Living Car Free - Cash for Clunkers

From the news coverage I have seen, the "Cash for Clunkers" economic stimulus program seems to be a howling success.

Does anyone else resent their tax money being donated to consumers who made irresponsible choices when they purchased their previous automobiles? Or is this money well spent to get the less efficient vehicles off the road?

Rewarding irresponsibility sure seems to be the thing to do these days.

I'd like to see us put more money into getting the worst-polluting motors out of use. I am not too bothered by the idea of paying to take old vehicles off the road, but I would prefer it be done in the same way as the glass bottle "deposit" they have in a few states:

all buyers of automobiles pay extra based on the pollution the vehicle will emit at the end of its life. Then that money's used to pay people to take the vehicle off the road when it becomes a "clunker".

I'd also like us to do something to address the environmental impact of small motors on things like weedcutters, lawnmowers, leafblowers, golf carts, ATVs, etc. These motors pollute because many of them are two stroke motors and almost none use technology like electronic fuel injection and catalytic converters to reduce pollution.

I personally think the program is a huge waste, especially considering that the restrictions as to what qualifies as a "more efficient" vehicle are a total joke. The program is just going to fuel more irresponsible consumption, and it is taking my tax money with it.

to be fair if you look at the most traded in (Ford Explorer) and most purchased car (Ford Focus) the program's mission was achieved. Now only if someone could bust out a calculator and show how mass transit is actually cost effective.

It's just too bad we can't trade in a clunker and get a sweet bike for FREE! $4500 will buy a LOT of bike! I can see that Nomad in my stand right now.......

It's just too bad we can't trade in a clunker and get a sweet bike for FREE! $4500 will buy a LOT of bike! I can see that Nomad in my stand right now.......You can get most of it. Just buy a fuel efficient compact car for ~$9-10k via the program, offer it brand new for $8-9k or whatever, make the quick sale and pocket the $3500 to spend on a bike of your choice. This isn't like the refundable home purchase tax credit AFAIK, where you have to keep the car for a certain amount of time, since all the paperwork is done on the dealer's end.

I personally think the program is a huge waste, especially considering that the restrictions as to what qualifies as a "more efficient" vehicle are a total joke. The program is just going to fuel more irresponsible consumption, and it is taking my tax money with it.

I agree. The idea of getting people out of the car was not implemented in this bill. Car manufacturers should never have been allowed to create gas guzzlers from jump street and who really needs them? Also, it is only targeted to those who can afford to get new cars. It clearly isn't for the masses.

We gave the auto industry Billions to make the cars. We are now being asked to give the industry more to sell the cars the people couldn’t or wouldn’t buy without the $4500. So you have people who couldn’t afford a new car buying a car and making payments they may or may not be able to afford. Because no one is making payments on the clunkers they are selling now. Doesn’t this sound a bit like buying a house you couldn’t afford because they subsidized the down payment? Isn’t it also like making those of us who made the choice to not buy a house over our head help bail out those who did buy over their head?

From a bicycling perspective it sounds like we would rather spend tax money to help get cars they can drive more and farther rather than find other ways to get around.

I think it's a terrible waste:

1. Most of what's being traded in are "halfways clunkers." By that I mean that most of them work reliably, have 15mpg fuel efficiency, and overall aren't too bad. These cars get destroyed. Meanwhile, my neighbor's real clunker, which gets 10mpg, breaks every other week, and leaks oil all over the road will stay on the road. The government should allow a "clunkers for decent clunkers" campaign that helps people who insist on using cars for transport.

2. Cars are crushed. I mentioned that in my first part, but you could part the things out for future repairs and help recoup the cost of the program.

3. A billion dollars could have built bike infrastructure for two-wheeled vehicles that are much more energy effecient. The bill is obviously not for the sake of the environment, but getting car sales back to normal.

4. Didn't we just learn a lesson about overspending in hopes of something that isn't guarenteed? :twitchy:

Another typical government farce/smokescreen/feelgood/giveway/kneejerk reaction at taxpayers' expense. It is going to do little to nothing to solve environmental issues, or transportation issues. When oil goes up again (and it already is) that billion plus dollars is going to a drop in the bucket. What is sad is if that money had been given to Amtrak it would better than double the amount of their current budget and we would get something much more long lasting for our money.

Aaron:)

Of all the legislation that Obama has signed, I dislike this one the most (and I voted for him).

You know... i didnt even have to read this thread

For starters i saw a post about cars in the living car free section. Then saw it was tied to tax payer money for cars.

Geez.. you guys are so predictable :) No bias here, thats for sure.

You fail to realize this was primarily an economic stimulus with good side effects of reducing fuel consumption and emissions. Secondly, if you gave the money to public transporation, it would not have had the same benefit. Primary reason, The C4C program gives $3500-4500 and the individual throws in an extra ~$20k. So at the end of the day, its an amazing ratio of taxpayer money vs money from individuals. I highly doubt you will get those returns or 'stimulus' to the economy by investing in public transporation. That would be closer to a 1:1 ratio or less as it would just marginally increase public transporation utilization and the individual will not put in any money. Therefore, the economy as a whole would get much less of a boost.

You know... i didnt even have to read this thread

For starters i saw a post about cars in the living car free section. Then saw it was tied to tax payer money for cars.

Geez.. you guys are so predictable :) No bias here, thats for sure.

You fail to realize this was primarily an economic stimulus with good side effects of reducing fuel consumption and emissions. Secondly, if you gave the money to public transporation, it would not have had the same benefit. Primary reason, The C4C program gives $3500-4500 and the individual throws in an extra ~$20k. So at the end of the day, its an amazing ratio of taxpayer money vs money from individuals. I highly doubt you will get those returns or 'stimulus' to the economy by investing in public transporation. That would be closer to a 1:1 ratio or less as it would just marginally increase public transporation utilization and the individual will not put in any money. Therefore, the economy as a whole would get much less of a boost.


Maybe we have a perspective slanted by our desire to see people drive less. However some seem to forget what the very same government and even candidate, now president, told us was the root of our economic down fall. We were scolded as American consumers for runaway spending. We were told we were buying on credit and didn’t save enough of our money to pay cash for things so we got deeper and deeper in debt. So first thing they do is take from the people that did save money and did buy what they could afford and were happy to live within their means and give it to the people that caused the problem in the first place? Then government comes up with a program that taxes the same people again to help people go into debt even more? If you have a car that works and get 15 MPG but it is paid for and you are having trouble putting $150.00 a month worth of gas in the car will things be easier if you are putting $100.00 a month worth of gas and $300.00 in car payments? :twitchy:

If we have to stimulate the economy by teaching people to go into debt by buying something they don’t need and something they wouldn’t buy without a bribe what happens when the bribe money runs out? :innocent:

Maybe we have a perspective slanted by our desire to see people drive less. However some seem to forget what the very same government and even candidate, now president, told us was the root of our economic down fall. We were scolded as American consumers for runaway spending. We were told we were buying on credit and didn’t save enough of our money to pay cash for things so we got deeper and deeper in debt. So first thing they do is take from the people that did save money and did buy what they could afford and were happy to live within their means and give it to the people that caused the problem in the first place? Then government comes up with a program that taxes the same people again to help people go into debt even more? If you have a car that works and get 15 MPG but it is paid for and you are having trouble putting $150.00 a month worth of gas in the car will things be easier if you are putting $100.00 a month worth of gas and $300.00 in car payments? :twitchy:

If we have to stimulate the economy by teaching people to go into debt by buying something they don’t need and something they wouldn’t buy without a bribe what happens when the bribe money runs out? :innocent:

I think it's even worse than that. We don't have the money to fund the program. Consequently the government will have to borrow the money that our grandkids will be paying back for a vehicle that will be used up in most likely 10 years. I predict that most of the people utilizing this program fall into one of two catagories. The first you described. The person who couldn't afford to replace the car in the first place and will now be in the position that they are even more desperately in debt and second those that could easily afford a new car and were merely waiting for some sanity to return to the economy. We shouldn't be subsidizing either, especially with borrowed money.

This was such a "grand" stimulus project. $4500.00 Government handouts for some people and the other folks that are already living responsibly don't get a dime of the money.......Well, except we get to fund the program. The bikes for clunkers idea mentioned above sounded much better!

The bill is obviously not for the sake of the environment, but getting car sales back to normal.

Absolutely. It's a way of putting a PC face on yet another Detroit bailout.

It's just too bad we can't trade in a clunker and get a sweet bike for FREE! $4500 will buy a LOT of bike! I can see that Nomad in my stand right now.......
Why not just use the taxpayer's money to buy the clunker and let the former clunker owner spend the money on whatever? Let the free market work its majic and allocate resources optimally as the econ professors always preach. It does seem like another case where responsible people are being taxed to reward irresponsible people. But, I'm not convinced that the clunker owners are getting the gravy here. Since the car companies have known this boodle was in the pipeline for months didn't they just jack up their prices by $4500.00 so the clunker owners are paying the same price and the extra money flows up to the car company executives for bonuses and remodeled mansions? I can't imagine patriotic capitalists just leaving all that cash on the table for their customers.

I have no problem with the program as it is doing a fairly good job of stimulating the economies of Michigan, Ohio and some other states that are having serious problems. The main advantage of the program is that it works very rapidly to stimulate employment in auto companies, parts suppliers, and dealerships. Any other stimulus of employment is going to be much slower.

OTOH, for stimulus, it probably would have been better to give the billion dollars (or 3 billion if the program is extended) directly to the state governments of the most badly damaged states. The money could have been used for community collegess, retraining, and other programs to help the unemployed.

As for the environmental impact, the program is only fair. It probably would have been better to give the money directly to public transit, however.

In the previous recessions of the past 75 years or so, it has actually been increasing car sales that have pulled the economy out of the recession. I think it's important to keep this in mind before judging the Cash for Clunkers program too harshly. It probably really is doing some good for a lot of people who need help NOW.

Since the car companies have known this boodle was in the pipeline for months didn't they just jack up their prices by $4500.00 so the clunker owners are paying the same price and the extra money flows up to the car company executives for bonuses and remodeled mansions? I can't imagine patriotic capitalists just leaving all that cash on the table for their customers.

Obviously not. Quite the opposite, in fact. The car companies and dealers have been matching the government rebates in many cases, and offering low interest financing and other additional incentives. They will make little profit on a per-unit basis.

The purpose now is to draw down the enormous inventory of new cars that are now backed up on dealer lots and in auto plant parking lots. This is an absolutely essential step in ending any recession, whether you like it or not. The key to ending a recession is to reduce inventories of unsold goods without going into deflation.

Another way to accomplish this would be to simply blow up or crush the excess supply of brand new cars. At least this way, more efficient new cars are getting into the hands of consumers.

Including the total cost to own a new auto, the average is about $30,000 over the life of the auto for even low end models. This program while well intentioned on the gas mileage front, does not address the issue of the expense of auto ownership. Another program called Workers on Wheels does. People can donate older vehicles and get a tax credit for the KBB value of the vehicle. This progams allows people to get rid of their older vehicles while they are still useful for someone else. Then if they choose to use that saved tax credit money to buy a more fuel efficient auto they can do so. Still the cash for clunkers program like its clever name does not save anyone very much. Truly everyone wins who bikes... you save on car expenses, and save the environment. Workers on wheels is a good way to pass on a used vehicle and help someone out. Still, if people can bike, those are the wheels they should really be using.

Stupid transfer of money between people, actually the money is going to the car dealers, as they raised the prices of cars, to absorb the majority of the incentive as windfall profit.

Stupid people get "incentive programs" which means 300,000,000 people are subject to higher taxes, so 250,000 can buy cars, and pay dealers $2000 to $3000 more in profit for each car, compared to a month ago. I know because I helped some buy a $14,700 Toyota that was now 16,900 with this clunker program.

Want to buy a car? Wait until 2 months after the program ends, as this program is stealing lots of future purchases.

I have no problem with the program as it is doing a fairly good job of stimulating the economies of Michigan, Ohio and some other states that are having serious problems. The main advantage of the program is that it works very rapidly to stimulate employment in auto companies, parts suppliers, and dealerships. Any other stimulus of employment is going to be much slower.

OTOH, for stimulus, it probably would have been better to give the billion dollars (or 3 billion if the program is extended) directly to the state governments of the most badly damaged states. The money could have been used for community collegess, retraining, and other programs to help the unemployed.

As for the environmental impact, the program is only fair. It probably would have been better to give the money directly to public transit, however.

In the previous recessions of the past 75 years or so, it has actually been increasing car sales that have pulled the economy out of the recession. I think it's important to keep this in mind before judging the Cash for Clunkers program too harshly. It probably really is doing some good for a lot of people who need help NOW.

So in effect you are saying that spending money you don’t have on things you don’t need is good advice? Then buying a 500k house when you only made 50k a year was stimulating the economy? Isn’t that a Balloon just waiting to get a pin stuck in it? I thought car free people advocated gross consumerism as a bad thing? If it is bad for me to spend more money than I can pay back in my lifetime isn’t it bad for the government to spend more money than they can pay back?

The thing that sticks in some of our throats is when we bought a vehicle we could afford and have had it serviced and taken care of so it lasts the people trading in their clunkers thought we were silly for not getting a new car every few years. Many of those clunkers are newer than my car. We aren’t rich people we are simply people that practiced moderation in our spending habits and now the people that didn’t buy cars they could afford when they could afford them are asking us to dig into our pockets and spend our grandchildren’s, maybe great grandchildren’s, tax money to aid those people and help them buy a new car? No the truth is we aren’t being asked we are being told they are taking our money and giving to others, no vote just a political action.

We didn’t have money for public transportation but we had money for men that flew to Washington in corporate Jets?

Let me pose a simple question, anyone in this forum get rid of their paid for car or form of transportation and get a new vehicle because of this plan? How do we define gross consumerism? And what is the difference between it and what the government is doing with this program?

Annoyed at how the tax code is used to control people's behavior. Behave one way, keep some of your money, behave in a way social do gooders disapprove of and be penalized. Free country? I think not.

Eliminating the income tax would have provided a cheaper more immediate stimulus. But then there wouldn't be as much opportunity for corruption and government wouldn't have as much CONTROL.

Annoyed at how the tax code is used to control people's behavior. Behave one way, keep some of your money, behave in a way social do gooders disapprove of and be penalized. Free country? I think not.

Eliminating the income tax would have provided a cheaper more immediate stimulus. But then there wouldn't be as much opportunity for corruption and government wouldn't have as much CONTROL.
More than that this cash for clunkers program is mis-represented when they say it is designed to be good for the environment, you don't get the cash to go car-free you get it only if you continue spewing pollution.

Obviously not. Quite the opposite, in fact. The car companies and dealers have been matching the government rebates in many cases, and offering low interest financing and other additional incentives. They will make little profit on a per-unit basis.

The purpose now is to draw down the enormous inventory of new cars that are now backed up on dealer lots and in auto plant parking lots. This is an absolutely essential step in ending any recession, whether you like it or not. The key to ending a recession is to reduce inventories of unsold goods without going into deflation.

Another way to accomplish this would be to simply blow up or crush the excess supply of brand new cars. At least this way, more efficient new cars are getting into the hands of consumers.

Even if the "goods" are not necessary for survival, and have questionable worth in the future. If I over produce a product and can't sell it, there are only a couple of choices, discount it to get rid of it, destroy it or give it away and take a tax write off...or get the taxpayers to take it off my hands.:innocent: Why are we propping up a dying industry? The money would have been better spent retooling the auto factories to make train cars, bicycles, etc. Amtrak can't add cars to it's fleets because they aren't available and in many cases the wait time for a new engine set can be 3 years. Tracks need repair and to be relaid where they have been removed. THAT would have been economic stimulus not the same old consumer/consumption BS.

Aaron:)

Even if the "goods" are not necessary for survival, and have questionable worth in the future. If I over produce a product and can't sell it, there are only a couple of choices, discount it to get rid of it, destroy it or give it away and take a tax write off...or get the taxpayers to take it off my hands.:innocent: Why are we propping up a dying industry? The money would have been better spent retooling the auto factories to make train cars, bicycles, etc. Amtrak can't add cars to it's fleets because they aren't available and in many cases the wait time for a new engine set can be 3 years. Tracks need repair and to be relaid where they have been removed. THAT would have been economic stimulus not the same old consumer/consumption BS.

Aaron:)
I agree the stimulus money is all going to reward the behavior that caused problems in the first place, Keep overpriced houses in the suburbs overpriced and in the suburbs, keep over compensated wall street sharpies overcompensated and at all costs retain the destructive car culture. Who pays? The people who lived within their means. Its a transfer of wealth from the frugal to the profligate. What kind of change is this?

The car companies are getting rid of their excess inventories by deep discounting but the taxpayers are making up the difference as car business profit. I guess the CEO's are earning their big bonuses through their skilled taxpayer scamming.

The consensus here seems to be that this boondoggle is yet another disgusting bail-out of the failed automobile industry, a blatant taxpayer rip-off, a non-starter for the environment and for transportation, a perpetuation of the "something for nothing" mentality that got our economy to where it is today, and another in what threatens to be a long series of disappointments in the Obama administration.

Thanks for your inputs.

I like this quote from Holier than You Blog (http://holierthanyou.blogspot.com/2009/07/cash-for-clunkers.html):

"Don't give me any guff about transit and cyclists not paying their fair share, when the government is subsidizing private car ownership."

So in effect you are saying that spending money you don’t have on things you don’t need is good advice? Then buying a 500k house when you only made 50k a year was stimulating the economy? Isn’t that a Balloon just waiting to get a pin stuck in it? I thought car free people advocated gross consumerism as a bad thing? If it is bad for me to spend more money than I can pay back in my lifetime isn’t it bad for the government to spend more money than they can pay back?

The thing that sticks in some of our throats is when we bought a vehicle we could afford and have had it serviced and taken care of so it lasts the people trading in their clunkers thought we were silly for not getting a new car every few years. Many of those clunkers are newer than my car. We aren’t rich people we are simply people that practiced moderation in our spending habits and now the people that didn’t buy cars they could afford when they could afford them are asking us to dig into our pockets and spend our grandchildren’s, maybe great grandchildren’s, tax money to aid those people and help them buy a new car? No the truth is we aren’t being asked we are being told they are taking our money and giving to others, no vote just a political action.

We didn’t have money for public transportation but we had money for men that flew to Washington in corporate Jets?

Let me pose a simple question, anyone in this forum get rid of their paid for car or form of transportation and get a new vehicle because of this plan? How do we define gross consumerism? And what is the difference between it and what the government is doing with this program?

Can you tell us your source for the seeming stereotype that people who are taking Cash for Clunkers money are irresponsible individuals? Or was this just an impression that you have? AFAIK, no demographic analyses of these individuals has been released yet.

As for your characterization of the vehicles themselvew--I have heard that many were in pretty good shape, but not much is known yet. They say big Fords were most often traded in so far, and little Fords were most purchased with the Cash for Clunkers funds.

As for relative expenditures:

Cash for Clunkers--$3 billion, already appropriated and funded by the Recovery Act.
High speed trains--$9.3 billion (http://elpc.org/2009/02/13/recovery-act-invests-93-billion-to-expand-high-speed-rail) in addition to funds in the Transportation Bill.
Other public transit--$8.4 billion (http://www.salon.com/news/feature/2009/06/22/transit/) for capital expenditures only.
Bailout of auto companies--Cost unknown but probably in the range of $50 to $150 billion dollars over several years.
Bailout of banks and financial institutions--unknown, but probably around $7.5 trillion (http://www.salon.com/news/feature/2009/06/22/transit/) when all is sadi and done.

So, you can see that public transit got almost six times what Cash for Clunkers got. The banks and financial instutions got 2,500 times as much.

I totally agree with you that the amount appropriated to public transit was inadequate and inappropriate. Furthermore, they are hamstrung to spend the money on new purchases, when what most transit companies need is help with operating expenses.

(These figures are a "rough and dirty" approximation. I welcome any corrections and clarifications.)

I agree the stimulus money is all going to reward the behavior that caused problems in the first place, Keep overpriced houses in the suburbs overpriced and in the suburbs, keep over compensated wall street sharpies overcompensated and at all costs retain the destructive car culture. Who pays? The people who lived within their means. Its a transfer of wealth from the frugal to the profligate. What kind of change is this?

The car companies are getting rid of their excess inventories by deep discounting but the taxpayers are making up the difference as car business profit. I guess the CEO's are earning their big bonuses through their skilled taxpayer scamming.

I think you (and most taxpayers) are getting a little confused about the distinctions between auto bailouts and financial company bailouts. As I noted above, the financial companies got several thousand times more federal money than the auto companies got. (Auto bailouts are in billions, financial bailouts are in trillions. 1Tr=1,000B.)

Another distinction--some financial executives are getting $100 million bonuses, auto executives are getting no bonuses, and some are working for $1 a year.

I think you (and most taxpayers) are getting a little confused about the distinctions between auto bailouts and financial company bailouts. As I noted above, the financial companies got several thousand times more federal money than the auto companies got. (Auto bailouts are in billions, financial bailouts are in trillions. 1Tr=1,000B.)

Another distinction--some financial executives are getting $100 million bonuses, auto executives are getting no bonuses, and some are working for $1 a year.

I have a feeling few (if any) people actually know what has been spent as part of the financial bailout/stimulous package. The numbers are staggering and most of us just shut them out. The government has passed for themselves a nearly unlimited credit card that they guarantee in the name of the American tax payers and then use that credit card for programs designed to control behavior. The auto industry was hurt first by gas prices, then by financial crisis and now by a crisis in confidence in the ability of a US auto industry to even exist. When the most recent money allocated for the CFC program runs out the problems facing the auto industry will not be solved, the problems in the economy will not be solved, all that will have happened is that a little bit of excess inventory will have been sold off and a few thousand people will have gotten a better deal than normal and a few thousand will be deeper in debt than they would have been or should be. This will not ramp up car production or bring suppliers back to work. We the tax payers will just be in hock for another $3B (about $36 for my family of 4, my tab for this years budget should be around $45000, too bad I only make $65000, thanks to you who pay the difference, sorry). If you want less of something tax it, if you want more subsidize it. The problem with both is that once started it nearly ever goes away.

A timely column from Tom Whipple (http://fcnp.com/commentary/national/4831-the-peak-oil-crisis-summer-in-wonderland.html) laying out where the problem is with continuing to spend money on auto infrastructure.

Aaron:)

I think the cash for clunkers is better than just giving free money to the auto industry. Environmentally, this bill is a joke since it takes more energy to produce a new car than it does to keep these clunkers running. That's ok, big, new, "fuel efficient" SUVs are as American as apple pie.

One last rant and I will let it go.

Two things that help me make my personal judgment call. Public transit got more funds only if you back out the first bailout for the auto industry. Add three to 4 Billion in cash for clunkers and you not only include domestic cars but foreign cars as well. Toyota had already approached the Japanese government for a 2 Billion dollar loan to help with cash flow and Japan said no. Now they get the Billions through the back door in a subsidy from the American Tax payer. The irony is this is a government that was already trillions in debt. So where is the two billion coming from? They will be taking it from funds already dedicated for some other bail out? But the second is the purchase itself. If your car is paid for and you have no car payment what is the net result of giving people $4500 bucks to buy a new car? I also understand work trucks qualify. Before the whole financial mess started people were already moving from big vehicles to small vehicles and if you remember Toyota had taken the number one spot just before GM hit the skids. So people were already interested in smaller vehicles even if it was somewhat slower than the people that bought a smaller vehicle several years ago. Even only a few years ago some people had started moving towards smaller vehicles and were paying with their own saved money higher prices to buy them.

What cash for clunkers did was reward people that waited it out and added to the car centric bailout not only for US made cars but for foreign owned car companies with our tax dollars. what this is saying in effect is yes we realize your neighbor thumbed their nose at you for getting your compact city driver when they were in full force buying SUVs and Trucks, remember the qualifying vehicles were made in 1984 or later the height of the SUV craze. To throw salt in the wounds of the responsible car buyers here is an excerpt from a Cash for car site.

The Car Allowance Rebate System (http://www.savingtoinvest.com/2009/06/3-money-reasons-to-buy-new-car-tax.html) is a recently approved initiative that will help you pay for a new, more fuel efficient car or truck from a participating dealer when you trade in a less fuel efficient car or truck. Under this program, auto buyers will be entitled to discounts/vouchers of $3,500 or $4,500, based on the following criteria.

- Tade-in cars must get no more than 18 miles per gallon, have been built in 1984 or after, and have been owned and insured by the purchaser for at least a year. A consumer could then get a $3,500 voucher toward a car that got at least 22 mpg. The value of the voucher will increase to $4,500 if the new car is 10 mpg higher than the trade-in. Consumers will also be able to use the vouchers toward the five-year lease of a vehicle.

- A $3,500 voucher can go to a small light-duty truck that gets at least 18 mpg and is two mpg higher than the trade-in. A 4,500 voucher will be issued for a truck with a five mpg improvement.

- A $3,500 voucher will be issued for large light-duty trucks that get at least 15 mpg and are one mpg higher than the trade-in. A $4,500 voucher will be issued for a truck with a two mpg improvement.


</SPAN>http://www.savingtoinvest.com/2009/06/3-money-reasons-to-buy-new-car-tax.html (http://www.savingtoinvest.com/2009/06/3-money-reasons-to-buy-new-car-tax.html)

So people who didn’t pay attention when gas prices were getting higher are now rewarded by the government for waiting buy getting tax money from people that did pay attention? Are we now going to start looking for Cash for run down homes or run down refrigerators? When will they start the Cash for Motorhomes or Airplanes? Shoot even if the government is broke there are checks in the check book. Even if Japan and France wouldn’t give Nissan and Toyota any money to bail them out we can tax my grandchildren to help them out? Just listen to your fellow forum members in this particular forum and see the pain they feel at what many perceive as a government betrayal. Why go car free if the government is will to give me $4500 bucks to drive a new car and get back in debt? I have to scrimp and save to get new components for my bike it would be nice if I could get the tax payers to help pay for it.

The consensus here seems to be that this boondoggle is yet another disgusting bail-out of the failed automobile industry, a blatant taxpayer rip-off, a non-starter for the environment and for transportation, a perpetuation of the "something for nothing" mentality that got our economy to where it is today, and another in what threatens to be a long series of disappointments in the Obama administration.

Thanks for your inputs.I wouldn't go that far, although I think I'm the minority here.

-Over the likely lifespan of the autos, the owners will save about $9,000 given the mpg difference we're seeing between new/clunker. $6000 of that is not being sent out of the country for foreign oil, and the other $3000 isn't being spent on domestic oil. Assuming oil stays at $60-70/bbl. If it goes up, so does the money that stays in the economy.

-The reduction in Carbon emissions, given EU prices, is worth a bit over $500.

-The reduction in CO, HC, NOx emissions is also worth something, although this varies a lot by region.

-Leveling the economy is also worth something, although I'm not sure how much exactly. During the recovery, the only thing excess auto demand will do is increase the cost, w/o improving the employment situation much. By trading car sales now for car sales during a recovery we can limit the negative impact of the recession, and to a lesser extent, reduce inflation pressure during the recovery, which may also minimize the risk of bubbles. Boom/bust cycles are not good for employment. Ideall, if we can trade the highs in a boom, for the lows in a bust, we can maintain high employment. Higher highs don't improve employment much, but they can lead to bubbles, making a recession worse. Lower lows otoh hurt employment a lot more (eg 25% unemployment in the great depression) because we can see pretty big drops below the average (93%, or whatever it is), but we can't see employment rise above 100%.

All told, the influence of this on the economy is likely a net positive, although it will take a decade in order to fully realize it.

Hmmm...I have a 1984 Dodge D300 farm truck that gets about 6mpg:o I could go trade it in on a new Ford PSD...it gets close to 20 mpg on the highway:roflmao2: that is a 14mpg improvement:thumb: 'course I don't drive the Dodge on the highway much, but I am sure the PSD would see some highway miles. The program, typical of many, if not most federal government programs is a farce and WILL NOT produce the savings or reduction in GHG or stabilize the economy, or whatever other magic panacea it was hyped up to produce.

Aaron:)

The program, typical of many, if not most federal government programs is a farce and WILL NOT produce the savings or reduction in GHG or stabilize the economy, or whatever other magic panacea it was hyped up to produce.

Aaron:)Seriously! It's not like people are actually going to save money going from 15.8mpg to 25.3mpg (http://www.examiner.com/x-2812-Road--Driver-Examiner~y2009m8d6-Cash-for-clunkers-vote-in-Senate-close-to-approving-more-funding-as-guidelines-work). Clearly, when all is said and done, at the current average of about 150,000 miles per decade and $2.50/gallon, drivers will go buy the extra gas they've saved, at a cost of nine grand or so, and light their houses on fire! A huge detriment to the economy. :roflmao2:

Even if ya don't like it, at $9000 in savings per guzzler on average, it will be good for the local economy. I mean, sure, if someone stands to make money by betting on the recession, I imagine that they would hate a stimulus designed to bring the economy out of a recession, but for most people it's beneficial. I think a gas tax (if we would pass it) would be better because it would reward the frugal, instead of those who aren't frugal, but either way, the result is the same. More money staying in the country's economy, fewer GHG emissions/pollution, and fewer jobs lost. :innocent:

We gave the auto industry Billions to make the cars. We are now being asked to give the industry more to sell the cars the people couldn’t or wouldn’t buy without the $4500. So you have people who couldn’t afford a new car buying a car and making payments they may or may not be able to afford. Because no one is making payments on the clunkers they are selling now. Doesn’t this sound a bit like buying a house you couldn’t afford because they subsidized the down payment? Isn’t it also like making those of us who made the choice to not buy a house over our head help bail out those who did buy over their head?

From a bicycling perspective it sounds like we would rather spend tax money to help get cars they can drive more and farther rather than find other ways to get around.

This is a good post.

I can see in the very near future, a huge bailout needed for the banking industry who provided car loans to motorist who purchased new vehicles under the "Clunkers" program! LOL!

This just illustrates how disfunctional our economy is since the loss of millions of manufacturing jobs. We can no longer pull out of recession through exports anymore. I repeat, there is just no economy anymore to make a recovery.

C4C has boosted auto sales in the short term, no doubt. Go by a local car dealer and you will see the number of cars on the lots are way down, but they still have a lot of trucks sitting on the lot that didn't qualify for C4C. C4C is a short term fix, very short term, and it doesn't go after the long term weakness in our transportation system.

Our local bus system (a fleet of about 1000 buses) got an injection of fed funds to continue with the replacement of diesel with CNG (compressed natural gas) fueled buses, at a rate of 20 buses a month. This provides a lot of long term benefits. Those buses are on the road all day, every day and cutting pollution by half is a big deal. The buses are made in the US, so that creates good manufacturing jobs. They burn natural gas, a domestic fuel instead of diesel refined from mostly imported oil.

But this is but a drop in the proverbial bucket compared to what China is spending their latest stimulus money on. At a cost of hundreds of billions of US$$ per year, China is ramping up the construction on a roughly 16000 km high speed rail network that will link most of the big metro areas in China within the next decade or so. That will make them less dependent on air or car travel for getting from one large city to another, and leave the existing rail network better able to handle more freight trains. About 14,000 (wow!) or so recent college engineering graduates have been hired to work on this project, along with hundreds of thousands of laborers and technicians. That in my book is a winning formula for spending government money on true, long term infrastructure projects.

But this is but a drop in the proverbial bucket compared to what China is spending their latest stimulus money on. At a cost of hundreds of billions of US$$ per year, China is ramping up the construction on a roughly 16000 km high speed rail network that will link most of the big metro areas in China within the next decade or so. That will make them less dependent on air or car travel for getting from one large city to another, and leave the existing rail network better able to handle more freight trains. About 14,000 (wow!) or so recent college engineering graduates have been hired to work on this project, along with hundreds of thousands of laborers and technicians. That in my book is a winning formula for spending government money on true, long term infrastructure projects.

This is quite impressive.

However, most that money is coming from us! LOL!

China is able to build their infrastructure using cash while we have to build ours using their cash! If we are going to build high speed rail, China will have to fund it.

Alot of people are worried that it will take generations to pay back this debt. Folks, we are never going to pay this back. None of these debtor nations who own billions around the world like Mexico are repaying back their loans and we will follow in their example. Think about it for a second. Why isn't China taking back their money when they know we will never repay them back today or tomorrow. It's simple. The money's been spent and we don't have to dime to repay them back even if China wanted to go to war tomorrow for the cash.

All this money is nothing more than a digital representation on a computer. There was never really any cash or gold that exchanged hands and all this wealth is just an electronic transfer of funds. That's all! I'm sure China would be pissed if we took all their money and didn't pay them back but we've done worse things in the past.

Just sit back and enjoy the ride. We gave China millions of our manfacturing jobs and now we're going to take all their hard earned money for compensation. Isn't that American?

C4C has boosted auto sales in the short term, no doubt. Go by a local car dealer and you will see the number of cars on the lots are way down, but they still have a lot of trucks sitting on the lot that didn't qualify for C4C. C4C is a short term fix, very short term, and it doesn't go after the long term weakness in our transportation system.
I think short term fixes are needed right now. Although the Recovery Act was pretty good overall, most of the effects won't be felt until next year and later. I know my carfree brothers and sisters would like to see fewer cars on the road, and so would I, obviously. However, this is not going to happen soon, and it will probably never happen. Holding the line, or slowing the increase in number of cars, is about the best we can realistically hope for. Cash For Clunkers will not cause more cars to be sold; it will only cause a few cars to be sold sooner--hopefully speeding the economic recovery a bit. Looking at the dwindling inventories of new cars, this does seem to be happening--and I think it's a good thing overall.


Our local bus system (a fleet of about 1000 buses) got an injection of fed funds to continue with the replacement of diesel with CNG (compressed natural gas) fueled buses, at a rate of 20 buses a month. This provides a lot of long term benefits. Those buses are on the road all day, every day and cutting pollution by half is a big deal. The buses are made in the US, so that creates good manufacturing jobs. They burn natural gas, a domestic fuel instead of diesel refined from mostly imported oil.

Our bus company is going for diesel hybrids. We don't have the smog problem of California, and we don't have a delivery system for alternative fuels.

But again, federal funding for capital expenses. such as better buses, is a wonderful long-term solution, but there are short-range obstacles. Many bus companies across the country are failing financially as a result of increased demand for services and fluctuating fuel prices. I support a bailout of these companies (the ones that are fiscally responsible) in the form of federal funds for operating expenses.


But this is but a drop in the proverbial bucket compared to what China is spending their latest stimulus money on. At a cost of hundreds of billions of US$$ per year, China is ramping up the construction on a roughly 16000 km high speed rail network that will link most of the big metro areas in China within the next decade or so. That will make them less dependent on air or car travel for getting from one large city to another, and leave the existing rail network better able to handle more freight trains. About 14,000 (wow!) or so recent college engineering graduates have been hired to work on this project, along with hundreds of thousands of laborers and technicians. That in my book is a winning formula for spending government money on true, long term infrastructure projects.


The US has only allocated $9.3 billion for high speed rail this year, as part of the Recovery Act. I agree that much more is needed, and this could be a great investment that will pay for itself many times over.

BTW, this brings up another issue that the anti-bailout people don't seem to understand. Much of this money is an investment in the future, and it will be repaid over and over. For example, it has been estimated that the economic return on capital investment in the transcontinental railroads of the 19th century was at least 10,000 times the amount invested. It truly had much to do with the building of our country. It's hard to estimate what the return would be on a 21st century equivalent, but I bet it would be similar. And yet, the Republicans believe that even $9.3 billion is "too much" for this investment in a modern rail system. How short-sighted. China will bury us for sure!

This was such a "grand" stimulus project. $4500.00 Government handouts for some people and the other folks that are already living responsibly don't get a dime of the money.......Well, except we get to fund the program. The bikes for clunkers idea mentioned above sounded much better!

True, we don't get a dime ..... BUT, we can look in the mirror and at least know that we are not part of/or adding to, the problem. Unfortunately, this is kinda like wetting your pants while wearing a dark suit. It gives you a nice warm feeling, but nobody notices.

My idea of a great car program would be if someone wants a car, they should buy one. If I want a car, I will buy one. Others can use their own money to buy their car and I will use my money to buy my car. Taking one person's money and giving it to some one else stimulates nothing.

Very few people seem to ever bring up what this might do to car sales next year or the year after.

It's almost laughable that the bureaucrats running this program should be surprised at it's success. For God's sake, we drop 4500 bucks on the ground in front of people and then are surprised when they bend down and pick it up??? Puuuhlease!!!

That oldguy52 quote is great!

"Unfortunately, this is kinda like wetting your pants while wearing a dark suit. It gives you a nice warm feeling, but nobody notices."

Bailout of banks and financial institutions--unknown, but probably around $7.5 trillion (http://www.salon.com/news/feature/2009/06/22/transit/) when all is sadi and done.

To tell the truth, this pisses me off far more than C4C or bailing out the auto industry. On a side note, the only person I know personally who has taken advantage of the C4C program is the guy who bought my truck last March. I sold him the truck for $3200, which he had to take out a loan to buy. He just paid the truck off recently, and last weekend he went and traded it in for a brand new Mercury Mariner (mid-sized SUV). The Dodge usually got 14-17 mpg, while the Mariner is listed as 20-28, I think. The problem is, now the Dodge will be in a junkyard or landfill serving no purpose, when it was a perfectly reliable vehicle. The fuel economy was bad, but it did pass the sniffer test with flying colors every time. It just seems like a waste. Meanwhile, my brother and I just paid cash for a 1991 Civic we could share, which gets better fuel economy than most new cars out there. And we couldn't afford to buy a new car regardless of rebates, because we can't afford a monthly payment. In fact, I'm starting to think we can't even afford this dirt cheap Civic. When do I get a bailout?

Another problem with the C4C program, it is taking decent used cars out of the market, leaving people driving older even higher polluting cars. Most of the cars being turned in appear to be in the 5-10 year old range, quite often with reasonably low mileage on them. I typically buy a 5 year old used vehicle with under 50k on it and drive it to the 300k mark. I also pay cash. Now that market is drying up and what is out there is going up in price, because of the lack of available used cars.

Also just how much stimulus are you going to get when the C4C ends and people stop buying new cars?

Aaron:)

Also just how much stimulus are you going to get when the C4C ends and people stop buying new cars?

Aaron:)

People will start buying new cars at some point, even without a rebate. At least they always have in the past, and I don't think things have changed much. We are not yet entering the carfree era.

With much of the new car inventory sold through C4C, consumers will be buying newly built cars, not stockpiled cars that were built last year. This will help get my neighbors back to work, and keep some of these good people from losing their houses and their health insurance. That's one way C4C hopes to speed recovery.

People will start buying new cars at some point, even without a rebate. At least they always have in the past, and I don't think things have changed much. We are not yet entering the carfree era.

With much of the new car inventory sold through C4C, consumers will be buying newly built cars, not stockpiled cars that were built last year. This will help get my neighbors back to work, and keep some of these good people from losing their houses and their health insurance. That's one way C4C hopes to speed recovery.

People without jobs aren't buying cars, people who's income has been decreased through various means, probably aren't buying new cars. People aren't buying new cars for a reason...they need the money for other things. When gas shoots back up again (and it will and FWIW it has gone up 16 cents a gallon in the past 2 weeks) people won't buy new cars and quite likely won't be able to afford the ones they have.

That money probably could and should have been spent elsewhere to get better and more lasting results. The auto industry as it has stood for the past 70 years is dead. Companies that want to survive need to change up and move on, or be shuttered for good. GM was a poster child for a company that continued to do things the old way until it cost them, and us dearly.

With so many trillions of dollars lost; IF the recovery occurs it will take years to dig us out of the hole that we have landed in.

Aaron:)

People without jobs aren't buying cars, people who's income has been decreased through various means, probably aren't buying new cars. People aren't buying new cars for a reason...they need the money for other things. When gas shoots back up again (and it will and FWIW it has gone up 16 cents a gallon in the past 2 weeks) people won't buy new cars and quite likely won't be able to afford the ones they have.

That money probably could and should have been spent elsewhere to get better and more lasting results. The auto industry as it has stood for the past 70 years is dead. Companies that want to survive need to change up and move on, or be shuttered for good. GM was a poster child for a company that continued to do things the old way until it cost them, and us dearly.

With so many trillions of dollars lost; IF the recovery occurs it will take years to dig us out of the hole that we have landed in.

Aaron:)

I really think people will buy cars. People even bought cars during the Great Depression. I see no indication that there is any kind of mass movement away from cars at this time. I think in 5 to 10 years, cars will start to be very different in the fuels they use, but they will still be cars. I won't make any prediction of oil prices, as smarter people than me have lost millions on that bet. I will say that many alternative fuels are competitive at prices over about $70 a barrel, so I wouldn't expect oil-equivalent prices to go a lot above that for the long haul.

One prediction I read is that consumer spending will start up again as soon as people feel they have saved enough money for a good nest egg. This might be a savings rate of 9 or 10 percent. We're at 7 percent now, up from zero or less a couple years ago. When people start spending money after a recession, cars and other durable goods usually are the first things that they buy.

One prediction I read is that consumer spending will start up again as soon as people feel they have saved enough money for a good nest egg. This might be a savings rate of 9 or 10 percent. We're at 7 percent now, up from zero or less a couple years ago. When people start spending money after a recession, cars and other durable goods usually are the first things that they buy.
Here's an article about that savings rate. Doesn't it look like the consumer driven recovery can't happen now? Remember we fought terrorists by bringing our savings rate to 0 or below. Now what? Did the terrorists win or something? In addition to saving, people are trying to pay off debt, not just interest as in Mr. Gilbert's graphs.

http://www.genre.com/sharedfile/pdf/Reflections200907-en.pdf

Also, what is a good nest egg when we just saw our retirement funds shrink? People who are thinking about nest eggs are thinking bigger eggs than they were a few years ago.

Here's an article about that savings rate. Doesn't it look like the consumer driven recovery can't happen now? Remember we fought terrorists by bringing our savings rate to 0 or below. Now what? Did the terrorists win or something? In addition to saving, people are trying to pay off debt, not just interest as in Mr. Gilbert's graphs.

http://www.genre.com/sharedfile/pdf/Reflections200907-en.pdf

Also, what is a good nest egg when we just saw our retirement funds shrink? People who are thinking about nest eggs are thinking bigger eggs than they were a few years ago.

I doubt if people have changed that much. It would be typical human reaction to remember that the Dow has doubled in the last six months, but to forget how fast and far it fell last year. Also it would be typical to look at almost zero percent financing, and want to go right back into debt again.

Well, we'll see what happens over the next few years. You and Aaron might be right, and it does seem a lot harder to put the toothpaste back into the tube than it was to squeeze it out.

(Sorry, can't look at your link right now. This 12 year old computer is acting up right now, and a PDF file would crash it for sure.)