the "Obama tax" every time they go to the pump.

[Rolfe]

Rgwinn predicts "a huge upswing in the 'Repo-man' Industry within the next 6 months..." A good point. If somebody has a horrible "clunker" that they haven't been able to replace due to lack of funds, should they be out buying a new car? Oh, but why not(!) do for cars what's already happened with houses... Buying things you can't afford is so wonderfully American. I love the corporate awakening to "Green" consumption.


I don't think that's the main target group. I know I was planning on changing my car fairly soon anyway. However, in the normal course of events it would have been sold on, and continued to go its inefficient way. This scheme has simply bribed me to scrap the car instead to passing it on to the second-hand car trade.

It has also bribed me to buy a new car instead of looking for a low-mileage used car.

The question is, are these desirable things? They are if the government wants to stimulate new car purchases at the expense of the used car market, and if it would prefer my 11-year-old car off the road rather than being driven by someone else during its declining years.

However, I think these aims are certainly debatable.

Rolfe.

[JoeTheJuggler]

Some buyers who took advantage of the program so far were already going to buy a new car. It could be the program encouraged some of them to buy a more fuel-efficient car than they might otherwise have.

Also, there's some evidence that people who do not qualify for the program (their particular clunker doesn't qualify) are going to the dealer and finding the prices lower than they thought (or they fall in love with a shiny new car, or the salespeople work their magic on them), and they end up buying anyway. These sales can also be seen as a side benefit of the program.

As for the destroyed value of the clunkers: I'm one who visits the junkyard for second hand parts pretty often. I've only bought drive train parts (like a transmission) on extremely rare occasions. Usually it's parts that don't really have a life time (like body parts, glass, etc.).

At any rate, even if you count them as completely destroyed value, surely the value of the car destroyed is far less than the value of the new car being made to replace the car that was bought from a dealer's lot.

Again, to say otherwise is to claim that every time a building is demolished, the economy suffers. I think most of the times when that happens, the land is put to a much greater use economically speaking. I think cash for clunkers is a similar approach. Think of it as "re-development"!

[Cicero]

Obama's Cadillac presidential limo almost qualifies for the "cash for clunkers" program.

Gets less (way less) than 18 MPG, is less than 25 years old, but hasn't been insured for at least one year.

Since when is a vehicle classified as a "clunker" based on MPG? This would be news to purchasers of the Dodge SRT10 Cabriolet, Lamborghini Gallardo, Murcielago, Aston Martin Lagonda DB9 08MY, V12 Vantage, Bentley Motors Continental Flying Spur Speed, Azure, Arnage, and Brooklands.

[JoeTheJuggler]

It seems to be working:

NEW YORK (CNNMoney.com) -- Ford Motor Co. reported a 2% gain in July auto sales compared to a year earlier, the first increase from any U.S.-based automaker since November 2007.

Ford said that it was helped by the popular Cash for Clunkers program that gives car buyers up to $4,500 for trading in older, gas-guzzling vehicles if they're buying more fuel efficient cars. Shares of Ford soared more than 6% on the news.

The program helped Ford sell significantly more cars and crossover models, even while its trucks and SUVs sales continued to fall from year-ago levels.
Linky (http://money.cnn.com/2009/08/03/news/companies/auto_sales/index.htm?postversion=2009080311).

[Upchurch]

The local conservative talk show guys had an ...interesting... take on this. They were upset that the cars being traded in were being destroyed. Why weren't, they argued, these cars being given to poor people who could use them to get to work, etc.? It's a big waste!

Is "redistribution of wealth" only "socialism" when the wealth isn't in car form?

[Cicero]

The local conservative talk show guys had an ...interesting... take on this. They were upset that the cars being traded in were being destroyed. Why weren't, they argued, these cars being given to poor people who could use them to get to work, etc.? It's a big waste!

Is "redistribution of wealth" only "socialism" when the wealth isn't in car form?

Since the program will be broke by the end of this week, and dealers will hold up delivery of vehicles until they get reimbursed after submiting the 15 page federal form (an absurd amount of paperwork to add to the already absurd amount of paperwork required to purchase a vehicle), this story has shorter legs than the POTUS "stupidly" remark.

[JoeTheJuggler]

Since the program will be broke by the end of this week,

The House voted in favor of the $2 billion extension on Friday. It's up to the Senate now.

[joobz]

Since the program will be broke by the end of this week, and dealers will hold up delivery of vehicles until they get reimbursed after submiting the 15 page federal form (an absurd amount of paperwork to add to the already absurd amount of paperwork required to purchase a vehicle), this story has shorter legs than the POTUS "stupidly" remark.
That's a very Feet stomping petulant child view.
I don't want cash-for-clinkers to work. I DON'T I DON'T I DON'T I DON'T!!!

[Cicero]

That's a very Feet stomping petulant child view.
I don't want cash-for-clinkers to work. I DON'T I DON'T I DON'T I DON'T!!!

That's a very good impersonation of the critics of removing Saddam from power when confronted with any good news from Iraq. When the VIN plates of these "cash for clunkers" trade-ins start showing up on stolen cars, I'm sure the feds will have another answer for that problem.

The dealers are being unreasonable to expect payment from the government before rolling the new car and, or, crushing the trade-in? More federal bureaucratic forms are a welcome treat for dealers and customers already fed up with the ridiculous amount of paperwork required to purchase a vehicle?

[Rolfe]

Some buyers who took advantage of the program so far were already going to buy a new car. It could be the program encouraged some of them to buy a more fuel-efficient car than they might otherwise have.


Is there any incentive to buy a more fule-efficient car in the US scheme? I think that's what's wrong with the British one.

I had intended to get a more fuel-efficient car than my present one. Really, I had. I'd thought about saving money by buying a low-mileage second-hand car, honestly. I fully intended to be a more economical motorist with the next car.

That was part of why I kept my present car so long. It's a cracker. I always said, this is the best car I'll ever have. I really was going to get something slower, truly!

Then the scrappage scheme came along. I realised I'd get a lot more for my old car under that than by trading it in, and that I'd have to do it now rather than next year. So now was the time to go for it.

The scrappage scheme mandated that I get new car. Oh dear what a shame. Then, I realised that first, the only thing that was going to reconcile me to giving up the Peugeot GTi, was getting something else at least as nice, and second, the actual difference in price between a tame, economical car and what I really fancied, wasn't really all that much. I mean, if you're going to spend £17,000 or £18,000, what the hell, let's go for £22,000.

So I've ordered the new Golf GTi. A bit more economical than the Peugeot, and goes like a bat out of hell. Very tasty. I'm weak-willed. I'm a bad person. And there's a pretty good chance I'd have done exactly that even if the scrappage scheme hadn't existed.

However, the scrappage scheme mandating a new car didn't exactly help, as far as reining in my urges was concerned. And then, with no restrictions on what new car I could buy, there was no disincentive to fall in love with the Golf. Insisting that I had to buy a car that met a certain degree of fuel economy and emissions in prder to qualify for the scheme might actually have worked. You never know.

But they didn't.

Rolfe.

[JoeTheJuggler]

Is there any incentive to buy a more fule-efficient car in the US scheme?

Yes, but I don't know the details. A qualifying "clunker" has to get above a certain combined mpg (as it was originally rated by the EPA when the car was new), and the new car has to get below a certain value.

A couple of people mentioned getting a "fuel efficient" PT Cruiser in this program. I didn't know there was such a thing! (Either that, or the definition of "fuel-efficient" isn't very restrictive.)

ETA: Yup--this PT Cruiser (http://www.chrysler.com/en/2009/pt_cruiser/)is advertised as qualifying for the program, and it's rated at 26 mpg on the highway. (My '97 Escort Wagon can beat that even when full of my gear.) If the cash for clunkers program considers this to be a "fuel-efficient" car, then I do have a problem with it.

ETA again: The incentive isn't as straightforward as I thought. Rather than not allowing the voucher to be used to buy a new guzzler, the amount of the voucher is based on the difference in gas mileage between the clunker and the new car. Here's the way it's worded on www.cars.gov (the official site):
The value of the credit given for the purchase or lease of a category 1 or 2 truck also generally depends on the difference between the combined fuel economy of the vehicle that is traded in and that of the new vehicle that is purchased or leased. If the new vehicle is a category 1 truck that has a combined fuel economy value that is at least 2, but less than 5, miles per gallon higher than the traded-in vehicle, the credit is $3,500. If the new category 1 truck has a combined fuel economy value that is at least 5 miles per gallon higher than the traded-in vehicle, the credit is $4,500.

If both the new vehicle and the traded-in vehicle are category 2 trucks and the combined fuel economy value of the new vehicle is at least 1, but less than 2, miles per gallon higher than the combined fuel economy value of the traded in vehicle, the credit is $3,500. If both the new vehicle and the traded-in vehicle are category 2 trucks and the combined fuel economy of the new vehicle is at least 2 miles per gallon higher than that of the traded-in vehicle, the credit is $4,500. A $3,500 credit applies to the purchase or lease of a category 2 truck if the trade-in vehicle is a category 3 (work) truck that was manufactured not later than model year 2001, but not earlier than 25 years before the date of the trade in.

Still 2 mpg difference isn't very much. I'd rather have seen those numbers be a bit more restrictive. You could trade in a 17 mpg guzzler for a 22 mpg guzzler and still get the maximum voucher!

[SezMe]

Since the program will be broke by the end of this week, and dealers will hold up delivery of vehicles until they get reimbursed after submiting the 15 page federal form (an absurd amount of paperwork to add to the already absurd amount of paperwork required to purchase a vehicle), this story has shorter legs than the POTUS "stupidly" remark.
You've seen the form? Is it online somewhere?

[Bob Blaylock]

By your approach (destroying wealth is always bad for the economy), every building demolition is bad for the economy. Surely you realize that often a building demolition can be good for the economy? Can you think of situations where that might be true? Can you compare those situations to the cash for clunkers situation and see how that "destruction of wealth" can have a net effect of creating more wealth?


Destroying something that has reached the end of its useful life is one thing. Something that has reached the point where it is more costly to maintain it and keep it in use than to replace it really doesn't represent much wealth any longer, and may, in fact, represent a drain on wealth.

But this scam is defining a “clunker” as any car made within a certain period of time that gets less than a certain, arbitrary miles-per-gallon value. The vast majority of these “clunkers” are probably still in good, reliable running condition, with considerable useful life left in them.

To destroy them is pure wastefulness. Obama might as well have pushed through a bill that calls upon Congress to take three million dollars in currency, put it in a big pile, and burn it.

[Bob Blaylock]

The local conservative talk show guys had an ...interesting... take on this. They were upset that the cars being traded in were being destroyed. Why weren't, they argued, these cars being given to poor people who could use them to get to work, etc.? It's a big waste!

Is "redistribution of wealth" only "socialism" when the wealth isn't in car form?


It's a point that I made early in this thread as well. I'm opposed, in general, to any form of socialist wealth redistribution, whether it is cash or cars or other valuable assets. However, I'd rather see wealth redistributed than simply destroyed and/or wasted.

I don't think Big Brother should be wasting three billion dollars of our money on a scam like this in any event, but if it is going to be buying up older cars in order to encourage their owners to buy newer cars, it'd be much better to make these older cars available to those who can put them to good use, rather than to just destroy them.

The left likes to paint itself as a champion of the poor and underprivileged, and here is an area where they are clearly failing in that role—they are simply destroying, in an unforgivably wasteful manner, valuable assets that could have been very well used to help the poor that they purport to champion.

[JoeTheJuggler]

Destroying something that has reached the end of its useful life is one thing. Something that has reached the point where it is more costly to maintain it and keep it in use than to replace it really doesn't represent much wealth any longer, and may, in fact, represent a drain on wealth.

But this scam is defining a “clunker” as any car made within a certain period of time that gets less than a certain, arbitrary miles-per-gallon value. The vast majority of these “clunkers” are probably still in good, reliable running condition, with considerable useful life left in them.

Sorry, but you're wrong. Buildings are destroyed that could still be occupied. Redevelopment is often a matter of the best use of the land.

Your argument that more wealth is being destroyed than is being created just doesn't wash.

You've failed to support your assertion that there's any kind of scam going on. (Do you even know what a scam is?)
To destroy them is pure wastefulness. Obama might as well have pushed through a bill that calls upon Congress to take three million dollars in currency, put it in a big pile, and burn it.
So are you arguing that it's a scam or that's it's wasteful?

At any rate, the effect it's having on the auto industry is real. Burning the money (and I think maybe you meant 3 billion rather than 3 million dollars) would not stimulate the auto industry or get any gas guzzlers off the road.

[Cain]

Still 2 mpg difference isn't very much. I'd rather have seen those numbers be a bit more restrictive. You could trade in a 17 mpg guzzler for a 22 mpg guzzler and still get the maximum voucher!

As noted on the previously mentioned Wikipedia page, if you want to consider fuel consumption we should take into account the limitation of MPG. For a long time environmentalists have wanted manufacturers to list Gallons Per Hundred Miles rather than MPG. Holding all else equal, upgrading from a car that gets 10 MPG to 20 MPG saves more gas than going from 20 MPG to 35 MPG, but by the looks of it, this program seems to assume all MPG differences are equal (perhaps this is indirectly taken into account with the different "categories" of trucks you quote elsewhere in your post).

[JoeTheJuggler]

(perhaps this is indirectly taken into account with the different "categories" of trucks you quote elsewhere in your post).

I don't think so. In one category the two levels of voucher are given for differences greater than 2 but less than 5 mpg vs. 5 and over, but in the other category, the distinction is greater than 1 but less than 2 vs. 2 and over. In other words, they're treating both as if the EPA combined mpg ratings are extremely reliable (ETA: and meaningful) figures.

[Cicero]

You've seen the form? Is it online somewhere?

The 135 pages of rules and regulations about "cash for clunkers" is online. The registration on the National Highway Traffic Safety Administration's Web site is five pages long by itself. Now add another 15 pages that are required by the dealer to submit to the government to get reimbursed.

[SezMe]

The vast majority of these “clunkers” are probably still in good, reliable running condition, with considerable useful life left in them.
Do you have evidence to support this claim?

[Cicero]

Do you have evidence to support this claim?

The government is obviously not interested in whether these vehicles are rolling wrecks. The government's (aka taxpayer money) exceedingly generous $4500 value of the cars that customers would likely trade-in, not sell privately, is way more than it would be worth to any non comatose person. The resale value of these vehicles are no doubt in the cellar. With the hit for miles and their overall depreciation, these vehicles would be valued at about a grand as trade-in value.

Since many of the callers into NPR's "Click & Clack" want information on how to keep their valueless heaps running, this "cash for clunkers" may put the Magliozzi brothers out of business.

[applecorped]

X0IcIxhd8ks&feature=related

[SezMe]

Do you have evidence to support this claim?

The government is obviously not interested in whether these vehicles are rolling wrecks. The government's (aka taxpayer money) exceedingly generous $4500 value of the cars that customers would likely trade-in, not sell privately, is way more than it would be worth to any non comatose person. The resale value of these vehicles are no doubt in the cellar. With the hit for miles and their overall depreciation, these vehicles would be valued at about a grand as trade-in value.

Since many of the callers into NPR's "Click & Clack" want information on how to keep their valueless heaps running, this "cash for clunkers" may put the Magliozzi brothers out of business.
Translation: No.

[JoeTheJuggler]

Translation: No.

The cars.gov site I mentioned above says that the trade-in must be drivable. Presumably, that implies the car has to have legal plates. (In Missouri that means it has to have passed a safety and emissions inspection within the past 2 years.)

[dirtywick]

Enticing people to buy cars they can't afford, I don't know. Wasn't there something about houses and whatnot similar to that recently?

[tyr_13]

Enticing people to buy cars they can't afford, I don't know. Wasn't there something about houses and whatnot similar to that recently?

Except that with the extra money, they can afford them. That is, unless they still get into more car than they can handle.

[ZirconBlue]

Destroying something that has reached the end of its useful life is one thing. Something that has reached the point where it is more costly to maintain it and keep it in use than to replace it really doesn't represent much wealth any longer, and may, in fact, represent a drain on wealth.

But this scam is defining a “clunker” as any car made within a certain period of time that gets less than a certain, arbitrary miles-per-gallon value. The vast majority of these “clunkers” are probably still in good, reliable running condition, with considerable useful life left in them.

Presumably the cars aren't worth all that much, or $4500 (or less) wouldn't seem like a very good deal to the recipients.


To destroy them is pure wastefulness. Obama might as well have pushed through a bill that calls upon Congress to take three million dollars in currency, put it in a big pile, and burn it.

Except that wouldn't boost the economy, or replace aging low-mileage cars with more efficient ones. And remember, older cars aren't just less fuel efficient, but also are likely more polluting.

Enticing people to buy cars they can't afford, I don't know. Wasn't there something about houses and whatnot similar to that recently?

So, you think the banks are already back to handing out loans to people who can't afford them? Or, do you think it more likely that they are a little more risk averse now?

[JoeTheJuggler]

Enticing people to buy cars they can't afford, I don't know. Wasn't there something about houses and whatnot similar to that recently?
The cash for clunkers program is a voucher, not a loan.

[Cicero]

The cars.gov site I mentioned above says that the trade-in must be drivable. Presumably, that implies the car has to have legal plates. (In Missouri that means it has to have passed a safety and emissions inspection within the past 2 years.)

Please. No state cares about the degree of rust that has permeated a vehicle's body. No state cares about the condition of the vehicle's interior, oil leaks, or the age of the tires. Safety checks in the U.S. or nothing like Europe. If your car can start, stop and has operating headlights, brake lights, and turn signals, it is good to go. If these cars are sailing through emissions tests, how are they 'clunkers?"

[dirtywick]

Except that with the extra money, they can afford them. That is, unless they still get into more car than they can handle.

I don't know that it impacts the monthly payments much, but it makes a new car a lot more appealing than something more sensible.

So, you think the banks are already back to handing out loans to people who can't afford them? Or, do you think it more likely that they are a little more risk averse now?

Don't know. I don't think they go too into finances for a car loan like they do a house though, but it's been a while since I tried to finance a car. I do think people trying to get this $4500, which as a new car devalues isn't even worth it IMO, won't think as sensibly as they would otherwise for the sake of getting a discount.

[dirtywick]

The cash for clunkers program is a voucher, not a loan.

It's an enticement to buy a car. Most people will need a loan.

[Richard Masters]

Doubtful. I strongly suggest you stop listening to "The Secret" and Amway tapes.

A gentle reminder to keep it civil.

My sincere apologies for the non-sequitur.

[Just thinking]

Where's my $9000?

Since 1975 I've bought cars that get at least 25 mpg ... right now we have 3 (model years 1985 - 1991 - 2008) ... all get over 30 on the highway and none less than 22 in the city. So what does that mean? ... Right! None qualify! Nice that someone who's been very energy conscious and efficient (not to mention environmentally friendly) gets the short end of the stick ... once again!

[Tricky]

Where's my $9000?

Since 1975 I've bought cars that get at least 25 mpg ... right now we have 3 (model years 1985 - 1991 - 2008) ... all get over 30 on the highway and none less than 22 in the city. So what does that mean? ... Right! None qualify! Nice that someone who's been very energy conscious and efficient (not to mention environmentally friendly) gets the short end of the stick ... once again!
This seems to be a bit tongue-in-cheek. I certainly hope so. I've never driven anything other than small cars. I don't know how much that's saved me in gas money over the years, but it's probably pretty substantial. And even if it weren't financially as good, I get the satisfaction of knowing that I've done what I could for the environment. (Plus small cars have and easier time parking.)

But I must say that it really is annoying that so many people say (and not at all tongue-in-cheek) whenever somebody else gets a break, "Where's MINE!!!" It's like little kids who are afraid that their sibling got a bigger slice of cake than they did.

[Just thinking]

But I must say that it really is annoying that so many people say (and not at all tongue-in-cheek) whenever somebody else gets a break, "Where's MINE!!!" It's like little kids who are afraid that their sibling got a bigger slice of cake than they did.

Why is it so wrong for someone to feel a bit disenfranchised in this case? Why should I (or anyone for that matter) be left out?

BTW, your analogy is a bit off ... I'm not speaking of someone getting a bigger piece, I'm complaining about getting no piece.

Hey ... here's an idea ... $4500 for all those who had fuel efficient cars (that meet the new car criteria) for the past 10+ years. Do as you wish with the loot ... you deserve it!

[SezMe]

Because there is not enough money (or cars) to buy everyone a new car so limits have to be placed on the program. Now, what those limits are can be debated but their necessity cannot.

[Just thinking]

Because there is not enough money (or cars) to buy everyone a new car so limits have to be placed on the program. Now, what those limits are can be debated but their necessity cannot.

What new car is $4500?

Besides ... you don't need to come up with the money ... just issue up to $4500 in tax deductions.

Plus .. how do you come up thinking it will involve everybody?

[SezMe]

If these cars are sailing through emissions tests, how are they 'clunkers?"
Cicero, you're being too literal. "Cash for Clunkers" is just a catchy phrase to draw attention to the program. "Clunkers" is not meant to be definitive.

[Vermonter]

Well, let's see. A loan for a $17000 car with a 6% interest rate for 5 years is about $337 a month. With the maximum voucher of $4500 with the same rate and term the payment drops to about $247 a month! That's not including any additional down payment on the vehicle or rebates.

Same terms with a $25000 loan the payment is $496 a month before the voucher. With the voucher it drops $90 a month to $406. I'd say that's a pretty substantial discount.

You get more of a discount if you apply it to a cheaper car, obviously, but who wouldn't want to have a car payment that was $90 cheaper than what it would have been normally? I know I would.

[Just thinking]

No doubt about it ... much of your payment on a car is in interest ... reduce that principle and you really save.

[Vermonter]

Hell, I'm planning on buying a new/ish truck in the next few months, so I need to save up moolah for a nice down payment.

[jmcvann]

I love this. When the bank and auto industry "bailouts" (loans) were beginning, the cry was "Why not give the money directly to the people?!?!?" Now money is going directly to the people, and the bitching continues. I need another scotch.

[Cleon]

Where's my $9000?

Since 1975 I've bought cars that get at least 25 mpg ... right now we have 3 (model years 1985 - 1991 - 2008) ... all get over 30 on the highway and none less than 22 in the city. So what does that mean? ... Right! None qualify! Nice that someone who's been very energy conscious and efficient (not to mention environmentally friendly) gets the short end of the stick ... once again!

I believe this is what some call a "sense of entitlement."

The program was designed for a purpose: to stimulate the economy while simultaneously engineering a nationwide net improvement in fuel efficiency. It seems to be successful. If it doesn't benefit you directly, well, it wasn't designed to.

It doesn't benefit me, either, but you don't see me whining about it.

[The Fool]

This thread has been a revelation for me... Clunkers for Cash.... Thats the alternate program we have here in Australia. Instead of Government rebates to stimulate the economy we are given old American Cars with abrasive powder run through the Motor. I'm living in one at the moment.....up to now I had wondered where they came from...

[Just thinking]

The program was designed for a purpose: to stimulate the economy while simultaneously engineering a nationwide net improvement in fuel efficiency.

Well, I've certainly met the condition for helping increase the nation's fuel efficiency numbers. And giving me $4500 will stimulate the economy every bit as giving it to someone else who plans to buy something ... in this case, a car.

It seems to be successful.

Of course ... give people more of their money and it has to help the economy, even if all they do is save or invest it. But if you think it must be spent, I can think of a million things to spend $4500 on. (OK, maybe half a million.) I promise I'll spend it.

If it doesn't benefit you directly, well, it wasn't designed to.

As usual ... it seldom helps those who have been successful ... in this case, buying and maintaining good efficient cars.

It doesn't benefit me, either, but you don't see me whining about it.

So, how does that expression go? ... what do want, a medal or a ... you know the rest.

[Just thinking]

I believe this is what some call a "sense of entitlement."

I'm sure those 222,000+ folks that lined up at the dealers thought the exact same thing.

[Just thinking]

Good night ... I'll be back Thursday night.

;)

[Oliver]

And since mentioning Ron Paul always stimulates the thread he's mentioned in :D :

Ron Paul:
Cash for Clunkers Hurts the Poor

LA8IM550tTU

[Cain]

But I must say that it really is annoying that so many people say (and not at all tongue-in-cheek) whenever somebody else gets a break, "Where's MINE!!!" It's like little kids who are afraid that their sibling got a bigger slice of cake than they did.

Yes, but this isn't exactly the same as conservatives shaking their fists at Lucky Ducky ( http://en.wikipedia.org/wiki/Lucky_Ducky ). This program benefits people in the middle-class, so why shouldn't those benefits be shared? Because certain people decided to buy wasteful, fuel inefficient vehicles while others did not? If we're interested in curbing emissions, helping the environment, then many alternative policies would make a lot more sense (a gas tax would disincentivize purchasing oversized vehicles, which make parking needlessly difficult for my small car -- SUVs spill into my space, I can't see around them, they're out to get me). As far as stimulus goes you're still killing cars before their time, which does destroy value. Yes, dealerships are reporting increased sales, but so what? Apart from the question, what makes the car industry so special, we have to ask, taking a page from our old textbooks on environmental economics, if that growth is sustainable. And who cares -- it's stimulus! Well, conservatives are occasionally right, even they say stupid things ("is the air around you any cleaner?" "Most wasteful use of taxpayer money I can imagine"). But it's true that money could have been spent elsewhere in the economy. The government gets to play Oprah for awhile: You get a new car. YOU get a new car. You get a new car! Everybody gets a new car!! (except not everybody does.)

This program is only a few billion dollars, even though its taken on symbolic importance. I'm pretty a lot more stimulus money is spent (or will be spent) weatherizing low-income homes, which probably drives Republicans mad. "You're redistributing MY money to promote an enviornMENTALIST agenda!?" Yes, because we want to reduce energy consumption, promote an industry that will create lasting jobs, and help poor people. And their answer remains, "It's still my money!" Of course, I guess Congress can give vouchers to people to tear down their existing homes in order to buy new "green" homes.

[IMST]

If my car qualified, I might well be getting into a new Versa or Accent or something similar right now.
Unfortunately, my teenaged, misbehaving Ford Escort is listed @ 37 MPG. And I am only aware of 5 cars in the entire market listed at least that effecient now.

[JoeTheJuggler]

Please. No state cares about the degree of rust that has permeated a vehicle's body. No state cares about the condition of the vehicle's interior, oil leaks, or the age of the tires. Safety checks in the U.S. or nothing like Europe. If your car can start, stop and has operating headlights, brake lights, and turn signals, it is good to go. If these cars are sailing through emissions tests, how are they 'clunkers?"

Take a breath, man.

I was actually providing the evidence that was being asked for that the cars still have some value. The program requires that the car is driveable and has been insured for I think the previous 18 months or something like that.

I don't believe "clunker" is part of the official language of the program. The name is actually the "car allowance rebate system (http://www.cars.gov/)".

I have no problem conceding that there is some value left in the trade in cars. The point of the program is to stimulate new car sales AND to make it dependent on some minimal improvement in the mileage of the new car (and, as has been mentioned, probably a greater improvement in emissions).


It's an enticement to buy a car. Most people will need a loan.
But it's not a loan in itself. You implied that it will somehow cause a bad loan crisis. How do you figure it will do that?

For the majority of people taking advantage of the program (those who already planned to buy a new car), it merely serves to reduce the amount of the loan.

[Shalamar]

I've got a fairly new car, a 2005 Magnum.

And you can pry it from my cold dead fingers. I actually FIT in the bloody thing.

[JoeTheJuggler]

If my car qualified, I might well be getting into a new Versa or Accent or something similar right now.
Unfortunately, my teenaged, misbehaving Ford Escort is listed @ 37 MPG. And I am only aware of 5 cars in the entire market listed at least that effecient now.

I'm a fan of the Escort, though none of the 5 I've owned ever had under 100K miles on it when I bought it.

The '97 Escort Wagon I now own was in a wreck and considered totalled. The insurance company let the owner keep it for something like $250. He sold it to me as is for that same amount. I put a hood, a windshield, some front end plastic, a bumper cover, a headlight assembly and a radiator into it--oh yeah, and new struts and some bushings. The bushings and shocks had nothing to do with the crash--they were required by the state safety inspection.

I got all of the parts but the shocks and the bushings from the junkyard. None of them were parts that would be required to be destroyed under the cash for clunkers program.

[JoeTheJuggler]

The program was designed for a purpose: to stimulate the economy while simultaneously engineering a nationwide net improvement in fuel efficiency. It seems to be successful.

I will go this far in agreeing with the critics of this thing: the "net improvement in fuel efficiency" is infinitesimal.

As I mentioned earlier, you can go from a 17 mpg guzzler to a 22 mpg guzzler and qualify for the full $4500. If you have a class 2 vehicle (I think that's mostly lower mpg stuff like larger trucks), you could improve by only 1 mpg and qualify for the $3500 voucher. I don't think the rating system is even accurate to within 1 mpg. (I suppose they're counting on the older car's actual efficiency being lower that the official rating.)

Since the program is so widely popular, I would rather at least the second round (the $2 billion) have somewhat stricter qualifications. They shouldn't allow the money to be used to purchase new gas guzzlers.

Seriously, a PT Cruiser with combined city/highway mileage of 26 mpg might have been considered fuel efficient in the 1970s, but this is the 21st Century! My "clunker" does a lot better than that!

[JoeTheJuggler]

The 135 pages of rules and regulations about "cash for clunkers" is online. The registration on the National Highway Traffic Safety Administration's Web site is five pages long by itself. Now add another 15 pages that are required by the dealer to submit to the government to get reimbursed.

Dealers are allowed to deduct $50 from the real scrap value of the car (the real trade in value) to cover their administrative costs. I don't think the dealers are complaining. It's been a boon to them!

[Cleon]

I will go this far in agreeing with the critics of this thing: the "net improvement in fuel efficiency" is infinitesimal.

As I mentioned earlier, you can go from a 17 mpg guzzler to a 22 mpg guzzler and qualify for the full $4500. If you have a class 2 vehicle (I think that's mostly lower mpg stuff like larger trucks), you could improve by only 1 mpg and qualify for the $3500 voucher. I don't think the rating system is even accurate to within 1 mpg. (I suppose they're counting on the older car's actual efficiency being lower that the official rating.)

Since the program is so widely popular, I would rather at least the second round (the $2 billion) have somewhat stricter qualifications. They shouldn't allow the money to be used to purchase new gas guzzlers.

Seriously, a PT Cruiser with combined city/highway mileage of 26 mpg might have been considered fuel efficient in the 1970s, but this is the 21st Century! My "clunker" does a lot better than that!

The net increase is small, but I wouldn't call it "infintesimal."

17 mpg to 22 mpg might not seem that much, but that's an increase of 30%. For an individual, that means doodly-squat--I have a PITA 20-mile commute, and it would only save me $6 or so a week. But over tens of thousands of vehicles, that translates to a substantial reduction in nationwide oil usage.

[Rolfe]

I will go this far in agreeing with the critics of this thing: the "net improvement in fuel efficiency" is infinitesimal.

As I mentioned earlier, you can go from a 17 mpg guzzler to a 22 mpg guzzler and qualify for the full $4500. If you have a class 2 vehicle (I think that's mostly lower mpg stuff like larger trucks), you could improve by only 1 mpg and qualify for the $3500 voucher. I don't think the rating system is even accurate to within 1 mpg. (I suppose they're counting on the older car's actual efficiency being lower that the official rating.)


Hey, at least your scheme has some stipulations about buying something more fuel-efficient! Ours has none at all.

Theoretically, in Britain, you could scrap a 10-year-old car, in good working order with a full service history and low mileage, which gets 45mpg, and buy a brand new Porsche with the money.

In practice, it's unlikely that an old car worth more than £1,000 will go into the scrappage scheme, which means that most will be high-mileage with maybe a few problems. However, a cheap, economical car which is 10 years old could be worth less than that even if it's only done 40,000 miles and has been well maintained.

I read that nobody has actually bought a Porsche with the scrappage money, but the Porsche dealers think that's because nobody has the nerve to show up at their door driving the sort of car that would qualify.

The car I'm scrapping does about 32mpg. The one I'm buying does 38mpg, in theory. So I suppose it's better. However, it's still a red-hot sports model. With a bit of incentive based on road tax group (goes by emissions, so the higher-emissions cars pay more tax) and/or official mpg figures, I might have bought something that does 45mpg. Or a diesel doing 60mpg plus.

But with no stipulations on what I could buy with the scrappage money, there was no curb on my daydreaming. And the daydreaming ended up here (http://www.topgear.com/uk/volkswagen/golf-gti).

Me extremely happy camper. But a bit of a missed opportunity in the environmental stakes.

Rolfe.

[Beerina]

Google the term "planned obsolescence". Report back when you have a proportionate amount of rage for that as this program.


As a tangential issue, it's long been noted that it would be far cheaper to reduce carbon dioxide from vehicles overall by buying up all the old, poorly tuned vehicles, many with big engines, than it is to spend incalculable sums eking out another percent or two from already highly optimized modern vehicles.

One clunker puts out as much crap as 20 or 30 new cars, something on that order.

Others have noted this will, though, increase prices the poor must pay for their cars, since fewer clunkers will be on the market. For the most part, they won't buy new cars even with a big incentive.

[Cicero]

The problem with a program that encourages perspective new car buyers to purchase a vehicle with superior fuel efficiency is that it fails to take into account the driving habits of these buyers. Even Al Gore's son got a speeding ticket for going over 100 mph in his Toyota Prius.

TOP GEAR proved how a BMW M3 managed 19.4 MPG while following a Toyota Prius on a race track that could only get 17.2 MPG.

[tyr_13]

Funny how we don't all live on race tracks and don't all go driving just because we're getting 10mpg great than before.

The Prius is designed for mid speed commuting, the type of driving that most people do. For that it is really efficient.

Next you'll be telling me that my swords aren't sharp because I can't shave with them.

[Cicero]

Funny how we don't all live on race tracks and don't all go driving just because we're getting 10mpg great than before.

The Prius is designed for mid speed commuting, the type of driving that most people do. For that it is really efficient.

Next you'll be telling me that my swords aren't sharp because I can't shave with them.

AlGore Jr isn't most people? Since when do owners of vehicles adhere to optimum gas mileage recommendations? Just because a vehicle is capable of impressive mpg doesn't mean that personnel driving habits do not undermine these features.

Why do you collect blunt swords? Why would you want to shave with them if they were sharp?

[Mark6]

The problem with a program that encourages perspective new car buyers to purchase a vehicle with superior fuel efficiency is that it fails to take into account the driving habits of these buyers. Even Al Gore's son got a speeding ticket for going over 100 mph in his Toyota Prius.

Two months ago I bought a 2008 Camry hybrid. I would have waited for "cash for clunkers" except my clunker got wrecked in an accident. Now, my driving habits were always of "hypermiling" variety, and my new Camry makes it very easy and satisfying to maintain them. It tells me instant fuel consumption, average consumption since last fill-up, and what is engaged at any given moment -- gas engine, electric engine, or generator (electric engine in reverse). It is quite addictive -- to me, anyway, -- to squeeze every last tenth of MPG out of the hybrid, and to know it. (BTW, I get average 39 MPG, and it is a fairly roomy car.)

But if your drive it in "lead foot" manner, all these gas savings go out the window, as I found yesterday when I had to get some place in a real hurry in heavy traffic.

TOP GEAR proved how a BMW M3 managed 19.4 MPG while following a Toyota Prius on a race track that could only get 17.2 MPG.
I am not surprised. BMW M3 is optimized for this kind of driving. Prius (or Camry) is not.

[Ziggurat]

As a tangential issue, it's long been noted that it would be far cheaper to reduce carbon dioxide from vehicles overall by buying up all the old, poorly tuned vehicles, many with big engines, than it is to spend incalculable sums eking out another percent or two from already highly optimized modern vehicles.

One clunker puts out as much crap as 20 or 30 new cars, something on that order.

You're conflating two different issues. Carbon dioxide output is determined pretty much by mileage alone. It tends to be lower for newer cars, but generally not by a factor of 2, let alone 20. The "crap" you refer to, which new cars CAN emit far less of, is not carbon dioxide but instead stuff like carbon monoxide, nitrogen oxide, ozone, etc. Controlling these pollutants is a serious issue for large metropolitan areas, but it's got little to do with global warming or energy independence, and you can get very low emissions of these things on newer cars even with lousy gas mileage cars, and very bad emissions on old cars even with great gas mileage.

Plus of course, manufacturing cars is not energy or pollution free either. It's not clear that there is any net benefit to the environment from this program.

Others have noted this will, though, increase prices the poor must pay for their cars, since fewer clunkers will be on the market. For the most part, they won't buy new cars even with a big incentive.

Indeed. This is ultimately just a political handout to a favored constituency, in this case the auto industry, which the rest of us will have to pay for.

[drkitten]

AlGore Jr isn't most people?

No, he's not. If he were, he would be much larger.

He's not even particularly representative of "most people"; How many people have gotten speeding tickets for going over 100mph?

Heck, how many people have even driven above 100mph, let alone gotten a ticket for it?

And most people who are interested in driving at 100+mph don't drive Priuses.


Why do you collect blunt swords? Why would you want to shave with them if they were sharp?

Way to miss the point, guy.

[casebro]

Sounds to me like the Dems are mortgaging our future.

Selling a car today costs the government $3500, done to sell one car today.

But the particular buyers would probably be buying a new car in the near future anyhow. So, for each car sold today, there will be one less sold next year.

It all sounds like the sales pushes I've noticed in brands about to go out of business or get merged up. Build up the current numbers, who cares about the future?

Sounds like the real estate debacle all over again. Let everybody buy, easy credit. Until the crunch comes...

[Tricky]

Sounds to me like the Dems are mortgaging our future.

Selling a car today costs the government $3500, done to sell one car today.

But the particular buyers would probably be buying a new car in the near future anyhow. So, for each car sold today, there will be one less sold next year.

It all sounds like the sales pushes I've noticed in brands about to go out of business or get merged up. Build up the current numbers, who cares about the future?

Sounds like the real estate debacle all over again. Let everybody buy, easy credit. Until the crunch comes...
Yes, it's just exactly like the real estate debacle except:

Cars are much cheaper than houses and they have much shorter pay-out periods.
They normally don't sell balloon mortgages on cars.
If you lose your car, you still have a place to live.
The real estate crunch wasn't caused by giving price supports for energy-efficient houses.
There is no "Fannie Mae" quasi-government agency that buys and sells securities based on car loans.
People who buy a car are reasonably likely to buy another one in five years.
Yeah, other than that and a whole bunch of other things, the programs are exactly the same.

[Bob Blaylock]

As a tangential issue, it's long been noted that it would be far cheaper to reduce carbon dioxide from vehicles overall by buying up all the old, poorly tuned vehicles, many with big engines, than it is to spend incalculable sums eking out another percent or two from already highly optimized modern vehicles.

One clunker puts out as much crap as 20 or 30 new cars, something on that order.

Others have noted this will, though, increase prices the poor must pay for their cars, since fewer clunkers will be on the market. For the most part, they won't buy new cars even with a big incentive.


If one purpose of this scam is to reduce fuel usage and pollution, then why the 25-year cutoff? This puts the oldest qualifying “clunkers” in the mid 1980s, which is a time when we had just experienced some technological advances that made cars considerably cleaner and more efficient than their counterparts from only a few years earlier.

I'm thinking of a 1975 Ford LTD station wagon that my family had for a while. It was a nice, big, powerful car, with a big V8 engine. It got about seven miles to the gallon. I'm not exaggerating. Seven (7) miles to the gallon. A friend of mine described this car well by saying that it could pass anything except a gas station. It was a very sturdy, well-built car, and I have little doubt that many of its siblings are still out there, in good running condition.

If the purpose is to reduce fuel usage and air pollution then getting one of these cars off the road would probably do more good than getting any dozen of any cars that actually qualify off the road. But at 34 years old, it would be too old to qualify as a “clunker”.

[JoeTheJuggler]

On the issue of efficiencies of older vs. newer cars and driving habits: don'e most new cars come with an LED readout that tells you how many MPGs you're getting (instantaneously and on a "trip" odometer setting)? I think that feature alone could make for more efficient driving habits. (I looked into putting such a thing in my car, but it's basically a $300 OBC reader. Too pricey for me, I'm afraid.) I would definitely support the requirement that ALL new cars have such a readout (that can't be turned off).

But the particular buyers would probably be buying a new car in the near future anyhow. So, for each car sold today, there will be one less sold next year.
You can't possibly know that.

I've heard industry estimates that about 40,000 of the sales that first weekend were probably people who weren't otherwise in the market for a new car.

[Ziggurat]

On the issue of efficiencies of older vs. newer cars and driving habits: don'e most new cars come with an LED readout that tells you how many MPGs you're getting (instantaneously and on a "trip" odometer setting)?

I don't think so. I've seen this feature on hybrids and luxury cars, but I've never seen it on a non-hybrid, non-luxury car. It may exist on a few, but certainly not most.

[Cleon]

I don't think so. I've seen this feature on hybrids and luxury cars, but I've never seen it on a non-hybrid, non-luxury car. It may exist on a few, but certainly not most.

In the past few months, I've seen it in a Honda Accord, a Mazda 3, a Ford Mustang, and my new-to-me BMW 325i. So I think it's becoming more common across all models as more people are conscious of mileage.

My beemer has two of them, actually; a digital readout of the cumulative MPG, and a gauge showing the MPG at that moment.

[Cicero]

No, he's not. If he were, he would be much larger.


Just because he is a Junior doesn't mean that he is small.

He's not even particularly representative of "most people"; How many people have gotten speeding tickets for going over 100mph?


Do all people who speed get caught by police radar?

Heck, how many people have even driven above 100mph, let alone gotten a ticket for it?

Probably every driver in Germany. In the U.S.? Millions?

And most people who are interested in driving at 100+mph don't drive Priuses.

Really? I see kids in eco boxes routinely driving above the suggested proper speed for the vehicle's designed maximum fuel economy. Maybe they are interested in driving 100+ mph, but their wallets confined them to a vehicle that would require a great deal of patients to reach those speeds.


Way to miss the point, guy.

The attempt at an analogy fell on its own sword.

[Cleon]

Minor correction:

Al Gore Jr. is the former VP. The kid who got his Prius up to 100 mph is Al Gore III.

[Cicero]

In the past few months, I've seen it in a Honda Accord, a Mazda 3, a Ford Mustang, and my new-to-me BMW 325i. So I think it's becoming more common across all models as more people are conscious of mileage.

My beemer has two of them, actually; a digital readout of the cumulative MPG, and a gauge showing the MPG at that moment.

As they become conscious of mileage, they discover that the fuel economy seldom matches the gas mileage claimed by the EPA on the Monroni.

[Ziggurat]

In the past few months, I've seen it in a Honda Accord

It's not in the Civic (at least the non-hybrid). It probably will be eventually, but it isn't yet. So we aren't at the "most cars" stage yet.

[Cicero]

Minor correction:

Al Gore Jr. is the former VP. The kid who got his Prius up to 100 mph is Al Gore III.

Tell that to HuffPo where they use the III and Jr. interchangeably.

http://www.huffingtonpost.com/2007/07/04/al-gore-jr-jailed-on-susp_n_54934.html

[Cleon]

As they become conscious of mileage, they discover that the fuel economy seldom matches the gas mileage claimed by the EPA on the Monroni.

Well, duh. The MPG claimed by the manufacturer (not by the EPA) is an average. It doesn't matter whether they use the EPA's standards for calculating the number or their own sooper-sekrit company formula; whatever number they use, it's going to vary individually.

[Cleon]

Tell that to HuffPo

No.

[Cicero]

No.

JREF is the exclusive venue for your jejune wisdom?

[ZirconBlue]

Sounds like the real estate debacle all over again. Let everybody buy, easy credit. Until the crunch comes...

Is there any evidence that lenders have relaxed their credit requirements in order to support this program?

[JoeTheJuggler]

In the past few months, I've seen it in a Honda Accord, a Mazda 3, a Ford Mustang, and my new-to-me BMW 325i. So I think it's becoming more common across all models as more people are conscious of mileage.


I don't drive or even ride in a lot of late-model cars, but it's in my brother's new Ford Focus.

[Cicero]

Is there any evidence that lenders have relaxed their credit requirements in order to support this program?

Do you work for a repo company?

[jnelso99]

If one purpose of this scam is to reduce fuel usage and pollution, then why the 25-year cutoff?

The car collector lobby pushed for it:

http://stylingperformance.search-autoparts.com/stylingandperformance/Distribution/Amendments-lessen-impact-of-Cash-for-Clunkers-bill/ArticleStandard/Article/detail/602885

[Tricky]

If one purpose of this scam is to reduce fuel usage and pollution, then why the 25-year cutoff?

The car collector lobby pushed for it:

http://stylingperformance.search-autoparts.com/stylingandperformance/Distribution/Amendments-lessen-impact-of-Cash-for-Clunkers-bill/ArticleStandard/Article/detail/602885 (http://stylingperformance.search-autoparts.com/stylingandperformance/Distribution/Amendments-lessen-impact-of-Cash-for-Clunkers-bill/ArticleStandard/Article/detail/602885)
And really, that's not an unreasonable exception. Only a very small percentage of cars make it to twenty-five anyway. Those that do are more often than not "collectors' items" which are preserved for historical sake and rarely driven. Even though they get low mileage, they aren't a major contributor to pollution. I'm wouldn't doubt that they want to keep the ones that aren't preserved as a source of parts.

[Cleon]

JREF is the exclusive venue for your jejune wisdom?

Why are you so defensive? It's a trivial issue. Gore Jr. didn't drive the Prius, Gore III did. BFD.

[Cicero]

Why are you so defensive? It's a trivial issue. Gore Jr. didn't drive the Prius, Gore III did. BFD.

Who didn't know that it was AlGore's son aka Jr./III/Tres, who got the ticket in my post? You seem to be lecturing yourself.

BTW: Everyone knows AlGore, former VP, failed POTUS candidate, drives a Ford Expedition.

[Cicero]

Well, duh. The MPG claimed by the manufacturer (not by the EPA) is an average. It doesn't matter whether they use the EPA's standards for calculating the number or their own sooper-sekrit company formula; whatever number they use, it's going to vary individually.

What is this?

http://static.huddler.com/imgrepo/thumbs/5/50/epa-fuel-economy-sticker.jpg/551x551px-LL-epa-fuel-economy-sticker.jpg

How long has it been since you stepped on a new car lot?

[Cicero]

"Liquid Glass" manufactures reap the benefits of "cash for clunkers." The lethal chemical injection that terminates the life of engines is hot property.

"In Grand Rapids, Mich., a company called Cleaning Solutions Inc. received a call from a dealer ordering a large supply for the clunkers program. When an employee recommended investing heavily in inventory and marketing, owner Ron Balk hesitated. In decades of selling the product, he'd never heard of it used as an engine-killer. But a few calls to local dealers convinced him otherwise: They quickly bought out his existing supply, prompting him to order large amounts of the product. "We've been working 12-hour shifts ever since," says Mr. Balk."

What happens when mechanics, who are morally opposed to killing engines, refuse to administer this lethal injection? Will dealers have to rely on salesmen for this procedure?

[Cleon]

Who didn't know that it was AlGore's son aka Jr./III/Tres, who got the ticket in my post? You seem to be lecturing yourself.

BTW: Everyone knows AlGore, former VP, failed POTUS candidate, drives a Ford Expedition.

Still so defensive, over such a trivial issue. Why?

What is this?

http://static.huddler.com/imgrepo/thumbs/5/50/epa-fuel-economy-sticker.jpg/551x551px-LL-epa-fuel-economy-sticker.jpg

How long has it been since you stepped on a new car lot?

Jesus, you really will defend anything you say to the death, won't you.

Look...Again, this is trivial, and you are simply factually wrong. Why you cannot deal with this, I have no idea, but read and educate yourself (http://www.fueleconomy.gov/feg/info.shtml#estimates): "EPA estimates are based on laboratory tests conducted by manufacturers according to federal regulations."

Maybe you spend more time on new car lots than I do, but I apparently know more about what I'm looking at when I do.

"Liquid Glass" manufactures reap the benefits of "cash for clunkers." The lethal chemical injection that terminates the life of engines is hot property.

"In Grand Rapids, Mich., a company called Cleaning Solutions Inc. received a call from a dealer ordering a large supply for the clunkers program. When an employee recommended investing heavily in inventory and marketing, owner Ron Balk hesitated. In decades of selling the product, he'd never heard of it used as an engine-killer. But a few calls to local dealers convinced him otherwise: They quickly bought out his existing supply, prompting him to order large amounts of the product. "We've been working 12-hour shifts ever since," says Mr. Balk."

What happens when mechanics, who are morally opposed to killing engines, refuse to administer this lethal injection? Will dealers have to rely on salesmen for this procedure?

I notice you didn't link to the original article, so maybe that explains why you missed this part:


At dealerships across America, mechanics accustomed to fixing engines are battling for the chance to ruin them. "Everybody wants to go first, so I'm probably going to have to make them draw straws," says Jim Burton of Randy Curnow Buick Pontiac GMC in Kansas City, Kan. As service manager, however, he might reserve that thrill for himself. "I can't wait," he says.


"Morally opposed to killing engines." Riiiight. I bet the Great Mechanic General Strike is going to be called any minute now.

[Ziggurat]

Well, duh. The MPG claimed by the manufacturer (not by the EPA) is an average. It doesn't matter whether they use the EPA's standards for calculating the number or their own sooper-sekrit company formula; whatever number they use, it's going to vary individually.

Look...Again, this is trivial, and you are simply factually wrong. Why you cannot deal with this, I have no idea, but read and educate yourself (http://www.fueleconomy.gov/feg/info.shtml#estimates): "EPA estimates are based on laboratory tests conducted by manufacturers according to federal regulations."

You are correct that the EPA does not administer the mileage tests. But your original post can be read as implying that some manufacturers come up with their own methods for calculating mileage, and that is false. I think demonstrating that they all use the EPA methods was the primary purpose of the response you got. Cicero may have missed the point you wanted to make, but it looks like you're missing his.

[Cleon]

You are correct that the EPA does not administer the mileage tests. But your original post can be read as implying that some manufacturers come up with their own methods for calculating mileage,

So the bit about "the EPA's standards for calculating the number" doesn't actually come across. I must remember to use shorter words, apparently.

[Cicero]

So the bit about "the EPA's standards for calculating the number" doesn't actually come across. I must remember to use shorter words, apparently.

So defensive when confronted with Ziggurat's on the mark observation.

[Tricky]

Keep it civil, folks.

[Cleon]

So defensive when confronted with Ziggurat's on the mark observation.

Only if by "on the mark" you mean "completely false."

Perhaps you should return to this thread when you actually know what you're talking about.

[Cicero]

Only if by "on the mark" you mean "completely false."

Perhaps you should return to this thread when you actually know what you're talking about.

I'll get you at recess!

[Tricky]

Since the program will be broke by the end of this week...

The House voted in favor of the $2 billion extension on Friday. It's up to the Senate now.

Looks like the vote goes to the Senate tomorrow (http://www.reuters.com/article/mergersNews/idUSN0528814420090806). (Thursday). I predict it will sail through. After all, a two-billion dollar bill doesn't sound so big when the military bill is 600 billion dollars. And the program is enormously popular among those who don't hate anything the Democrats do.

[Ziggurat]

Only if by "on the mark" you mean "completely false."

No, Cleon. Nothing I said was false. But I'm disappointed you've wasted an opportunity to tone down the personal hostility.

[Cleon]

No, Cleon. Nothing I said was false. But I'm disappointed you've wasted an opportunity to tone down the personal hostility.

:rolleyes:

[Ziggurat]

Looks like the vote goes to the Senate tomorrow (http://www.reuters.com/article/mergersNews/idUSN0528814420090806). (Thursday). I predict it will sail through. After all, a two-billion dollar bill doesn't sound so big when the military bill is 600 billion dollars.

That was a pretty safe bet.

And the program is enormously popular among those who don't hate anything the Democrats do.

I don't pretend to know who does and doesn't hate anything the Democrats do, but among the US population as a whole, no, it's not enormously popular. A recent poll (http://www.rasmussenreports.com/public_content/business/auto_industry/august_2009/54_oppose_more_money_for_cash_for_clunkers_program ) 54% of adults opposed additional money for the program, and 33% were in favor of additional money. That's a pretty solid margin against extending it.

[Cicero]

Ford seems to be doing rather well, (http://www.cnn.com/2009/US/08/02/ford.gain/index.html) and they're attributing it to the program.

"Transportation Secretary Ray LaHood, for example, promotes the fact that the Ford Focus so far is at the top of the list of new cars purchased under the program. But the limited information released so far shows most buyers are not picking Ford, Chrysler or General Motors vehicles, and six of the top 10 vehicles purchased are Honda, Toyota and Hyundai."


"Transportation Secretary Ray LaHood said Sunday the government would release electronic records about the program, and President Barack Obama has pledged greater transparency for his administration. But the Transportation Department, which has collected details on about 157,000 rebate requests, won't release sales data that dealers provided showing how much U.S. car manufacturers are benefiting from the $1 billion initially pumped into the program".

[Cleon]

"Transportation Secretary Ray LaHood, for example, promotes the fact that the Ford Focus so far is at the top of the list of new cars purchased under the program. But the limited information released so far shows most buyers are not picking Ford, Chrysler or General Motors vehicles, and six of the top 10 vehicles purchased are Honda, Toyota and Hyundai."


"Transportation Secretary Ray LaHood said Sunday the government would release electronic records about the program, and President Barack Obama has pledged greater transparency for his administration. But the Transportation Department, which has collected details on about 157,000 rebate requests, won't release sales data that dealers provided showing how much U.S. car manufacturers are benefiting from the $1 billion initially pumped into the program".

I assume there's a point here somewhere; it doesn't contradict anything I said.

[Cicero]

I assume there's a point here somewhere; it doesn't contradict anything I said.

The point is your post was pointless. Compared to Honda, Toyota and Hyundai, Ford is doing only fair business even with the program that uses taxpayer money to pay a dealer four times the market value for a trade-in.

The reluctance to release the DOT records no doubt stem from the realization that Ford is not the main beneficiary of this program.

[dirtywick]

Well, let's see. A loan for a $17000 car with a 6% interest rate for 5 years is about $337 a month. With the maximum voucher of $4500 with the same rate and term the payment drops to about $247 a month! That's not including any additional down payment on the vehicle or rebates.

Same terms with a $25000 loan the payment is $496 a month before the voucher. With the voucher it drops $90 a month to $406. I'd say that's a pretty substantial discount.

You get more of a discount if you apply it to a cheaper car, obviously, but who wouldn't want to have a car payment that was $90 cheaper than what it would have been normally? I know I would.

Depends on insurance.

[dirtywick]

But it's not a loan in itself. You implied that it will somehow cause a bad loan crisis. How do you figure it will do that?

For the majority of people taking advantage of the program (those who already planned to buy a new car), it merely serves to reduce the amount of the loan.

I think that some people who wouldn't have thought of buying a car because they can't afford it will go and buy a car to because they're cheaper. I think some of those people can't afford it, will lose their original car and default and lose their current car eventually.

For instance, my car payment now is $0 because I own it, and my insurance is ~$25 a month for liability. With a new car the payment goes up substantially obviously and so does my insurance. Plus new cars devalue so rapidly. I really would have been better off buying somebody's old clunker straight up. But they're destroying those unfortunately.

I don't know if this is going to a significant amount of people that are in this situation or not. I might be wrong altogether also. That's just the impression I got when I read about this bill. Guess I'll wait a year or so and see how all these new loans are doing.

[Cleon]

The point is your post was pointless. Compared to Honda, Toyota and Hyundai, Ford is doing only fair business even with the program that uses taxpayer money to pay a dealer four times the market value for a trade-in.

So? The fact that Ford is benefiting greatly from the program is undeniable; the fact that foreign automakers are benefiting as well doesn't change that.


The reluctance to release the DOT records no doubt stem from the realization that Ford is not the main beneficiary of this program.

Right. That's the only possible explanation. :rolleyes:

[Bob Blaylock]

So? The fact that Ford is benefiting greatly from the program is undeniable; the fact that foreign automakers are benefiting as well doesn't change that.


It means that a large portion of the money that was was supposed to be used to help OUR economy is instead going to help Japan and South Korea. And these are not the economies that are being damaged by the destruction of valuable automobiles already part of their economy.

[Cleon]

It means that a large portion of the money that was was supposed to be used to help OUR economy is instead going to help Japan and South Korea. And these are not the economies that are being damaged by the destruction of valuable automobiles already part of their economy.

Most, if not all, of the major foreign automakers operate plants in the United States, using US-built parts and materials.

The financing to buy a foreign car comes from a US bank (even if it's Honda Financial Services, it's still a US-based bank).

The sales, distribution, manufacturing, and maintenance of these cars directly employs thousands of American workers.


Much of the money that you believe is going to Japan and South Korea is, in fact, staying right here.

[Rolfe]

Mmmmm. I'm buying under the British scrappage scheme. I'm paying with cash currently deposited a Scottish bank. I'm directly benefiting the economy of - Lower Saxony.

I guess I'm putting some business the way of a Scottish car dealership, and maybe the North Sea ferry is British?

Oh well.

Rolfe.

[JoeTheJuggler]

I think that some people who wouldn't have thought of buying a car because they can't afford it will go and buy a car to because they're cheaper. I think some of those people can't afford it, will lose their original car and default and lose their current car eventually.
If they're willing to buy a car they can't afford and someone is willing to lend them money they can't afford, why wouldn't both parties do this without this program? I don't see any connection between reducing the cost of buying a new car and making bad loans.

For instance, my car payment now is $0 because I own it, and my insurance is ~$25 a month for liability. With a new car the payment goes up substantially obviously and so does my insurance. Plus new cars devalue so rapidly.
Yes I understand why many of us don't buy new cars. (I've bought one new car in my entire life--and I'm 47.) What you haven't shown is what any of this has to do with the cash for clunkers program. If someone can actually afford a car using the voucher even though they couldn't without it, it would result in the sale of a new car that otherwise wouldn't have been sold. If a person is better off buying a used car, this program doesn't stop that.

I don't know if this is going to a significant amount of people that are in this situation or not. I might be wrong altogether also. That's just the impression I got when I read about this bill. Guess I'll wait a year or so and see how all these new loans are doing.

You still haven't offered any evidence that this program causes or encourages bad lending practices. It's nothing at all like the mortgage problem.

[dirtywick]

If they're willing to buy a car they can't afford and someone is willing to lend them money they can't afford, why wouldn't both parties do this without this program? I don't see any connection between reducing the cost of buying a new car and making bad loans.

I don't say they couldn't, only that it's more enticing. Reducing the cost of a car makes it a more appealing purchase. The whole point of the program is to sell cars to people who otherwise wouldn't have bought a car, right? Some people wouldn't buy a car because they couldn't afford it, and some people will buy a car now even though they can't afford it. There's going to be some overlap, how much I'm not sure.


Yes I understand why many of us don't buy new cars. (I've bought one new car in my entire life--and I'm 47.) What you haven't shown is what any of this has to do with the cash for clunkers program. If someone can actually afford a car using the voucher even though they couldn't without it, it would result in the sale of a new car that otherwise wouldn't have been sold. If a person is better off buying a used car, this program doesn't stop that.

It does reduce the pool of used cars available, if it is true that they're destroying the old cars.

You still haven't offered any evidence that this program causes or encourages bad lending practices. It's nothing at all like the mortgage problem.

Time will either bear it out, or it won't.

Sales entice people to buy, some people buy things they can't afford. There's no doubt in my mind some people will buy a car that they can't afford the payments on, people do that all the time without a discount. I think people are more likely to with a discount. Really depends on how many people who can't afford the car are enticed by the $4500 and whether or not they'll get loans. It could result in a round of bad loans from people trying to get a cheap car and dealers selling them at any cost because business is booming. I've seen too many "pre-approved" car dealerships to think the lenders are all that discerning about who they'll lend to.

[GreyICE]

It means that a large portion of the money that was was supposed to be used to help OUR economy is instead going to help Japan and South Korea. And these are not the economies that are being damaged by the destruction of valuable automobiles already part of their economy.

How come globalization is the best thing ever, until a Democrat does it?