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The Reality of Cash for Clunkers

Unfortunately, $1 Billion is thrown around with such negligence that the cash for clunkers program doesn’t even make the average tax-payer bat an eye.  I had previously disclosed the details on this program in a previous post and the reason I did that was because it is a good deal for those who want a new car but are sitting on an old jalopy – pure and simple.  That does not mean that I agree with the program.  I just merely feel that we need to work to the best of our abilities with the cards that we are dealt while critiquing those who are making massive fiscal errors.

What is cash for clunkers for?  The naive response from the preliminary proponents would be: “it helps individuals, it helps automakers, and it’s good for the environment because it gets crappy cars off the road!”  I call BS on all of it.  Cash for clunkers is a subsidy for the automakers which also perversely helps out the middle and upper class who can afford a new car and happen to have an insured jalopy or a jalopy that a teenager is driving.  It would be interesting to see the actual statistics, but I would venture a guess that the majority of this $1B (now being considered for $3B total) is not going to the lower working class individual because I bet A) he probably has more things to worry about besides getting a new car and B) even if he did want a new car, he wouldn’t be able to scrape together the cash or get a bank loan to purchase it.

Since this program is supposed to be so helpful to the environment, each “clunker” turned in is destroyed.  The engine is seized by running some silica and other dastardly things in the engine until it freezes up – all so that these gas guzzlers never touch the pavement again.  What if you took these cars and gave them to those below poverty?  Wouldn’t that give them more job opportunities if they were able to travel to a work site?  What about giving these clunkers to impoverished countries?  These clunkers are not going to fix the world’s emission problems and it seems like a really silly place to start.  Let’s work on shutting down some dirty (non-scrubbing) coal power plants and open up a few nuclear plants?

Let’s just see how many cars sell once the cash for clunkers program ends.  I just hope that the automakers are not stupid enough to start producing more cars because they see a spark in demand.   I would just like congress to ask the 37 million Americans (children included) who are living below the poverty line if they would rather have the $3B disbursed to them in cash ($80 per head).  I think I know the answer.

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Continuing the Discussion

  1. Continued Pressure on the Consumer – SurlyTrader linked to this post on August 13, 2009

    […] the strength of the American Consumer.   Neglecting temporary boosts from government sponsored cash for clunkers programs, I do not believe that is going to be the case this time.  Following the greatest personal wealth […]

  2. The True Cost of Government Subsidies – SurlyTrader linked to this post on September 1, 2009

    […] came out for August at 14.1M cars.  Last month came in at 11.3M so we so quite a bump due to the Cash for Clunkers program.  The real question is: how many cars did we actually incentivize the public to buy because of the […]



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