Skip to comments.CASH FOR CLUNKERS TRANSFERS WEALTH TO ... THE WEALTHY?
Posted on 07/31/2009 10:06:05 AM PDT by drangundsturm
Was watching morning call and the ceo of an auto company said that the credit scores of the average person taking advantage of "cash for clunkers" was over 700, far higher than the average car buyer walking in off the street in normal times.
This likely indicates that upper income individuals are mainly getting the $1 billion handout from the government. Another great example of "unintended consequences". Low income and out of work individuals won't qualify for financing, but wealthier individuals will, or will have cash available, to take quick advantage of the program.
QUESTION: If there are massive unintended consequences, a major misreading of demand, and huge paperwork backlogs from a program this conceptually simple (the basics of the plan can be described in a single page), how can we trust the government to run health care and predict the consequences of a bill that exceeds 1000 pages?
The purpose of the program was to put UAW members back to work, imo.
I just donated a car to charity a few months ago.
I wish I had waited so I could have gotten in on this newest government scam.
whoever’s brokering off those cars to third world countries is probably going to do OK.
THe healthcare plan can get a similar name, ‘clunker for your cash’
I’d kinda like to get one of those new Pontiac two seaters. Maybe I could get a clunker from craigslist for a couple hundred and use it as a MAJOR downpayment...
And yeah, I have an EXCELLENT credit score.
>>Low income and out of work individuals won’t qualify for financing...<<
Often it is not even about qualifying for financing. The real issue is that they won’t bother. Meanwhile, the “rich” do not like leaving money on the table. When you are thinking about a $30k car and the government has just agreed to give you $5k of a down payment you are almost FORCED to get the best deal you can and then purchase a worthless clunker and use it for those government dollars.
The “poor” won’t bother, generally speaking.
There have already been reports that charities are huge losers under this plan because donations of autos have been slashed.
Well the wealthy pay most of the taxes anyway, so it’s about time for them to get a deal.
Theoretically, the car dealers are supposed to “prove” that the cars under the plan were “destroyed”. But of course, in any government program, there are huge incentives for people to game the system. I can imagine that a year from now 60 minutes will have a story about a junkyard scam where cars were certified to have been crushed under the program, but in reality a rusted out hull was crushed instead and the clunker was shipped to brazil for a wholesaler, with the junkyard operator and/or the dealer getting a piece of the action.
“Low income and out of work individuals won’t qualify for financing, but wealthier individuals will, or will have cash available, to take quick advantage of the program.”
Well, duh. Also, cars that get good gas mileage tend not to be family sized cars, so this idiotic program won’t benefit low income families either.
You only qualify if you've owned, registered, and insured the "clunker" car for the 12 months prior to the trade-in.
FWIW I have three vehicles that would qualify, but I won't participate in this program as it makes no sense to me to trade in a paid-for working vehicle and take on a car payment, higher insurance premiums, higher personal property taxes, etc.
Clunker act pulls useful vehicles off the road. Vehicles that modest people need. So their price goes up.
Clunker act requires the engines, if not the vehicle be destroyed. So used part prices go up.
So, take into the account of the direct and indirect cost to everyone who has to pay more for a used vehicle, or parts, than the Cluncker act is a drain on the economy, hurts poor people, helps better off people.
The parable of the broken window was created by Frédéric Bastiat in his 1850 essay (That Which Is Seen and That Which Is Unseen) to illuminate the notion of hidden costs associated with destroying property of others.
Bastiat uses this story to introduce a concept he calls the broken window fallacy, which is related to the law of unintended consequences, in that both involve an incomplete accounting for the consequences of an action. Economists of the Austrian School frequently cite this fallacy, and Henry Hazlitt devoted to it his book Economics in One Lesson
"Rich" people don't have "clunkers." However, I see no problem getting some of my money back from the extra taxes I have to pay because 47% of Americans do not pay taxes. I'm surprised they allow individuals with higher incomes to qualify for the deal. When they did this in Texas, I believe only people under $45K income could qualify for the $3000 rebate.
MASSIVE PAPER WORK...
That’s the reason we DON”T want gov’t in Health Care or Making Cars or buying clunkers.. My mother in law a nurse, complained that more than HALF of her time was not given to ‘nursing the sick’, but to doing MASSIVE PAPER WORK. All of the endless questions...when they need someone to give them medical attention not a CLERK.
Well, I was not trying to disparage upper income people, being one myself. My point was more that if Obama had thought this program was going to be essentially a $1 billion transfer to upper income people he would have never done it in the first place. In other words they had no idea this was going to happen.
The converse of that is, if Bush had done something like this, the headlines would have been: "Bush proposes billion dollar auto welfare plan for the rich!"
I wasn’t planning on buying, but my 95 Suburban gave up
the ghost last week. So I saved 3500 on a car I would have
bought anyway, and never considered buying anything made by Government Motors or the UAW.
This whole Cash for Clunkers fiasco; Who says God isn’t still blessing America?
The Gates/Obama racial attack on a white policeman? Another of Gods blessings!
Right. Most upper income people I know have cars laying around that have a trade-in value of less than $4500.00. Sheesh!
I’m in the same position-why take on more personal debt?
Either a lot of dealers are going to lose a bundle or taxpayers are going to have to cough up a whole lot more cash...
Either way, when it's over I want a list of the zip codes where the dealers are who actually got the money are...
I’ve got a bridge for sale...
Don't overgeneralize. Many rich people got rich because they don't waste money in the first place, and those habits continue even after they become wealthy. They may start small businesses, manage cash flow carefully so those businesses grow and survive tough times, conserve their personal finances, don't overspend on houses or cars, and that's how they become, and stay, rich. The founder of Novel was a billionaire. He lived in a modest 2500 square foot house and drove a cheap car. He flew commercial, and not first class either.
No matter how much income you have, if you overspend you become poor. Look at Michael Jackson. His income from just the Beatles music he bought was something like $20 million per year. He had assets worth half a billion dollars by some estimates. But he spent so much money, millions in a single shopping spree sometimes, he was far, far underwater in debt by the time he died. It will take a decade to unravel it.
My bad. Did not know about the ownership period rule.
I’m frankly surprised the plan is so popular then. It’s like offering a large sum of cash as a downpayment for a Porsche, but to qualify you have to be destitute and unemployed.
Got my new Jeep Liberty on Wed just in time for my 16 yo daughter. Traded in my 97 Lincoln, I paid cash no financing.
I guess I’m one of the rich guys that took advantage of the program. And now that the government see that the wealthy are getting a good deal the program is done.
That’s exactly what the weatherization program does.
I might not have believed it if I didn't know, for example, that Home Depot puts such returned merchandise as weed whackers in the crusher rather then send it back to the mfg, give it to charity, etc. regardless of how infinitesimal the problem with the unit is.