Economics

Cash for Clunkers Is Back, Baby!

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Out of money? Not the government's cash for clunkers program! We're the government, dammit, have some more! So Congress declares today:

The House approved a bill Friday afternoon to provide $2 billion to continue the federal government's week-old "cash for clunkers" program, which has proven so popular with consumers that it was almost out of cash. The 316-109 vote split Republicans but attracted the support of nearly every Democrat in the chamber. 

The money will come from funds in the already-passed economic stimulus package that were intended for energy loan guarantees. Congress will seek to replenish the energy program at a later date. 

Thus a program that sees economic progress in taking actual working objects that meet human needs (even if at less than 18mpg) and destroying them in exchange for some inked paper will stagger on. While thusly staggering, it also sets in essence a $4,500 price floor in what would probably have been the cheapest used cars on the market, thus pricing the less well off out of the car market entirely.

There are so many more totally useful things the Feds could buy and destroy in order to create the "stimulus" of forcing people to use resources they (or the government, which of course gets the opportunity thanks to the unbacked dollar to pretend that it has no tradeoffs; note that Congress intends to "replenish" the energy program it dinged for this cash later) could have used for other things to replace them. We could enjoy "bucks for bungalows" to re-inflate housing; "shekels for stereos" to get the electronics business zapping; "moolah for motorboats" to get our seas swelling with the sweet sound of economic growth. Well, I'm sure they are more experienced in Washington at coming up with these sort of ideas than I am. 

Some interesting details of the program, for SUV owners wanting to trade up:

If you're trading in a basic truck, van or SUV—in other words, not a heavy-duty truck or big passenger van—you can get a $4,500 credit for purchasing a new truck or van with fuel economy that's better by 5 mpg or more. You can get a $3,500 credit for a 2 to 4 mpg improvement….

If you're trading in a bigger truck—a truck with a wheelbase of 115 inches or a van with a wheelbase of 124 inches—you're eligible for a $4,500 credit for buying a similar vehicle with a 2 mpg improvement or a $3,500 credit for buying one with a 1 mpg improvement.

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  1. what’s the carbon footprint of making new cars vs driving old cars that get 4-5 mpg less

  2. I’m seriously considering getting in on this. It’s my fucking money anyway.

  3. Exactly, and how are banks going to treat these paper losses. And if I hear the phrase “cash for clunkers” one more time, somebody is going to get hurt.

  4. Good idea in principle. I was wondering how we were gonna get people out of low mpg cars at a pace necessary to address carbon emissions. The standards are way too low at the moment, though.

    But a single program that offers economic stimulus, provides a boost for an industry desperately in need of one, and addresses carbon emissions? There have been worse ideas.

  5. “what’s the carbon footprint of making new cars vs driving old cars that get 4-5 mpg less”

    Do you think the government really knows or cares? The whole CARS program is a charade that is being used to bribe the American people into liking Obama and the Congressional Democrats. Really, in many cases, the cars being scrapped for the CARS program are worth more than the $4500 the gov’t limits us to.

  6. Tony, though you are merely a sockpuppet, I’ll direct your ignorant ass to the broken window fallacy anyway.

  7. Ep, I thought about trading my 2000 Expidition but I will be hoarding any vehicle that can haul seven people.

  8. But a single program that offers economic stimulus, provides a boost for an industry desperately in need of one, and addresses carbon emissions?

    Shit yeah.

    Everybody knows that people are the most carbon-emitting creatures on the planet, and the axe industry needs a stimulus.

    Therefore I am proposing my “Smackers for Scalps” initiative.

  9. Cash for clunkers was totally misguided and unfair. How many times does the government need to reward idiots rather than people who made smart decisions.

    Instead of the current fiasco, the government should have sent every American who owned a 30+ mpg car a $10,000 voucher for a new car to be purchased before the end of the year. These people, of course, would then sell their fuel-efficient used car into a market that is hungry for them, while purchasing another new gas-sipper.

    Nothing pisses me off more than thinking if I had bought the LEAST fuel-efficient variation of my current vehicle, the government would be handing me $4500 right now. I get screwed because I bought the most efficient. Boy, that sure makes sense.

  10. aw, Chad! you poor baby! this is your first step towards learning why we are libertarians.

  11. I find it amusing that about half of the Republicans voted for this. The reason this country is awash in debt and why we are giving the government more and more control of our economy is because there is no major party that stands up against it. The Republicans say again and again that they are for small government, but their actions belie those words. Keep in mind that it was under a Republican president and 6 years of a Republican controlled Congress that our deficit and annual debt exploded. Yeah, it’s worse now, but the American public does not trust the GOP to keep their word about their financial principles and does not like their views on cultural issues. If the GOP adhered to their principles, then there would be an effective opposition that could offer the public another choice and force the Democrats to modify their outrageous spending habits, but as it is, there really is no viable option (unless the GOP becomes a marginalized regional party and the Libertarian party steps up and becomes the 2nd main party- one can always dream!).

  12. My family has recently been beset with some misfortunes. We are down to 1 car. It really would benefit us if we could get our hands on one of these “clunkers” they are sending to the recycler. Such a damned waste.

  13. The thing that sucks about this is that it may dry up the old truck market. I was hoping to purchase a second K-5 Blazer soon but now I don’t know if I can get one for what I’m willing to pay. Hell, I’ll settle for an old Bronco if I have to.

    Fuckin’ government screwing with my plans.

  14. Chad,

    Energy efficient cars are more expensive. People don’t own low mpg cars because they’re stupid, they own them because they’re cheaper and there has not been an incentive to buy the better cars outside of having enough concern about the environment.

  15. Car dealers are just going to raise the price of cars because of this. Like colleges & healthcare once “free” government money gets involved the price of things skyrocket..

  16. So, I just glanced at this, but I think it kinda sucks. You don’t get trade in value because your old car has to be reduced to atoms that it may never bespoil gaia again. That makes a $4,500 credit for an Expedition, not such a good idea, right?

  17. So I can’t trade in my 1995 Accord, eh? Something wrong with not giving me largess for driving a fuel-efficient car.

  18. Tony | July 31, 2009, 6:02pm | #
    Chad,

    Energy efficient cars are more expensive. People don’t own low mpg cars because they’re stupid, they own them because they’re cheaper and there has not been an incentive to buy the better cars outside of having enough concern about the environment.

    Really? My 2WD manual 4-cylinder was sure a hell of a lot cheaper than the 4WD automatic 6-cylinder.

    How, pray tell, does a bigger engine, a bigger body, etc make a car cheaper?

  19. I’ve got a friend at work that was going to trade in his ~early 90’s full size, 2WD (standard trans) pickup with this deal. He had the +2mpg needed and was negotiating with dealers.

    He then found out that the official rating system for this program adds 2mpg to his pickup if it has a FUCKING SHIFT LIGHT, bringing it up to 18mpg. He says it didn’t get that under any circumstances when it was brand new. I exclusively drive standard and I have never, nor have I ever known anybody that has, paid attention to the shift light. If you shift when it tells you to under moderate acceleration you will almost stall the vehicle. They are shit worthless.

  20. wait, they destroy the traded-in cars?

    Really?

  21. “Energy efficient cars are more expensive. People don’t own low mpg cars because they’re stupid, they own them because they’re cheaper and there has not been an incentive to buy the better cars outside of having enough concern about the environment.”

    I got to agree with Chad here that makes no sense at all. People by big vehicles, because they like big vehicles.

  22. TOA,

    Only in a decadent country like a America would a government pay to destroy a perfectly good automobile. Could you imagine how this looks to some poor person in Africa. They would love to have a 15 year old car or truck, but can’t afford it.

  23. Incredible – I want to hear Chad go on and on about “cheap Chinese crap” and how wasteful we all are, and simultaneously defend the destruction of perfectly functioning cars.

  24. wait, they destroy the traded-in cars?

    I believe that certain parts are salvaged (as spares for clunkers not traded-in — how ’bout that), but that the engines are destroyed.

    Yes, I know — citation needed.

  25. I’d really liek to see someone investigate fraud in this problem.

    I’d be welling to bet a large number of people are simply buying old beaters from the junkyards, and trading them in for cash.
    Actually, I’d bet a lot of used car dealers are doing this in cahoots with the junkyard owners, which is why the program ran out of money so far. They probably just collected the VIN numbers and filed the paperwork on day one.

  26. wait, they destroy the traded-in cars?

    Really?

    New idea.
    Take the traded in car, get a VIN off of a another car in the junkyard, weld it on, trade it in again.

  27. Awesome, Chad and Tony, our resident leftist sockpuppets, are going at each other. I love it.

  28. Hazel Meade-

    From what I understand, the program requires that you trade in a car that has been registered in your name for a year to prevent that.

  29. Fortunately, many of these cars will make it out of the country. But I’m not looking forward to passing the Expedition towing the Suburban in the narrow lane construction zone.

  30. Registered and insured for a year IIRC.

  31. Episiarch | July 31, 2009, 6:50pm | #
    Awesome, Chad and Tony, our resident leftist sockpuppets, are going at each other. I love it.

    Perhaps this shows how the left isn’t as full of group-think as the folks around here.

    Not that I am “on the left”. I just chose to argue the points that go against the the conventional wisdom around here. When I agree with you guys (say, perhaps, the minimum wage thread), I don’t post.

    The funny thing is how all the tree huggers think I am on the right. Muhahahahaha…

    In any case, cash for clunkers is a stupid law. Generally, it doesn’t help the environment to build new anythings. However, IF we are going to do it, we should have set it up to reward the right people instead of the wrong ones.

  32. How, pray tell, does a bigger engine, a bigger body, etc make a car cheaper?

    Sorry was on my way out of the office and I don’t agree with what I wrote. I was trying to address your point about rewarding bad behavior. It’s just an incentive for people to trade up for better mpg, to make people want to buy cars who otherwise would have kept their older and lower mpg cars for a while, which would be perfectly rational in the absence of such an incentive.

  33. From what I understand, the program requires that you trade in a car that has been registered in your name for a year to prevent that.

    The junkyard dealers probably have that paperwork. Insurance might be harder to get around, but then, they may be taking cars that were registered and insured some number of years earlier.

    Let’s also look at this from the car dealer’s perspective. What’s to prevent him from faking the paperwork?

    You trade in the beater, buy the car at $4500 off the list price. Immediately sell it back to the dealer at a slight discount. The car has never left the lot, so the dealer can pretend it’s new. The dealer gets $2000, you get $2500. Like a kickback. You agree to this beforehand. The old beater was registered and insured at some point in the past. How thoroughly are these numbers really going to be checked?

  34. Not to say it’s good for the environment, but I think that is taking a backseat to stimulus and auto industry help. I think they should raise the incentive and raise the mpg standards by a lot, but I’m not someone ever mistaken for a righty.

  35. Tony | July 31, 2009, 8:17pm | #
    How, pray tell, does a bigger engine, a bigger body, etc make a car cheaper?
    Sorry was on my way out of the office and I don’t agree with what I wrote. I was trying to address your point about rewarding bad behavior. It’s just an incentive for people to trade up for better mpg, to make people want to buy cars who otherwise would have kept their older and lower mpg cars for a while, which would be perfectly rational in the absence of such an incentive.

    First, if this is the goal, why not reward a mileage improvement rather than set an artificial limit? If CfC applied to my vehicle, I would probably use it to buy a new vehicle with 40% better mileage, somewhere in the 30s for sure. Yet some moron who improves his behemoth tank from 15 to 17 mpg gets rewarded for making TWO crappy decisions? WTF? (And yes, I know this can be tricky to calculate…increasing my 23 mpg to 29 is about the same gas savings as increasing 15 to 17, at about .8 gallons per 100 miles).

    I like my “give everyone who got it right a present” plan a hell of a lot better. For the first time in history, the government would actually rewarded having done the right thing. And the car market would be just as stimulated. Indeed, it would be much more targeted at high mileage cars!

  36. I don’t know which is worse… this cash for clunkers or cap and trade. Both are just so horrible.

    If you want to decrease carbon emissions, ramp up the taxes on carbon-releasing stuff. If you want to help the auto industry, give them money directly (well, don’t do that, but it would be more efficient and effective than this crap).

    But for some reason, the Democrats are seeking out plans that are optimal for corruption and fraud. Maybe they’re trying to nail future Republican politicians, who will take advantage of these disastrous policies by colluding with corporations.

    I knew the Dems would make some serious economic blunders, but this is just amazing… I mean, destroying cars to boost the economy… wow!

    The world would be a better place if everyone read and understood Henry Hazlitt’s “Economics in One Lesson”.

  37. I was trying to write a criticism of this program earlier, and I was stopped at this.

    If “cash for clunkers” creates a rush to the new car market, how does it affect the used car market? Formerly mid-priced used cars will be forced down in price, and there will be glut on the market. What will be the result, though? Won’t the driveway seller just continue to drive the car, since it’s worth less? A car is not the same as a house, where one purchases it in the hope that the value wlll go up. Instead, the utility of the car carries its value.

    Used car retailers will be hurt, and many will fold, but it will be a buyer’s market. Meanwhile, if the very people who just purchased new cars are the same people who would have bought the mid-priced used cars, that should further drop the price once “cash for clunkers” is over, but many people may be looking to buy multiple cars. And it’s quite possible that they’ll do just that.

    Once that happens, what happens to the new cars with a glut of used cars being bought? They should drop in price as well. That might hurt the U.S. auto industry, but let’s face it; does the U.S. auto industry even have a prayer, anyway?

    This “cash for clunkers” thing is certainly unjust. So I hate to ask this; is it actually going to work as an effective stimulus? If not, why not, specifically? It seems to pack a punch for 3 or 4 billion. And Congress can hardly scratch it’s own head for that amount.

    Can an unjust, temporary, federal program of relatively minimal cost actually work? I thought such programs weren’t supposed to exist. Someone please smack me around. I’d welcome it. I’m losing my religion here.

  38. There have been worse ideas.

    Name one.

    So, lemme get this straight. The government’s giving away free money, and the pot is already empty? How can that possibly be?

  39. We could enjoy “bucks for bungalows” to re-inflate housing; “shekels for stereos” to get the electronics business zapping; “moolah for motorboats” to get our seas swelling with the sweet sound of economic growth.

    How about “greenbacks for guns?” I have a couple of .22s I’d love to trade up to AR-15s.

    I’m seriously considering getting in on this. It’s my fucking money anyway.

    The other incentive is to score a real car, before we’re limited to Obamobiles.

  40. So for years I drove a fuel-efficient car, even when gas was less than $1 per gallon, partly due to thriftiness and partly because I didn’t see any need to pollute the environment – and now everyone who made a BAD decision is getting rewarded while I pay for it? That’s America, baby! Love it or leave it!

    And the decision is in: Leave it.

  41. Anyone catch this power trippy bullshit from our dear legislatures who obviously slept through the Constitution section in civics class?

    Text of the Privacy Act & Security Statement at cars.gov:

    This application provides access to the DoT CARS system. When logged on to the CARS system, your computer is considered a Federal computer system and is the property of the U.S. Government. Any or all uses of this system and all files on this system may be intercepted, monitored, recorded, copied, audited, inspected, and disclosed to authorized CARS, Dot, and law enforcement personnel, as well as authorized officials of other agencies, both domestic and foreign.

  42. BTW, Capital A guy is definitely not me. I’ve been known to back my car up to the garden and rev up the engine for a while just to show my special plants how much I love them. In other words I know what a catalytic converter actually does.

  43. Hey chad welcome to the club. Any dictat based system, even the one you proposed, is going to be unfair and reward bad decisions. If congress wanted to encourage people to drive higher milage cars, they would just raise the gas tax. But there isn’t a lot of opportunity for graft in that, so they don’t use that approach.

  44. I am sure closed that tag.

  45. Don’t worry, soon the feds will respond to the disappearance of cheap cars from the market with a big push for “affordable transportation” involving lots of easy credit so poor people can buy new Priuses. Of course, they’ll have to be prepared for the sub-prime auto lending crisis that will follow, and the wave of repossessions, but they’ll be used to that kind of thing by then.

  46. Seamus, the next big bubbleis the government itself. It is currently over-valued by the masses and billions of folks are inversting in it.(mostly involuntarily) When this bubble bursts, it will be like a tornado in a manure settling pond.

  47. Someone needs to start hitting the dealerships and writing down vin numbers and serial numbers on engine blocks. I’m guessing a fair percentage of the clunkers will be back on the road soon.

  48. Hmm, About time to go around town and offer to buy those “clunkers” before people trade them in. Clunkers will become a scarce commodity and will rise in value far byond the price the Government is offering.

  49. Wow, that actually makes pretty good sense to me dude!

    RT
    http://www.anon-web-tools.us.tc

  50. Many will make it back into the market. Similar programs have seen 20% or more of the cars to be destroyed making it back into the market. Organized crime is probably already siphoning cars off to other countries.

  51. I appreciate everyone’s opinion, but I’m encouraged that the Cash for Clunker program has been extended. Not only has it helped the struggling auto industry, but it has inadvertently helped auto recycling too. We’ve seen a significant increase in the amount of scrap vehicles since the program began.

  52. Now that’s interesting. Someone supporting a government program also happens to benefit from it!

  53. Oh sounds like a great idea.
    Trade in your car that is less than 10 years old that still runs good but gets 3-5 mpg less than a new one and drive off the lot with a payment book for 5 more years and get ready to pay that insurance increase ,ya hoooo.
    You people have lost your mind that do this,i can see if the car was made back in the late 70’s or 80’s or a car that is just a junk heap that is unsafe to drive.
    Just remember when you loose your job or get laid off you can not blame Obama for his stupidity,it was You that got in to that car that took you many places for many years that you relied on for your safety and now on the way to the dealer to trade it in not knowing what your poor old car’s destiny is,well you can see it here http://www.youtube.com/watch?v=waj2KrKYTZo

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