Cash for Clunkers Gets $2B, Back on Track

[Frank Lee]

I pretty much always think needless destruction is wasteful and ignorant. A lot of perfectly good equipment was destroyed.

[Iexpedite]

Originally Posted by darcane

I don't think anyone was claiming that owning an aging vehicle is "irresponsible" or "a bad decision", but rather the whole Cash for Clunkers program is.

Originally Posted by Old Mechanic

One more govt program subsidizing irresponsible people who make bad decisions.

I was responding to Old Mechanic who felt the program was a handout to the poor. At least that's how I interpreted his post.

As you said it was designed to get people to buy cars from the struggling auto industry. It worked on your friends, they may not have purchased had the incentive not been there. Many of us were holding tight on to our wallets waiting for the other shoe to drop.

[user removed]

Originally Posted by Old Mechanic

One more govt program subsidizing irresponsible people who make bad decisions.

I think it is still affecting used car prices here (much too high) thus one reason I bought new.

regards
mech

you read that out of this.
AMAZING

[user removed]

Poor people don't have the credit to buy new cars.

[Iexpedite]

Originally Posted by Old Mechanic

you read that out of this.
AMAZING

I tend to interpret things differently than others. It was a blessing throughout my career, unfortunately it can also lead to some confusion. When you said another "program subsidizing irresponsible people who make bad decisions" I thought you were saying poor people. To me they are typically who government subsidies go to. They are widely considered financially irresponsible as well as poor decision makers. What did I miss?

Were you going for corporate subsidies? There were definitely some bad decisions being made at GM.

[user removed]

https://en.wikipedia.org/wiki/Car_Al..._Rebate_System

normal trade in Ford Explorer
normal purchase Toyota Corolla

regards
mech

[Xist]

Originally Posted by Old Mechanic

normal trade in Ford Explorer
normal purchase Toyota Corolla

I guess that is technically progress.

Except, how many Corollas were traded-in? Maybe they bought a Prius instead.

[Fat Charlie]

Originally Posted by Iexpedite

I thought you were saying poor people. To me they are typically who government subsidies go to. They are widely considered financially irresponsible as well as poor decision makers. What did I miss?

Were you going for corporate subsidies? There were definitely some bad decisions being made at GM.

Government subsidies that go to poor people are really giveaways to the companies that poor people have to buy from. A subsidy for new cars (or electric cars or home solar installations) is a giveaway to companies that rich people (or simply people with good credit, which effectively counts as rich) buy from. We pretend it's better policy because it helps a "good" industry get established... and people with trust funds and home equity get nice new toys that they can feel good about. That's much better policy than just shoveling money into Walmart's pockets via food stamps.

By making new cars artificially cheap (by $4500) and reducing the available pool of used cars (raising the price of the remaining supply and thus narrowing the difference between new and used cars, again distorting the market to make new cars more attractive), the progam was a direct subsidy to new car manufacturers and dealers. So direct, in fact, that it was paid to the new car dealers.

While it was a direct subsidy to the car industry, it encouraged the public to make the bad decision to scrap low value cars and buy brand new ones.

Most cars I've ditched were at the end of their usable lives, while the ones that didn't deserve scrapping went on to new homes. The most economical car is the one that doesn't need to be built.

[Iexpedite]

Charlie

Without a doubt the money all goes up. People get caught up in the "I need it" trap and they spend themselves into a lifetime of work.

A family member showed me a picture of his new giant travel trailer. I accidently let it slip that I hated those things. They can make sense for some, but this guy is a preacher and he has a full time job. His wife is a school teacher and they have 2 kids. That $30K+ trailer attached to the new Ford F-150 4X4 he purchased to tow it, add insurance and property taxes and fuel will run him an easy $1K per month. He works so much that I don't know when he is supposed to use that thing. When he finally pays all that stuff off it will be worth a fraction of it's original cost.

He's trading time for money to buy things he can't afford to own.

[darcane]

Originally Posted by Iexpedite

As you said it was designed to get people to buy cars from the struggling auto industry. It worked on your friends, they may not have purchased had the incentive not been there. Many of us were holding tight on to our wallets waiting for the other shoe to drop.

"Worked" may be a bit of a stretch.

Both were starting to plan for a new vehicle anyways. One worked out fine, but still would have been better off selling private party.

The other rushed into buying a new car without doing enough research first. They let their Durango get crushed to buy a new Dodge Caravan that had problem after problem until they couldn't deal with it breaking down all the time. They ended up buying a used Ford Freestyle instead, and had to buy a '90's Chevy truck (another common "clunker") to take over the hauling duties that the Durango used to do. They would have been far better off to not use the program and just pick up the used Freestyle and keep the Durango.

Yes, there was a boost to the auto industry, but at a large cost both in taxes and in increased cost in the used car market, with little to no benefit to the person buying the car. That marks it as a huge failure in my book.