The idea of the program was to give an incentive of up to $4500 for people to trade in their gas-guzzling old cars toward getting new, more
fuel-efficient cars. The US government funded the program, which was intended to run through November.
How has it worked out? How wise are politicians when they intervene in business?
The dealers are frustrated with the paperwork. They report a single sale under this program takes about five hours to complete all the forms.
Some car owners with poor mileage cars are frustrated, because their cars don't qualify. Suppose you own a car of which the government test model got 20 mpg when it was evaluated. Your car, in real life, gets twelve mpg (perhaps the fuel injectors do not all function optimally, or one of the spark plugs has trouble getting fouled with oil). In REAL LIFE, this is a car that gets bad mileage and should be replaced. But, government and politicians don't conform to real life--in their imaginary world, which they look up in a book, the car doesn't qualify for the financial help.
The law requires that the engines of the cars and trucks traded in be destroyed (by running them without oil until the engine seizes up, with a chemical put in instead of oil). What a shame, when there are hundreds of thousand, perhaps millions of people who cannot afford to buy a car, but they need a car to become employable. If these cars could have been given to them, they would have had a chance--but, that's not what the program is for.
Normally, the poor, who can hardly afford a car, buy a vehicle from its third or fourth owner. Perhaps they can only afford to drive when they must--to work, to the laundromat, and to buy groceries. When the older cars are destroyed, they are not available to the poor who can only afford $1000 or less for a vehicle. They are getting a rotten deal.
Now, the "Cash for Clunkers" program is suspended, because the money is thought to have run out. The government is warning the public not to count on actually getting the money that the government promised. Do you notice a difference between the present date, and the month to which the program was supposed to extend? Do you think it might indicate that the politicians are too stupid to plan such an operation?
What do you suppose will happen to people who have turned in their older cars (and so the cars have been destroyed) if the government payment doesn't come? Or, if the car dealers have signed off on the buyer owing a certain amount (since the car dealer expected government reimbursement for $4,500), what will they do? What if they have sold 100 cars on this program, and the government money allocated for the program was already spent?
Some car companies have sold cars with the promise that they will take over the payments for up to a year if you lose your job (because they thought that people were unwilling to buy because of job uncertainty). How many people will lose their jobs, with the result that the car companies will be MAKING PAYMENTS TO THEMSELVES for a year? How can they make any profit doing that?
This is a horrific mess. But, it could be worse--at least the government is not screwing up health care for most of the general public. Government incompetence ought not be allowed to kill us.
What do you think of "cash-for-clunkers"? Did you expect it to work out better than it has? Are you surprised when politicians dream up programs that have unforeseen problems? Is it any wonder that the money ran out months ahead of time?
De ja vous!
A similar programme has been a success over here in as much as there are more old cars off the road and more new cars being sold.
scrappage and how it works
However the price of cars has apparently been hiked up so that those who did not have older cars are now paying more which does not seem fair at all.
Still, it should have been a continuation of that thread, then, at least, there would have been some continuity.
However, once there is a thread about cash for clunkers/scrappage put into existence by, say, scholar that thread should be easy enough for
scholar to add on to?
We're not saying don't tell us more about this "interesting topic", just could we have them all in the one thread rather than starting multiple threads about one thing.
RW started one thread for photos of flowers. That seems to be going quite well as he keeps adding in to the one thread. I'd also guess that it gets more interest because it is in the one place too, but in any case it is certainly more coherent.
I had not remembered that I had a "cash-for-clunkers" thread already started. I did know I had said something about it, but I thought I had done so
under the broader topic of the harm done to the US when the government did not allow the auto companies to go through normal bankruptcy procedures,
with the result that teachers, policemen, and firefighters whose pensions were invested in the car companies lost the money that was supposed to
support them in old age.
I thought the short-sightedness of the politicians in the clunkers program deserved attention because their miscalculation is so extreme. The program started on Monday, and ran out of money in four days, when it was supposed to last to November. So, the money lasted approximately one day for each month it was supposed to last.
If US government calculations for health care are similar, that would mean that money the government thinks should pay for health care for 90 years would instead run out after three years. Don't count on the government having any money left for your health care, after you start to lose your baby teeth!
Or, to look at it another way, when Obama says the government will pay for the program by increasing taxes $x, figure it will acutually be necessary to raise them 30 times that much.
Politicians in favor of the cash-for-clunkers program have told the car dealerships to continue making the deals, that the government would take the
necessary steps to increase funding for the program.
The US House of Representatives has passed it, but the Senate is debating it today. If they fail to vote for more funding, the program will be suspended.
Some information that has come to light from discussion on call-in radio shows:
Some aspects of the program make no sense. If you turn in a car that got 17 mpg to buy one that gets 23 mpg, you qualify for the government money. But, if you turn in a car that gets 20 mpg to buy one that gets 40 mpg, you get nothing, even though the savings in gasoline consumption is much greater.
People may be buying new cars they cannot really afford, because the government help encourages them to do so. When they are unable to make the greater monthly payments, the cars will be repossessed. They will have no car, and the engine of the car that was turned in for trade has been destroyed. There will be fewer used cars available to buy. (Marymary said the price of used cars goes down in such a program. I don't understand why this would be, since fewer are available.) The people who need a car to get to work will be in danger of losing their jobs.
A long-time car salesman called in to say that, when a new car is sold, the dealership and salesman gets very little cash profit. Almost all of the real profit comes from the money that comes in when they sell the used car which was received as a trade-in. But, in the cash-for-clunkers program, that car is destroyed! Leave it to the government to destroy the part of the business that makes money, and declare the program a success!
1--Many people have bought new cars, most of which are from companies based in other countries. Japan and Korea are happy. It's amazing how politicians will brag about a program which sends money from
American taxpayers to other countries.
2--The timing of the cash-for-clunkers program has undercut the bargains that car dealers usually give at this time of year, as this model year nears its end. The dealers have taken the attitude, "You're already getting thousands from the government. Why should we give any discounts?"
3--People now shopping for new cars are finding that there are not many left to buy which are eligible for the program. The new car must get much better mileage than the older one (I think the improvement must be 9 mpg, but I'm not sure). If you need a large vehicle because you have a large family, or you need four-wheel-drive for snow and hills, or you need to be able to tow a trailer or boat, tough luck for you! If you already drive a car that gets good mileage (like my Geo Prizm ), you aren't likely to find a car you want that is that great an improvement, either.
4--Since the dealers are not offering discounts (because of the government money in the program), the people who need a new car in the natural course of events, but cannot qualify for the program, get a bad deal.
5--Since the trade-in engines are being destroyed, there is a shortage of used cars at the dealerships. Consequently, the prices are going up for USED cars. The poor are getting a bad deal. If you are poor, and don't have a clunker to trade in, you're harmed by this.
(Marymary informed us that elsewhere, this had not been the case. If used car dealers were discounting their cars to compete for customers who would otherwise go for new cars, I could understand lower prices for a time. That isn't happening in the U.S.)
If a successful program harms the economy and the people in several ways, is it really a success? Perhaps it would be better if the harmful programs would fail.
The feature that people like about the program is getting $4500--but, they can only get it if they meet all the government requirements, and can only get it toward a car. If everyone were given a tax credit for $4500, they could use the money for whatever they wanted or needed. Historically, lowering taxes stimulates the economy and results in more revenue coming in to the federal government. (I don't know if $4500 is the best number--I just chose it, because it is the largest car rebate the government is giving.)
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Redwolf, if you don't have anything to say that adds information or advances the topic here, you'd do better to post on a topic where you can make a
I do not welcome your harrassment.
What a coincidence, the British members of this board don't "welcome" your constant posts slamming the U.S. President and/or the present
Hasn't stopped either of us, has it?
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Scholar, I have a broken middle finger on my right hand right now.
It is splinted and heavily wrapped. It still hurts like heck.
Considering I'm trying to write three news stories and work on 30 images for this week's paper while not being able to effectively work a mouse, be grateful I don't take a photo of my right hand and post it as a reply for the foreseeable future.
How is THAT for "advancing the topic?"
To whom were you showing that middle finger towhen it got broken?
Maybe they should buy, you, RW, sounds like you are a bit of a clunker, now.