It’s incredible what takes place when the government gives people “free money” – they take it. The Car Allowance Rebate System, also known as Cash for Clunkers, program was another smashing success.
The Cash for Clunkers program officially began on July 1 with a budget of $1 billion. The idea behind the program was for car owners to trade in their old “clunkers” and the government would then give them a $3,500 to $4,500 towards a new car. People loved the program so much the $1 billion budget was maxed out in about four days. Not to fear, an extra $2 billion was quickly thrown together to continue the program.
There was certain criterion for these “clunkers” but generally it was pretty broad. One requirement was that the vehicle must be in driving condition. My question is if these vehicles are still in driving condition, don’t they still have value to someone?
According to www.edmunds.com, a popular used automotive resource guide, the Ford Explorer was the most common clunker traded in. I’ve rode in a few Ford Explorers. I think they’re good looking cars. I would drive one, as I assume most would if it was an automobile they desired and could afford. And we’re simply throwing them away?
I don’t have a soft spot for Ford Explorers. My point is by throwing away vehicles like these that are capable of providing the means of transportation for years to come, we are providing a disservice to low-income families. By taking older and cheaper cars off the market, the prices of the used vehicles still around are artificially inflated. Economics 101 – supply and demand.
These “clunkers” still serve a purpose. A kid fresh out of high school, the college kid looking for a dependable but cheap car, or the families struggling to make end’s meet are the people that are getting hurt by this program. While we and the rest of the taxpayers are being billed to misallocate $3 billion dollars.
For example, let’s assume that you pay taxes. A random person in another state trades in his beat up Dodge Caravan for a new Chevrolet Silverado. That was very kind of you to help him buy his new truck! Let’s hope he doesn’t default on his new much higher truck payment.
Some environmentalist would argue that the plan did help put more fuel efficient vehicles on the road. According to the Department of Transportation the fuel efficiency of the “clunkers” being traded in was on average around 16 mpg. The fuel efficiency of those being bought with the government handout was around 25 mpg. That’s an improvement of nine miles per gallon for 250,000 vehicles of the nearly 260 million on the road – 250,000 out of 260,000,000.
A report that appeared in The Washington Times states the program will save 7 million metric tons of C02 over the next decade. Sounds good right? Unfortunately 7 million metric tons is only .04 percent of the total auto emissions expected for the next decade. This also doesn’t take into account the amount of energy used to crush these “clunkers” and to assemble these new vehicles.
I’m not sure if nine miles per gallon and .04 percent of CO2 auto emissions over the next decade justifies $3 billion dollars and a regressive program that ultimately hurts lower income individuals.
President Barack Obama said in a recent interview that the program has been “successful beyond anybody’s imagination.” Unless, by successful he means people took money handed to them, I politely disagree.
Brett Mize/The Bulletin
Loading ...
Bret- does the sun ever shine in your conservative world
good points…will there be a “sub-prime” auto loan default wave in the near future after these people slid into a new auto loan and now quite possibly will lose their job and not be able to make payments?
also, they have wrecked the secondary used car market by mandating that the trade ins be destroyed!
wow, you just made me wonder what the government will do once it gets it grubby little paws on health care…
keep up the good work!
Wow. So it was a dud huh? I guess that’s why so many people used the program and it had to be expanded.
And your argument about the destruction of the rebated vehicles doesn’t stand either. We all know you’d be bitching if the dealerships were allowed to sell the traded vehicles because then the rebates would have been free money for the dealers. Why don’t you find some real issues to write about. We’re all sick of your pointless attacks on the Obama adminstration. I can’t imagine what kind of hell would be going on if McCain/Palin were in office right now.
Thanks for the fresh perspective Brett! I like “Big O” but this idea was just plain stupid. Let’s give the rookie a break and hope he makes better decisions in the future.
The “Cash for Clunkers” program had both positive and negative points. The biggest negative is that this is more government spending taxpayer money needlessly. I like that Obama wants to get the economy moving again, but reckless spending of taxpayer money isn’t the way to do it.
Mr. Mize is incorrect in many of his factual assertions on the CARS program. According to the official Department of Transportation has issued a report on the CARS program issued last month the total number of vehicles purchased was more than 677,000 not the 250,000 he claims. The program will result in the reduction of 9 million metric tons of carbon emissions over the next 25 years with an estimated social benefit of $278 million. Additionally, it will save 33 million gallons of gasoline each year. As for Mr. Mize’s claims that the program was a dud, it was actually so popular that it was tripled in funding after just 12 days! Furthermore, it is estimated to have added 1.1% to the 3rd Quarter GDP and created or saved 60,000 jobs. The program was administered with only 5% overhead and it took effect only 30 days after being signed into law!
Finally, as for Mr. Mize’s contention the working class or poor suffered because of the increase in prices on used cars, the report makes clear that the lower tier of used vehicles ($5,000 or less)did not see an increase in average vehicle prices in the month following the program primarily because the trade-ins would not have appeared on used car lots anyway because they were mostly old and had high mileage. The report can be found here: http://www.cars.gov/files/official-information/CARS-Report-to-Congress.pdf
I am so thankful that Brett writes for The Bulletin. Thank heavens they have at least one conservative employee. More students than most people realize agree with Brett and his views, not everyone is taken in by our President’s smooth talk and big promises. It is easy to put a positive spin on almost anything, and Obama is famous for doing so. Thanks for reporting the facts Brett, and for making sure those of us who are conservative can still relate to the Bulletin.