Posted on 08/01/2009 8:12:57 AM PDT by PureSolace
Press reports late Thursday said the government's Cash Allowance Rebate System could already be out of money, hitting a major speed bump and possibly causing dealers some drama.
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CARS works this way: Owners of a 1984 or newer vehicle getting 18 mpg or less in combined highway/city ratings can trade in their so-called "clunkers" for more fuel-efficient new cars (in some cases only a few extra miles are required). For their trouble, owners get $3,500 to $4,500 of taxpayer money and their old vehicles' engines are destroyed so they won't end up back on the road.
That last part, the destruction of engines, is causing heartburn for more than a dozen already hurting auto-parts suppliers who have had to file for bankruptcy this year. As Michael Wilson, executive vice president of the Automotive Recyclers Association, told a reporter, "Why throw away good parts when the supply chain is in jeopardy? It doesn't make a whole lot of sense." Catherine Tsai, in a story she wrote for Associated Press, reports that engines and drive trains account for 60 percent of recyclers' revenue from a used vehicle.
Tsai quotes various auto recyclers who prove the point that the government program benefits those who have enough money to pour into a brand new vehicle while hurting people who need help the most. Norm Wright, the CEO of Stadium Auto and Truck Parts Inc. in Denver, said of the program to destroy perfectly good vehicles, "Now you're removing cars people could afford, and they're not available anymore." He added, "There will be less cars to pull from, so the price of parts will go up."
It's unbelievable that the government has set aside $1 billion of taxpayer money to remove roughly 250,000 drivable vehicles from the road.
(Excerpt) Read more at oregonlive.com ...
They allocated another 2 billion — so 750,000 affordable cars are going to be destroyed. If you don’t want to buy a new car, used cars just got more expensive. If you are a low wage worker or need an inexpensive car for a teen or as your second vehicle — this hurts you.
Another thing to recall about the “Cash for Clunkers” program is how it hurts the poor. The program will take these “clunkers” off the street and give them to the government to destroy. But these are precisely the kinds of cars that poor or fixed-income people tend to purchase. Most of these “clunkers” are of course in fine shape, but they are not “green” enough according to government determinations. So poor people who cannot afford to purchase new, government-approved (and thus artificially expensive) automobiles will be told to “go take a hike” – literally!
The government having melted down these “clunkers,” the market in low priced used cars will dry up, thus driving up cost and further hurting poor and working people as well as seniors and others on fixed income. Grandma who just needs a cheap old car to get down to the pharmacy for her prescriptions will thus be forced to walk or hire a cab, as the finance companies will take a look at her social security income and say “next!”
Cash for clunkers is an attack on the poor for the benefit of government-connected Big Auto big-wigs and GMAC-style bankster/moneylenders. As with most government programs, the poor get the short end of the stick.
New car buyers(like us) with no clunker trade in need to step back from the market. We stopped our purchase and will wait til they run out of money for this program. No sense competiting with buyers with $4000 of the govt’s money to throw away. They won’t be getting the best deals.
Additionally this is a tax on the poor..higher prices for used beaters.
There are better ways to run this type of program, but I’m sure that no one in congress took a serious look at other countries.
Ah....but having all the poor walking instead of driving will cut down on the obesity problem. Another triumph for our skinny president and his central planning czars!
From the videos I’ve seen, Volvos, Jeeps and the like are being destroyed — good used cars. The cheap new cars are Kia and Hyundai. This seems like a stimulus program for Korea and an America highway uglification program.
I envision a scene in my mind where the auto dealers conduct a sacrifice of the vehicle. They ceremonially destroy the car while dancing, chanting and praying to the earth-god asking her to spare us from global warming.
And how much energy will be used and pollution generated to destroy perfectly good cars? This is a bad idea no matter how you look at it! Even if I were a die-hard environmentalist, I'd be hard-pressed to find the benefit of this program.
Worth Repeating!
I just had a brilliant idea (hey, most of the times I’m humble)...
You know the way you have to have an Environmental Impact Report (EIR) before you can undertake any significant development project? Well I think we should require an EIR (ECONOMIC Impact Report) for any government program. And a requirement must be to follow Henry Hazlitt (”Economics in One Lesson”) guidelines in analyzing them, wherein a detailed study of the consequences is undertaken. It should aim to spell out who loses, who gains, how much and what’s the net effect. Like the environmental report there should be a review and comment period by the public before it gets voted on.
The CBO does some rudimentary study like that today but it can be ignored - moreover, the review and approval process is not the same.
I'm fairly certain that this is part of a well thought out scheme. Too many things are being blamed as "unforeseen" or "unintended consequences." What if some of these consequences HAVE been foreseen and intended, and certain actors have been playing this like a game of chess, looking 3 or 4 moves ahead.
They purposely exclude the oldest vehicles from the program, knowing that the vehicles they're destroying would probably have been the next step up vehicles for those at the low end of the income spectrum. This makes it less and less likely that the poor will be able to have their own vehicles in the future. It also (as you stated) will drive the cost of used cars up, and make maintenance more difficult and expensive for those who have cars in that age range.
I believe that this is a concerted effort by "environmentalists" to try to reduce urban sprawl - without cars, people will be forced to move into heavily urbanized cities. And without the ability to travel at will, they (the authoritarians who have taken up the mantle of "environmentalists") will finally have complete control over the majority of the city dwellers.
One of the things that has really set American people apart from the rest of the world is that we've had a level of personal freedom that is really unknown anywhere else... We've been able to just pick up and move somewhere else, jumping in the car and taking a ride. Have you seen what happens to a senior citizen when it becomes obvious that they're no longer capable of driving safely, and they have to stop driving? They go into a deep depression. Even worse is if you have to take their keys away from them, because they refuse to give them up on their own, but you know they're a danger to themselves and others on the roads (we just had to do that with an 85 year old aunt - she was in a minor accident and got a ticket for driving on the wrong side of the road on the same day!). Having your own vehicle brings one a level of independence and freedom that we haven't given much thought to. And the people in many other countries have emulated us in this respect. But I don't believe that any other country has a "car culture" that's so heavily integrated into their national psyche. And those who wish to control us know that the first step on total domination of the population is to take away our cars, and force us to live where they want, in order to use "public transportation."
Mark
I can see it now: low income earners with a clunker, will be sucked into buying a new car....low interest rates....then a few months down the road, the guy losses his job, hence unable to make his payments...guess what, the Lone President will ride up, announce a program to assist the unemployed to keep his car...
New cars just got more expensive too if, like me, you don’t own a clunker but want to buy a new car. And the geniuses that brought you this bill and much of the mortgage mess now want to increase their regulation of the banking and healthcare industries. And according to John Conyers they are not even reading the bills on which they are voting. Why does anybody trust Congress to display competence in any field of endeavor?
Ah....but having all the poor walking instead of driving will cut down on the obesity problem. Another triumph for our skinny president and his central planning czars!
Yes, either lose weight, or drop dead. A Twofer!
Well I think we should require an EIR (ECONOMIC Impact Report) for any government program.
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How much energy is used to produce a new car? I wouldn’t be surprised if the environmental impact of this program is negative in that it increases energy use.
That’s exactly right. I was reading about that 1988 BMW getting murdered (haha) and I was thinking “Man, I would like to have that car to put around town”.
Destroying wealth, adding cost to poor people, taking away tax dollars to states and local governments. Good thought out move by the democrats central planning committee. Wonder what the central committees ten year plan is.
This was a very well thought out, but worrisome, comment.
Wrong, the democrat want you to lose weight and drop dead and stay out of the hospital unless you are a minority democrat voter.
The Senate won’t get around to this crisis until next week. Contact your Sens to kill this program.
I posted this on another thread but it’s highly relevant to this type of program:
It’s the fallacy of the broken window. A thug breaks a window in a store. The store owner buys a new window. Presto, the economy has benefited because the glass seller has a profit. Should we go around breaking windows (or destroying cars) to help the economy?
NO!
The storeowner would have bought something else with the money for the window, say a new accounting program to make his life easier. He would have had the window and the new accounting program and been better off, while his spending would have been the same.
In this case a new car is sold and an old car is destroyed. The tax money to overpay for the old car and destroy it could have been spent on something useful — so the economic effect would be the same — and we’d still have an old car on the road for people that can’t afford a better auto.
The Democrats love to steal from the unborn!!
They purposely exclude the oldest vehicles from the program, knowing that the vehicles they’re destroying would probably have been the next step up vehicles for those at the low end of the income spectrum. This makes it less and less likely that the poor will be able to have their own vehicles in the future. It also (as you stated) will drive the cost of used cars up, and make maintenance more difficult and expensive for those who have cars in that age range.
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I heard a caller from France on talk radio who said that Americans have it wrong. They think that people overseas are all about the environment when, in fact, if they can afford a car the only car they can afford are the tiny ones. It’s not that they like them; it’s that they’ve been boxed into a corner.
As we all know, the supposed “energy savings” is a smokescreen for something else. When I think of all the parts that are going to be made unusable, it sickens me. The parts remanufacturing industry was one of the first “recyclers” and is very efficient. Don’t think for a moment that your old cars have been going into landfills complete. The figure on how much energy they save would be astounding.
Obviously, this is an indicative of a plan...but for what?
Good move.
Wait 6 months to a year and the used car lots will be stuffed with almost brand new vehicles that have been Repo'd.
It’s the fallacy of the broken window. A thug breaks a window in a store. The store owner buys a new window. Presto, the economy has benefited because the glass seller has a profit. Should we go around breaking windows (or destroying cars) to help the economy?
NO!
The storeowner would have bought something else with the money for the window, say a new accounting program to make his life easier. He would have had the window and the new accounting program and been better off, while his spending would have been the same.
In this case a new car is sold and an old car is destroyed. The tax money to overpay for the old car and destroy it could have been spent on something useful — so the economic effect would be the same — and we’d still have an old car on the road for people that can’t afford a better auto.
...except in this case, the government is offering money to "have the windows smashed."
I wonder how much longer it's going to be before they start taking living victims?
I have old appliances. Will there be a cash for old appliances program?
Mark
I bought a new Fusion in May. I had an ‘88 car that would have qualified as a clunker, I think, but took the re-bate and gave the clunker to somebody who needed transportation.
I was attached to my clunker... it is still a good car that didn’t need to be crushed.
Shhhh! There will be after they read that!!! LOL!
Damn shame. But wait. The fools that think they are making a real deal now have a car payment for something that is a headache. Clunker was probably paid for and probably had more miles. Dealers are upset that now they have a clunker that they cannot salvage parts. Same as goes health care. Maybe they will allow salvaging parts of the old that are let to die with a pill instead of life saving care.
***It’s unbelievable that the government has set aside $1 billion of taxpayer money to remove roughly 250,000 drivable vehicles from the road.***
that is the point! Keep the poor into mass transit!
Destruction is the name of the game.
That fact that the cornerstone of this ‘program’
involves stripping the ‘clunkers’ of their most valuable
parts, thereby removing a huge part of the livelihoods
of people who’ve been in this industry probably for generations, tells you a LOT about the Leftist, Big Government mindset, and how COMPLETELY they want the
advantage of a ‘clean slate’ and how far they’re willing to
go to get it.
Not so oddly, the same mindset was in operation when the
few remaining “electric cars”, fifteen or so years ago, which had lots of people excited in California because of their potential, were ordered DESTROYED by a special Board of the State in CA, never to be thought of , or referred to again.
The program could easily destroy 2 or 3 million cars a year if it became permanent. In a decade, that would be 20 or 30 million older cars taken off the road. I think this would be a very noticeable change in car “demographics”. There’d be fewer older sub-$4500 cars and more smaller, newer cars. Just like Europe!
I wouldn’t be surprised if some of the lefty groups have thought this through with particular social ends clearly in mind. It’s ironic and unfortunate how nicely the left’s social engineering tendency fits with the corporate world’s anti-competitive tendency and willingness to snuggle up with the government if it decreases their risk. The clunker program has the trifecta of pleasing leftist social activists, opportunistic politicians, and the auto companies, and is therefore very likely to become permanent.
Get this,
My son works at a dealership.
Cash4Clunkers Step 1——>Seize the engine so it cannot be used again by pouring chemicals in the carb to seize rods and bearings.
And, how much will a recycler offer me for my engine? $50?
How much would they charge me to buy my engine back?
How much will a recycler offer me for my entire car? $250?
How much would they charge me to buy my car back?
IMO, recyclers, a.k.a. junkyards need to put up or shut up.
So, you're mad at what the owners of these cars, i.e.: private property, are doing?
Are you equally mad at the drivers in a demolition derby for destroying their perfectly good cars, too?
How about guys who race cars and wreck them on the track or burn up their engines?
Who are you to say what anyone else does with their own property? If I want to sell my car to the government, knowing full well, that it will be rendered useless, then what business is it of yours?
Since you seem to feel so strongly about it, perhaps you could pony up a few billion dollars to buy them, instead.
How many cars from the 1930s are still on the road? From the 1940s? 1950s? 1960s? 1970s?
Guess what? This happens even without a government program.
No the junk yards are upset that they didn't get a freebie, just think, how many really good parts they would have had for free, if they only paid poundage for the car. These were suppose to be sold directly to the crusher to prevent the junk yard owners from recycling and playing games with id numbers and titles...
Since you seem to feel so strongly about it why don't you and your other union supporters just pony up the money and pay the tax payer back and have a real free market.
It would probably have been cheaper and wiser for the government to stimulate the economy by giving each TAXPAYER $2500 for us to spend as we wish. Or how about a two month holiday from paying federal taxes? It’s good to spread the wealth around (or so I’ve heard.)
No it doesn't. The program pays people to crush cars years before they would normally get crushed. This means fewer older cars on the road than without the program.
Not too hard to understand in my opinion.
Okay, now I get it. You’ve got some kind of grudge against Big Junkyard.
No one is mad at the car owners and the dealerships. If the govt offers you $4500 to crush a $1000 car, it’s only rational to have it crushed.
The problem is the government paying people to do this. Are you okay with the government using your tax dollar to subsidize other people’s car purchases? As a conservative you shouldn’t be.
This is nothing but a subtle leftist wealth redistribution program undertaken to accomplish certain political and social ends. It’s unprincipled, it distorts the market, it’s the Democrat-controlled government trying to look beneficent by handing out your tax dollars.
Your instinct should be to oppose this.
But you’re angry at your brother-in-law who owns a junkyard and that’s got your mind all warped.
Obama is playing the same economy destroying games that FDR played.
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