Sunday, August 2, 2009

Cash for Clunkers : Another Clunker of a Program Burning Taxpayer Dollars

My good friend Dana Garrett triumphantly touts the "stunning success" of a government program to give away "free" money to trade-in "clunker" automobiles for purchase of new higher-fuel-efficiency vehicles.

I do find it interesting that Dana seems compelled to make a headline of the proclamation that there is a government subsidy program "that is working" (as if the opposite is the predictable outcome, not noteworthy). I love Freudian slips of truth.

But I have to say, Dana, thanks so much for such brilliant insightful analysis. People are flocking to a program handing out $1000's in cash? You could have knocked me over with a feather.

Sure it's working. People are lining up like gangbusters to get their "free" money. It's blowing through billions so the Obama junta can manipulate the U.S. economy in yet another way, rigging outcomes through private enterprises (car makers, car dealers) and charging it to whoever will end up paying their champagne government tab, if ever.

Despite Dana Garrett's belief that the government's handing out money and people actually taking it, in droves, is in itself a "stunning success", the efficacy of this program remains to be seen.

Sure Dana offhandedly mentions the environment and improved gas mileage - the benefits of which are largely nebulous and incalculable under this program. For example, how many people are trading in that "clunker" second car they rarely or never actually drive for a spanking new second car that they will now, in fact, make use of with more frequency because, taking free money....they can?

Taxpayers, in such instances, are being charged $1000's so that a vehicle rarely or ever used (and thus that rarely burns fuel, by lack of use) is now replaced by a vehicle with somewhat better fuel economy but that may well end up being put to far more use, the net result of which will actually be more fuel burned. So much for energy independence.

How many people are taking unused, idle junk cars and turning them in so they can have government subsidize their purchase of a new car for immediate resale, allowing them to walk with most or all of the "clunker" subsidy in cash. Someone makes a quick buck, and taxpayers get bilked by assuming the super-inflated junk purchase of a "clunker" that was never actually on the road, burning fuel, or emitting anything, which purportedly are what the program is seeking to curb, beyond just outright public subsidies for now-government-owned automakers like GM (Government Motors).

People are quite enterprising at cashing in on big honkin' giveaways, especially in a bad economy, and frankly I doubt any give a rat's ass about the feel-good pseudo-environmental nonsense behind this colossal misappropriation of taxpayer resources. They just want the money and will get it, even if it means thwarting the supposed purpose of the program that enables them to grab some "free" cash.

The statist candymen behind this are (as Al Mascitti of WDEL so hilariously put it) like the Philly Phanatic with his T-shirt cannon - except they are shooting bundles of cash into the hoardes.

They are also unfailingly ignorant of the laws of unintended consequences in their mania to put the country further into crushing hock for lurching ad hoc schemes like this, underlain by their obsessive push to "do something/anything", making their omnipotence and control known and felt across the land.

The "Cash for Clunkers" ruse is no exception. They are robbing demand from future markets in which competition for dollars would drive innovation and production of far more efficient or even petroleum-free motor vehicles than are being produced by the automakers we now reward with public subsidies.

The statists could probably have obtained better results in the aggregate and wasted exponentially less money had they offered $1000 to simply turn in running "clunkers" rather than replace them with yet more petroleum-burning combustion engine powered vehicles...only to become the "clunkers" of tomorrow.

But alas, we have to keep those big clunky government-controlled automakers and their bloated union albatrosses in clover.

And just wait until you see the statist market manipulators try to make this program permanent - yet another indicia of the creeping fascism at hand.....another "stunning success" in government's giving away other people's money "free".

But who cares? It's all borrowed from some future generation anyway, right?

Even in Vegas they get what a clunker this program actually is :

Imagine you're in the car business. You have a problem. Government mandates -- aimed at "fuel efficiency" and lots of other high-sounding matters in which Congress is granted no power to meddle by the Constitution -- require you to manufacture cars that are more expensive, yet lighter and thus less safe than the cars Americans already have.

Add that to the current economic slowdown -- exacerbated by high government taxes -- and your customers are maintaining, buying and selling amongst themselves their old vehicles rather than visiting your showrooms. What to do?

One option would be to take billions of dollars seized from your customers against their will, and use it to buy those older cars and trucks, at higher than market value, from anyone who comes in and agrees to buy one of your newer models.

Then -- this is the good part -- don't turn around and re-sell those trade-ins as used cars: Destroy them.

You could claim you're doing it to "protect the environment" -- though in fact any car without smog controls that's still on the road would be more than 30 years old, probably a restored classic whose owner is hardly going to sell it for $4,500.

What's that? Private auto manufacturers would have to explain to their stockholders why they were destroying those valuable assets for a dead loss? And private car makers have no power to seize their customers cash against their will and put it to use in such a scheme, in the first place?

But who said anything about "private" automakers? The U.S. government now runs America's biggest car company, formerly known as "General Motors." The federal government does indeed have the power to seize billions of dollars from its "customers," on threat of jail. And it has indeed launched such a program, officially known as the Car Allowance Rebate System, or more colloquially as "Cash for Clunkers."

They launched it early last week. And suspended it on Friday, as Congress raced to allocate an extra $2 billion to keep the scheme from running dry. And what a week it was.

Sen. Debbie Stabenow, D-Mich., said about 40,000 vehicle sales had been completed through the program but that dealers estimated they were trying to complete transactions on another 200,000 vehicles.

Jim Mooradian, general manager of Courtesy Imports in Henderson, called getting registered for the program a "nightmare," with systems crashing and dealers experiencing trouble submitting documents. Nor are guidelines clear on when the federal rebate money will flow to dealers.

One letter-writer last week reported her family visited a local Las Vegas dealer and completed one of the "cash for-clunkers" deals -- only to be called back later, told their trade-in didn't qualify, and that they had to bring back either their new car or their $4,500.

"At this point, if you start it three days ago and say it will be a three-month program, and within two days you panic and pull things offline, you will have dealers very hesitant to sign people up again," Mr. Mooradian warns.

This is like getting your car fixed up after your drunken teenager drives it into a wall, handing him the keys, and saying "Try again."

If someone estimates funding of a plan is adequate for 90 days, and the money runs out in a week, how much of the American economy would you trust that person to run?

These days, the method in Washington is to dream up some crackpot scheme, insist that it has to be enacted "immediately! -- no time to read the bill or organize anyone to administer the program! This is an emergency!" Then they draw some dollar figure out of their hat (some would suggest a more proctological source), throw a billion or two at the fan (after all, it's only tax money), and see what flies.

First there was last autumn's huge bank bailout -- the "Troubled Asset Relief Program." Leaders of both parties raced to Washington and said there was no time for study and debate: the thing had to be enacted in a week! It was an emergency! Remember?

The rich banking buddies of the rich bankers at the Federal Reserve got bailed out, all right. But as for all that new credit that was supposed to flow out into the economy, making it easier for small businesses to stay in business? Still waiting.

Next, in Feburary, came billions of dollars in "economic stimulus" funding.

Five months later, less than 10 percent of that money has been spent, most of that on propping up state budgets to make sure no Diversity Training Officer goes without her bureaucratic raises and benefit hikes. Those "shovel-ready projects" that were going to immediately create "high-paying new construction jobs"? Perhaps Washington can use the shovels to shovel something else they've got plenty of.

Now, Congress races to throw another $2 billion of our hard-earned money down the swirling "Cash for Clunkers" whirlpool, approving said measure Friday by a vote of 316-109.

"The federal government can't process a simple rebate. I've got dealers who have submitted the paperwork three times and have gotten three rejections," said Rep. Pete Hoekstra, R-Mich. "What is a dealer supposed to do?"

"There are a lot of questions about how the administration administered this program." House Minority Leader John Boehner of Ohio told The Associated Press, Friday. "If they can't handle something as simple as this, how would we handle health care?"

Oh, gosh. He would have to ask that.

Mary Katherine Ham also catalogs what a wishful ad hoc waste of public resources is this clunker of a scheme :

Meanwhile, the unintended consequences are stacking up with a vengeance:

Buy a Chevelle with your Cash-for-Clunkers money!

Jack up prices for car maintenance on the likely lower-income and responsible folks who forgo the giveaway to keep an old car that doesn't come with a monthly car payment:

If you own a "clunker," you would be harmed by this legislation, because it would remove old cars, and old car parts, from the market, making older cars even more expensive to buy and to fix.

Because the government plans to destroy the "clunkers" traded in -- even if they are perfectly good vehicles -- the supply of used cars will dwindle and both used -- and new-car prices will increase.

Cost already-hurting car companies millions in ads planned and paid for touting the Cash-for-Clunkers program!

But by all means, let's have these folks revamp the 15 percent of the economy that is health care. I'm sure they'll be able to keep us alive for more than a week.

Update: The House hurriedly passed $2 billion more for the Cash-for-Clunkers program, which Obama proclaimed successful "well beyond all expectations."

The vote was 316-109. The bill now goes to the Senate which remains in session for one more week. But they will have to pass the exact same bill since the House goes into recess today and will not be around to participate in a conference to hash out differences.

President Obama praised Congress for their quick action and said he was "pleased with the progress" made in the House.

Republican Rep. Dave Camp had this to say on Twitter: "Cash for Clunkers was running on fumes, so we voted to top it off through September."

Sen. Claire McCaskill at first declared, via Twitter, her intention to vote "no" on a similar provision in the Senate, should it come up next week, as expected: "I will vote no on any extension of Cash for Clunkers program."

But later prevaricated: "I will consider using EXISTING stimulus $ that has already been appropriated to finish up cash for clunker program. No new $."

Sen. John McCain was more definitive in his opposition: "House passes $2b additional for "cash for clunkers" - another outrageous act of generational theft!"

Here's a Newsweek video highlighting the bureaucratic idiocy associated with this messy program. At the end you'll see a dealer marveling at how a perfectly good running late-model Dodge pickup truck that could be well-used by a contractor or small business is headed to be crushed for scrap...


Nancy Willing said...

I hate the horrid waste of sending these vehicles....newish, pristine in some cases, to be crushed. No parts recycling? HORRIBLE HORRIBLE HORRIBLE.

Delaware Watch said...

Wow, two posts in a row from you about something I've written. And this one was so long; it required so much effort. That says a lot, Tyler.


Tyler Nixon said...

You're worth it, Dana. LOL.

downwithabsolutes said...


You've said some things here I had failed to consider. Put me on the side of agreeing that Cash for Clunkers is complete bullshit. Short-term gratification for long-term (potential) failure. Sounds like something the Bush Administration would do.

I continue to be disappointed with the Obama administration.

Anonymous said...

Cash for Clunkers is successful! Its gets those old polluters off the roads, gets people to buy a new car (and puts people to work)! Its environmentally a good deal in the long term, and all those materials going into making cars puts people to work, and money into the economy. Oh I forgot you republicans wouldnt go for any program that might be worthwhile...whiling away the days and hours until 2010...the Party Of NO, with NO ideas.

Libertarian in Colorado said...

"Cash for Clunkers is successful! Its gets those old polluters off the roads, gets people to buy a new car (and puts people to work)!"

[citation needed]

Cash for Clunkers encourages our citizens to get into debt to finance our debt culture. Proper economic policy should be to promote saving, allow the recession occur, and go back to production rather than consumption. Our generation will never allow this to happen, because that means we'd have to actually work for our living. If you think it's only the Republicans that are guilty, then you're just a partisan spewing non-sense.

Most of the problems we face are caused by Americans being in too much debt. I fail to see how creating more debt solves the problem.

Subsidizing debt at the federal level (or any level for that matter) is not a good long term strategy.

karenc said...

You can always donate your car to charity. You'll get a tax deduction and the charity will get the proceeds from its sale. Details at

sammy said...

what will they do with the used cars? will they go to the used car market or to scrap market?

if used car market, then it can also mean that the people who have not gone in for the scheme may later on go to the used car market as prices drop, which may impact car sales in coming months/years.

if they are going to the scrap market, then scrap prices may be impacted, affecting steel makers' profitability.