So the cash for clunkers program is a success because it's running out of money already. Let's run through this thought exercise for a moment.

You get a "rebate" from the gov't for trading in an old car that gets crappy gas mileage for a new car with improved mileage. The old car then has it's engine destroyed.

It's not an environmental gain.  The car was already made, the environmental costs associated with the construction of a new vehicle far outweigh those of the gas consumption savings (unless the car was going to run for another twenty years or more).

It's a small win for the car companies right now.  Provided of course the economy rebounds significantly by the time the rebate is finished, and normal demand for vehicles returns.  Forecasts show a weak return is likely and nothing like the booms we've seen in the past decade.  So what happens is that demand won't return and the car companies will now have an even harder time pushing product because a large portion of their customer base has already purchased a new vehicle.

What about the consumers?  If you're driving a vehicle crappy enough to qualify in the first place it's likely not an expensive car and it's even more likely you're not the type of person with a lot of free cash to purchase a new vehicle in the first place.  So now you've "traded up" and have another monthly bill to pay.  How many of these people are going to find that extra expense too much to handle?   

So what's likely to happen?  In six months we'll see a large number of car loans default, the repo men will be in force in about nine months.  There's no longer a large base of cheap older cars in circulation at the car auctions because they were already destroyed.  So that vehicle that was probably worth $5K this summer and didn't qualify for a rebate for a trade in is going to be devalued a few more thousand dollars, because there's a glut of slightly used (1 year old) vehicles flooding the car lots.  Supply and demand.

If you're the kind of person who buys slightly used cars, I bet next year we'll be a fantastic time to buy a car, unless you want to trade your older car in.  If you're the kind of person who buys the cheapest vehicle you can, you'll find a lack of vehicles for a few months and then a sudden increase in cheaper vehicles that are probably better than anything you've been able to purchase before.

If Obama wanted to provide more work for the repo industry, than this bill is a rousing success. 

Here is my understanding of the program, feel free to correct any inaccuracies.  See link http://money.cnn.com/2009/07/29/autos/clunker_tips/?postversion=2009073013

In order qo qualify for the clunker program you must trade in a car that:


Is rated at or below 18mpg
Has been insured, licensed, and operated by you for at least the prior 12 months
Car must be less than 25 years old
Is traded in for a vehicle that gets at least 2 MPG better


In my opinion, the last factor is totally bogus.  If you trade in an 18-mpg clunker for a 20-mpg pickup truck, that's a travesty.  My thought is that the new vehicle purchased should have at least 26MPG.  Then you have a decent fuel economy improvement, at least ion theory there would be a desireable benefit.

Now the real problem is this.  According to NADA (If I recall the organization correctly) over the course of the next year, the clunkers program will really only increase the number of qualifying cars being traded in by maybe 20%.  But the incentive will be applied to ALL qualifying trades.  So... in essence... the government is paying $20,000 or so per INCREASED UNIT SOLD as compared to no program.  ::)

Therefore, I declare this program is a boondoggle fo sho.  Brought to you by the present-day "pinata party"...

^  I agree with both Chucky and LB. 

You try and try to dissuade people from the prevailing conservative opinion about government getting involved.  You try to say government doesn't crap up everything it tries to do...and then government comes up with a truly lame-o scheme like this. 

I'm now dreading what that healthcare bill might look like by the time it goes for a vote.  We'll prolly hafta buy insurance for our insurance!
http://www.inthe00s.com/smile/07/nut.gif

Decent idea, totally fubar implementation. Looking at the link lyricboy left, they alotted just 7.5 million for class 3 trucks - at $3500 per turn-in, that's not even 2200 vehicles.

My truck is class 2 and considered a clunker, but its BB value is well over $4500. Why trade it in at a loss?

If I traded in my truck for a $30k one that got 5 mpg more (a tall order for a work truck), I would have to drive it for 500,000 miles @$4/gallon gas just to break even with what I have now (a paid-for truck).

I don't get the 25 year limitation. Cars and trucks that old or older are all carbuerated, have minimal and very aged (read: ineffective) emissions control equipment, and are generally very un-green. Here in VA, any car over 25 years old is considered an antique, and they are very attractive to own due to lower costs.

istm the only people who would benefit from this program are those driving total pos and were going to get a new car anyway.

Ant

I wondered if cars over 25 years old were regarded as 'classic' and owners tried to limit the mileage.  :-\\

It's not an environmental gain.  The car was already made, the environmental costs associated with the construction of a new vehicle far outweigh those of the gas consumption savings (unless the car was going to run for another twenty years or more).

It's a small win for the car companies right now.  Provided of course the economy rebounds significantly by the time the rebate is finished, and normal demand for vehicles returns.  Forecasts show a weak return is likely and nothing like the booms we've seen in the past decade.  So what happens is that demand won't return and the car companies will now have an even harder time pushing product because a large portion of their customer base has already purchased a new vehicle.

What about the consumers?  If you're driving a vehicle crappy enough to qualify in the first place it's likely not an expensive car and it's even more likely you're not the type of person with a lot of free cash to purchase a new vehicle in the first place.  So now you've "traded up" and have another monthly bill to pay.  How many of these people are going to find that extra expense too much to handle?   


It's not even a win for the recycler - scrap steel isn't worth much, there are only two tons of it per car, and after the drivetrain is pulled from the car, there's that much scrap not available to be recycled.  Subtract the hour or so of labor involved in draining the fluids and rendering it safe for the junkyard, and the recyclers barely break even. 

The only winner here is the car dealer, who just got thrown a lifeline in the form of a lot of unanticipated traffic. 

The irony is that - now that the programme is out of money after four days - most of that traffic being driven to dealer lots is going to be told "Sorry, your car doesn't qualify, and even if it did, the programme's out of money... but we can still work out a deal, just not a $4500 deal.  Come into my office..."

If I were a conspiratorial type, I'd say it was a bone thrown to the surviving car dealers after Government Motors shut down a bunch of redundant dealers.  But that would have required forethought.

Nope, this is a cluftersark on every level.  If you wanted to do something to help people out of work, you'd have given a $4500 rebate on trade-ins, and not crushed the cars, but would instead have handed the otherwise perfectly-functional automobiles over to charitable organizations, who could then give the clunkers away to families who could use said clunkers to get to/from their jobs.

In the programme's defense - if ChuckyG's thesis is correct that the loans will eventually go into default, then my post stands.  What I think is really going on is that the administration's gambling.  Get enough of a short-term boost in auto sales by shredding a bunch of old cars and paying people $4500 to buy a new one, and you just might give the Big Three enough of a short-term boost in sales to convince the rest of the world that the recession's over.  If that gamble pays off, then it really does pay off.  By the time the loan's about to go into default, Joe Sixpack will have found a job, and will be able to make the payments.  The odds aren't great, but they're no worse than they were three months ago, and it's a hell of a lot cheaper than $700B.  (Especially considering it's the $700B - via several layers of intermediaries - that's backing the loans in the first place... :)

In the programme's defense - if ChuckyG's thesis is correct that the loans will eventually go into default, then my post stands.  What I think is really going on is that the administration's gambling.  Get enough of a short-term boost in auto sales by shredding a bunch of old cars and paying people $4500 to buy a new one, and you just might give the Big Three enough of a short-term boost in sales to convince the rest of the world that the recession's over.  If that gamble pays off, then it really does pay off.  By the time the loan's about to go into default, Joe Sixpack will have found a job, and will be able to make the payments.  The odds aren't great, but they're no worse than they were three months ago, and it's a hell of a lot cheaper than $700B.  (Especially considering it's the $700B - via several layers of intermediaries - that's backing the loans in the first place... :)


I have to say I had the same thought after I wrote my initial post, that maybe Obama is rolling the dice here to see if the short term boost is enough to snap the recession long enough so that consumer and investor confidence returns.  The market already had it's most successful July in 20 years despite several indicators that are less than stunning.  After the past, oh 30 years, I've never seen anything approaching that level of cleverness for anyone in politics, so I have a REAL hard time believing it could be the reason.

The House just allocated another $2 Billion for the program.  It's all rather odd to me that they could have pushed 200,000 cars already (that would be at $4,500 per rebate to equal a billion, and not all rebates are for that much).  Everybody who needed a car must have just waited until they knew the rebate program began. I smell a bit of fraud here.

The House just allocated another $2 Billion for the program.  It's all rather odd to me that they could have pushed 200,000 cars already (that would be at $4,500 per rebate to equal a billion, and not all rebates are for that much).  Everybody who needed a car must have just waited until they knew the rebate program began. I smell a bit of fraud here.


heh... a google search for "1000000000/4500" brings up a few web pages already of people questioning the program as well.

I have to say I had the same thought after I wrote my initial post, that maybe Obama is rolling the dice here to see if the short term boost is enough to snap the recession long enough so that consumer and investor confidence returns.  The market already had it's most successful July in 20 years despite several indicators that are less than stunning.  After the past, oh 30 years, I've never seen anything approaching that level of cleverness for anyone in politics, so I have a REAL hard time believing it could be the reason.

The House just allocated another $2 Billion for the program.  It's all rather odd to me that they could have pushed 200,000 cars already (that would be at $4,500 per rebate to equal a billion, and not all rebates are for that much).  Everybody who needed a car must have just waited until they knew the rebate program began. I smell a bit of fraud here.


Of course we may also see a "hangover effect" in that once the CARS program has expired, nbody buys a car because CARS simply "pulled up" car sales that were gonna happen anyway.

I wonder how much of that $2 billion is going to pay for foreign cars? ???

I am watching CNN and listening to all the car dealers and congressmen fawning over this "vital program that is helping the auto industry".

Gee, when do we see a vital program to help the pleasure boat industry, the steel industry, the video rental industry, the farming industry, the ship building industry, and the chat room sortware industry?

The more I think of the idea of the government fronting people money to turn in a gas hog for a truck that gets only 2MPG better, (and possibly foreign made, to boot) the more I now know this is an abuse of the people's hard earned money.

The money for all of this, you know, is yours... it came from your taxes (or future taxes)

I actually think its a good progam "the Cash For Clunkers" the only thing is the government ran out of money in the first week of the program but now the government is going to continue the program. I mean cars from the 80's-early 90's(1990-1995) are being traded in and destroyed. I know a guy at work he had and early 90's Ford F-150 Pickup(maybe 1990-1992) and he traded it in for a 2010 Toyota Prius with the "Cash For Clunkers Program".

Dang, I'm surprised I'm for a government program since I'm not for the government with the public option insurance for health care if its going to be at medicare rates.

So the cash for clunkers program is a success because it's running out of money already. Let's run through this thought exercise for a moment.

You get a "rebate" from the gov't for trading in an old car that gets crappy gas mileage for a new car with improved mileage. The old car then has it's engine destroyed.

It's not an environmental gain.  The car was already made, the environmental costs associated with the construction of a new vehicle far outweigh those of the gas consumption savings (unless the car was going to run for another twenty years or more).

It's a small win for the car companies right now.  Provided of course the economy rebounds significantly by the time the rebate is finished, and normal demand for vehicles returns.  Forecasts show a weak return is likely and nothing like the booms we've seen in the past decade.  So what happens is that demand won't return and the car companies will now have an even harder time pushing product because a large portion of their customer base has already purchased a new vehicle.

What about the consumers?  If you're driving a vehicle crappy enough to qualify in the first place it's likely not an expensive car and it's even more likely you're not the type of person with a lot of free cash to purchase a new vehicle in the first place.  So now you've "traded up" and have another monthly bill to pay.  How many of these people are going to find that extra expense too much to handle?   

So what's likely to happen?  In six months we'll see a large number of car loans default, the repo men will be in force in about nine months.   There's no longer a large base of cheap older cars in circulation at the car auctions because they were already destroyed.  So that vehicle that was probably worth $5K this summer and didn't qualify for a rebate for a trade in is going to be devalued a few more thousand dollars, because there's a glut of slightly used (1 year old) vehicles flooding the car lots.  Supply and demand.

If you're the kind of person who buys slightly used cars, I bet next year we'll be a fantastic time to buy a car, unless you want to trade your older car in.  If you're the kind of person who buys the cheapest vehicle you can, you'll find a lack of vehicles for a few months and then a sudden increase in cheaper vehicles that are probably better than anything you've been able to purchase before.

If Obama wanted to provide more work for the repo industry, than this bill is a rousing success. 
No you have to have a job if your gonna pay monthly payments on a car and the salesman who you are dealing with asks if you have a job to pay the payments. If you are gonna by the car outright they don;t ask if you have a job.

A girl in NJ since I am from NJ I read today in the newspaper she was an unemployed grad student (29 years old) and she traded in a 1991 Infiniti for a 2009 Honda Civic with the cash for clunkers program.

Of course we may also see a "hangover effect" in that once the CARS program has expired, nbody buys a car because CARS simply "pulled up" car sales that were gonna happen anyway.

I wonder how much of that $2 billion is going to pay for foreign cars? ???
Thats what the Domestic Big 3 used to do in the early to mid 2000's put monster rebates or do special programs on their cars so all the people would come in in droves all at one time. Once the Domestic Big 3 pulled those big rebates off their cars showroom traffic and sales would come to a halt. Does anybody remember the 0% finacing that GM and Ford did after 9/11, the GM summer employee pricing program of 2005, and the August and Septmber 2008 GM employee pricing program?

Its seems like if GM did one of those special programs Ford or Chrysler would follow. Chrysler had an employee pricing program in summer 2007 and it didn;t do well and GM and Ford didn;t follow them with a program of their own.

I am watching CNN and listening to all the car dealers and congressmen fawning over this "vital program that is helping the auto industry".

Gee, when do we see a vital program to help the pleasure boat industry, the steel industry, the video rental industry, the farming industry, the ship building industry, and the chat room sortware industry.

The more I think of the idea of the government fronting people money to turn in a gas hog for a truck that gets only 2MPG better, (and possibly foreign made, to boot) the more I now know this is an abuse of the people's hard earned money.

The money for all of this, you know, is yours... it came from your taxes (or future taxes)
Thats one of the things I don't like about the program that of your vehicle only gets 2 mpg better than the vehicle your replacing you still get a government voucher I don;t think thats right either. Still like I said in a previous post on this thread we are still getting old cars off the road which is a good thing. :)

Well car dealers are suffering this year(of all makes and models) with a few expections I mean this years rate for selling cars in the US is the worst since the early half of the 1960's. Every car company since the recession began has been in red ink with the expection of Honda and Hyundai, even Toyota is losing billions of dollars in this current sales enviroment. I guess Honda and Hyundai control their costs better than Toyota. :)

It's too bad that you can't use the vouchers to buy new motorcycles, I'd totally dump the Crown Vic and get a Harley.  ;D

Well I was watching the CBS Evening News, and they reported that 53% of the cars bought under the clunkers program are FOREIGN MADE.

Nice work Washington... you just spent my tax dollars to help foreign automakers...

It's too bad that you can't use the vouchers to buy new motorcycles, I'd totally dump the Crown Vic and get a Harley.  ;D


I think that's a great idea.  They should allow it.  A motorcycle -- even a big hog -- is going to burn heck of a lot less gas than the Crown Vic.  Plus it'll make the insurance companies happy.
;)


Well I was watching the CBS Evening News, and they reported that 53% of the cars bought under the clunkers program are FOREIGN MADE.

Nice work Washington... you just spent my tax dollars to help foreign automakers...


Exactly.  We can't get a meaningful reform of our healthcare system, but we can sure get a big fat taxpayer subsidy for Hyundai.  It's a jucking foke!
::)

Well I was watching the CBS Evening News, and they reported that 53% of the cars bought under the clunkers program are FOREIGN MADE.

Nice work Washington... you just spent my tax dollars to help foreign automakers...
What do you mean the Honda Accord, Toyota Camry, and Nissan Altima are all made in the US. People work in the Toyota, Honda, and Nissan plants here in the US. Plus, you don;t think the Domestic Big 3 didn;t like the cash for clunkers program? I'm sure they all loved it I mean after all 47% of business of the clash for clunkers business went to the Domestic Big 3. Ford Motor Comany was one of the few automakers to report a sales increase for sales in the month of July of 2009 vs the month of 2008. Ford Motor Company reported the most US market share gain the month over year increase(July 2009 vs July 2008) by having 15.9% of the US Market last month vs 13.7% of the US market in July 2008. Thats something Toyota, Hyundai, and Honda couldn;t even match in last months of auto markers market share.

These are corporations based in Japan and South Korea regardless of where the parts are made.

More to my point, I find this an empty gesture that maintains our dependence on the private passenger car -- which WILL have to be phased out as the world's petroleum reserves diminish -- under the guise of reducing carbon emissions, which it will do, but to an utterly insignificant degree.  Thus, it ends up being a subsidy to auto dealers, auto parts manufacturers, and automotive brands.  At the same time, it helps out big petroleum as people fill up for extra Sunday drives in their spiffy new roadsters. 

We need to lessen our dependence on the private passenger car, which means investing in mass transit infrastructure, not any of the above-mentioned. 

Furthermore, the majority of the population is not even benefiting from the scrappage program, which is a temporary measure set to die in a week. 

What would benefit the majority of us was healthcare reform, which is being set up for failure.  After all, if you would benefit from healtcare reform, you are not rich enough to matter.  So...we get more bread and circuses while we continue our slow-boil into right-wing totalitarianism. 

These are corporations based in Japan and South Korea regardless of where the parts are made.

More to my point, I find this an empty gesture that maintains our dependence on the private passenger car -- which WILL have to be phased out as the world's petroleum reserves diminish -- under the guise of reducing carbon emissions, which it will do, but to an utterly insignificant degree.  Thus, it ends up being a subsidy to auto dealers, auto parts manufacturers, and automotive brands.  At the same time, it helps out big petroleum as people fill up for extra Sunday drives in their spiffy new roadsters. 

We need to lessen our dependence on the private passenger car, which means investing in mass transit infrastructure, not any of the above-mentioned. 

Furthermore, the majority of the population is not even benefiting from the scrappage program, which is a temporary measure set to die in a week. 

What would benefit the majority of us was healthcare reform, which is being set up for failure.  After all, if you would benefit from healtcare reform, you are not rich enough to matter.  So...we get more bread and circuses while we continue our slow-boil into right-wing totalitarianism. 
Why are you blaming the right wing and using healthcare in the same sentence as a failure? The Denocrats have the house, the senate, and the president. The republicans don;t want any government inolvement in healthcare except medicare and thats it. The Republicans can;t even phillibuster anything in the senate. Its the left wing that wants government run health care.

To get to your parts made point you look to be a "buy American car person"  you have to admit the Domestic Car Makers for 2.5 decades made some really dumb mistakes. I;m not saying the Japanese Makers didn;t makr any mistakes during that past 2.5 decade span(1980-2005/2006) but alot less mistakes than their Domestic Big 3 rivals. The Koreans have made huge gains in the past decade with their cars.

You say the passenger car has to be phased out what about electric cars for the future? I cannot use a train to get to work because a train goes nowhere near my 2 workplaces that I work during the week.  Whats wrong with people buying a new car thats more fuel efficient that that clunker that they were previously driving?

I personally think it's good for the auto industry, but I think that we could all spend 4,500 pretty well if given to us in a form that cash cannot be taken off of, like government issued visas that could only be used for spending in the economy . . .that way it's not all going to one industry, and it benefits everyone, plus people really can't put it into savings--especially if it had an expiration date. . .it's like "Use this or lose it, buy some stuff"

I personally think it's good for the auto industry, but I think that we could all spend 4,500 pretty well if given to us in a form that cash cannot be taken off of, like government issued visas that could only be used for spending in the economy . . .that way it's not all going to one industry, and it benefits everyone.


The problem, of course, is when the government "gives" anybody $4500, it is really we taxpayers who are doing the giving.

The problem, of course, is when the government "gives" anybody $4500, it is really we taxpayers who are doing the giving.


I think I've paid enough over that past few years to get $4,500 back, they can afford to give it to the auto people. . .and the bankers afterall--which was also our money--just let me keep my taxes instead, it'll help me a lot more than Cash for Clunkers, especially since neither of my cars qualified (My 94 Geo got 40 MPG, and my Kia my mom gave me gets even more)

Well I was watching the CBS Evening News, and they reported that 53% of the cars bought under the clunkers program are FOREIGN MADE.

Nice work Washington... you just spent my tax dollars to help foreign automakers...


Exactly. Great work, expand that trade deficit!!

The republicans don;t want any government inolvement in healthcare except medicare and thats it.


And they didn;t want that to begin with!

I would love to this with clunkers!

http://www.youtube.com/watch?v=2ggPQG6wIEA

or this!

http://www.youtube.com/watch?v=qxah0ZZtyiw

;D

or this!

http://www.youtube.com/watch?v=WxeVoXc84J0&feature=related

The House just allocated another $2 Billion for the program.  It's all rather odd to me that they could have pushed 200,000 cars already (that would be at $4,500 per rebate to equal a billion, and not all rebates are for that much).  Everybody who needed a car must have just waited until they knew the rebate program began. I smell a bit of fraud here.


I wouldn't call it fraud, I'd call it luck.  You had to own the car for a year to take advantage of the lottery.

It's the Broken Window Fallacy writ large:  The government will give you $4500 of other people's money to throw a rock through a $1000 plate glass window, and iti doesn't matter whether you buy a $10000 replacement from American Windows Inc. (Hecha in Mexico) or Fujiyama Windowta 3000 (Assembled in the FWUMMI plant in Taxbreakansas, USA). 

(disclaimer:  I believe that whatever the 50-year effects of CO2 emissions might be, there's a 3-5 year economic loss to any individual who scraps a perfectly functional automobile that is owned free-and-clear, in exchange for a more fuel-efficient vehicle that's financed.  The Wikipedia footnote on the Broken Window Fallacy as it pertains to the Cash for Clunkers programme states the opposite assumption.  That's the assumption the government has taken.  I dispute it, because the programme isn't designed to solve the problem of AGW, it's designed to provide a short-term revenue boost to the auto/autoparts manufacturing sector.  If you wanted a programme to solve AGW via maniuplating the auto market, you'd offer the $4500 subsidy to consumers who purchased electric-only vehicles, and you'd use the subsidy to fund solar, nuclear, and wind power.)

To get back to broken windows, if your window was old and cracked and pitted, and you were going to replace it this week, congrats!  You won the lotto.  If your window was just a little dirty, and you smashed it anyways, you didn't really win anything, even if you think you did.  The same economic effect could have been had by issuing $4500 checks to everyone whose social security number ended in a randomly-selected two-digit combination.

You pays your taxes, you takes your chances.

Exactly. Great work, expand that trade deficit!!
What trade deficit?

I wouldn't call it fraud, I'd call it luck.  You had to own the car for a year to take advantage of the lottery.

It's the Broken Window Fallacy writ large:  The government will give you $4500 of other people's money to throw a rock through a $1000 plate glass window, and iti doesn't matter whether you buy a $10000 replacement from American Windows Inc. (Hecha in Mexico) or Fujiyama Windowta 3000 (Assembled in the FWUMMI plant in Taxbreakansas, USA).  

(disclaimer:  I believe that whatever the 50-year effects of CO2 emissions might be, there's a 3-5 year economic loss to any individual who scraps a perfectly functional automobile that is owned free-and-clear, in exchange for a more fuel-efficient vehicle that's financed.  The Wikipedia footnote on the Broken Window Fallacy as it pertains to the Cash for Clunkers programme states the opposite assumption.  That's the assumption the government has taken.  I dispute it, because the programme isn't designed to solve the problem of AGW, it's designed to provide a short-term revenue boost to the auto/autoparts manufacturing sector.  If you wanted a programme to solve AGW via maniuplating the auto market, you'd offer the $4500 subsidy to consumers who purchased electric-only vehicles, and you'd use the subsidy to fund solar, nuclear, and wind power.)

To get back to broken windows, if your window was old and cracked and pitted, and you were going to replace it this week, congrats!  You won the lotto.  If your window was just a little dirty, and you smashed it anyways, you didn't really win anything, even if you think you did.  The same economic effect could have been had by issuing $4500 checks to everyone whose social security number ended in a randomly-selected two-digit combination.

You pays your taxes, you takes your chances.


Agreed.

It's starting to annoy me how the liberal commentators, such as Ed Schultz and Rachel Maddow, are sticking up for the Obama Administration on this one.  Are these people blind?  It's such a bunch of bullcrap.  It reminds me of the scene in "Blazing Saddles" where the governor takes the box of paddle balls and says, "Hand these out to some of the boys in lieu of pay!"
::)

What trade deficit?


For some time now, the United States has had a rather large negative balance of trade. I was making the observation that subsidizing foreign cars doesn't help this at all.

For some time now, the United States has had a rather large negative balance of trade. I was making the observation that subsidizing foreign cars doesn't help this at all.


Maybe he meant "what is a trade deficit?"

;)

Maybe he meant "what is a trade deficit?"

;)


I feel you may be correct.