Cash for Clunkers - why does congress hate me ?

[Tommy Ceez]

Under his proposal, only individuals with adjusted gross incomes of less than $50,000 or joint filers with adjusted gross incomes of less than $75,000 could take part.

So wait, this program is now here to encourage people making under 50k to take on additional debt?

[mcnabb]

This whole 'Cash for Clunkers' is ridiculous, and I laugh at the liberals who are defending this program. I keep hearing, "Look how many cars people are buying, the car companies can't make enough cars right now!!"

Again, these people are not looking LONG TERM at the economy. I bought a car in 2007, and if they had this progam in 2006, I probably would have taken advantage of it, but the bottom line is I bought a car a year earlier, but I am still not going to buy another car for another 6-7 years!!!! So, in 2006, the car companies would have reaped a shortterm spurt in growth, but eventually everyone who bought a car, isn't going to buy another one next year!!!

This is all about politicans saving their asses in the short term, and nobody looks at the longterm effects of these programs. We have a trillion dollar deficit, possibly 2 trillion next year!!! But no one looks longterm that our dollar may not be worth shit in the coming future.

[sracer]

Originally Posted by mcnabb

This whole 'Cash for Clunkers' is ridiculous, and I laugh at the liberals who are defending this program. I keep hearing, "Look how many cars people are buying, the car companies can't make enough cars right now!!"

Again, these people are not looking LONG TERM at the economy. I bought a car in 2007, and if they had this progam in 2006, I probably would have taken advantage of it, but the bottom line is I bought a car a year earlier, but I am still not going to buy another car for another 6-7 years!!!! So, in 2006, the car companies would have reaped a shortterm spurt in growth, but eventually everyone who bought a car, isn't going to buy another one next year!!!

This is all about politicans saving their asses in the short term, and nobody looks at the longterm effects of these programs. We have a trillion dollar deficit, possibly 2 trillion next year!!! But no one looks longterm that our dollar may not be worth shit in the coming future.

I'm against all bailouts, but of all of the government bailouts and stimulus, this is by far the LEAST ridiculous IMO. And it is the most directly stimulative.

The NEED for new cars hasn't dropped... it was uncertainty about the economy and unemployment that caused SALES to drop. This plan simply tries to close the gap a bit.

People need to get a grip. Relative to the amount of money, Cash for Clunkers is getting a disproportionately high amount of criticism compared to the bank bailouts last year and stimulus package this year.

[Birrman54]

Originally Posted by sracer

I'm against all bailouts, but of all of the government bailouts and stimulus, this is by far the LEAST ridiculous IMO. And it is the most directly stimulative.

The NEED for new cars hasn't dropped... it was uncertainty about the economy and unemployment that caused SALES to drop. This plan simply tries to close the gap a bit.

People need to get a grip. Relative to the amount of money, Cash for Clunkers is getting a disproportionately high amount of criticism compared to the bank bailouts last year and stimulus package this year.

Spending tax dollars to destroy useful assets so that taxpayers can generate more debt by replacing them is not effective policy. Under that thought process the ultimate stimulative action is war.

http://jim.com/econ/chap02p1.html - The Broken Windows Fallacy

Some have insisted this isn't an example of a 'Broken Windows' fallacy but I've yet to see a reasonable explanation why not. If it's simply because we're allegedly improving the environment - then that justifies a Broken Window policy that replaces old windows with energy efficient ones.

[sracer]

Originally Posted by Birrman54

Spending tax dollars to destroy useful assets so that taxpayers can generate more debt by replacing them is not effective policy. Under that thought process the ultimate stimulative action is war.

http://jim.com/econ/chap02p1.html - The Broken Windows Fallacy

Some have insisted this isn't an example of a 'Broken Windows' fallacy but I've yet to see a reasonable explanation why not. If it's simply because we're allegedly improving the environment - then that justifies a Broken Window policy that replaces old windows with energy efficient ones.

It's a cute example, but that link illustrates a belief that wealth is fixed. I don't ascribe to that belief.

[arminius]

Originally Posted by Birrman54

Spending tax dollars to destroy useful assets so that taxpayers can generate more debt by replacing them is not effective policy. Under that thought process the ultimate stimulative action is war.

http://jim.com/econ/chap02p1.html - The Broken Windows Fallacy

Some have insisted this isn't an example of a 'Broken Windows' fallacy but I've yet to see a reasonable explanation why not. If it's simply because we're allegedly improving the environment - then that justifies a Broken Window policy that replaces old windows with energy efficient ones.

War is exactly that. Except the losers and some winners pay big time.

[fujishig]

Originally Posted by sracer

I'm against all bailouts, but of all of the government bailouts and stimulus, this is by far the LEAST ridiculous IMO. And it is the most directly stimulative.

The NEED for new cars hasn't dropped... it was uncertainty about the economy and unemployment that caused SALES to drop. This plan simply tries to close the gap a bit.

People need to get a grip. Relative to the amount of money, Cash for Clunkers is getting a disproportionately high amount of criticism compared to the bank bailouts last year and stimulus package this year.

Being the least ridiculous of government bailouts and stimulus is not a good defense, IMHO. The need for new cars has dropped, because of the economic factors you attributed. How many of the people taking advantage of this NEEDED new cars?

I agree, though, that the bank bailouts and stimulus package (and "Making Home Affordable") should have had much more criticism. Doesn't mean that this program shouldn't be criticized as well.

[mcnabb]

Originally Posted by sracer

I'm against all bailouts, but of all of the government bailouts and stimulus, this is by far the LEAST ridiculous IMO. And it is the most directly stimulative.

The NEED for new cars hasn't dropped... it was uncertainty about the economy and unemployment that caused SALES to drop. This plan simply tries to close the gap a bit.

People need to get a grip. Relative to the amount of money, Cash for Clunkers is getting a disproportionately high amount of criticism compared to the bank bailouts last year and stimulus package this year.

I agree with you that this isn't even on the ridiculous scale when it comes to the bank bailouts, because that number reached a trillion dollars!!! I am waiting for someone to do an ad with Dr. Evil, "If not a trillion, why not a............ bazillion!!!!"

I just wish government would get out of the way of this recession and just let it be!!! I own a small family business and they are doing more harm to this country by prolonging the recession with all this ridiculous meddling of the economy. We need to hit a bottom, once businesses see that, and see some uptick in the economy then we can start planning for the future on how to grow our business, and maybe, just maybe, we can start hiring next year. All we are doing this year is honestly just trying to make payroll every week, because you just don't know where the economy will be in 6 months.

[Birrman54]

Originally Posted by arminius

War is exactly that. Except the losers and some winners pay big time.

War seems stimulative because it requires output and the debt or inflation it creates is not immediately apparent. You can't seriously imagine that smashing something into obliteration and rebuilding it is 'stimulative'.

You've paid twice - once to destroy it and once to rebuild it. The result is exactly what you had before.

re: sracer

Please describe the creation of wealth as you see it in this program.

[Nick Danger]

Originally Posted by sracer

I'm against all bailouts, but of all of the government bailouts and stimulus, this is by far the LEAST ridiculous IMO. And it is the most directly stimulative.

The NEED for new cars hasn't dropped... it was uncertainty about the economy and unemployment that caused SALES to drop. This plan simply tries to close the gap a bit.

People need to get a grip. Relative to the amount of money, Cash for Clunkers is getting a disproportionately high amount of criticism compared to the bank bailouts last year and stimulus package this year.

It's a good example of Parkinson's Law of Triviality.

In his essay, the committee quickly agrees to spend a hundred million pounds on a nuclear power plant, and then argues for ten minutes on a hundred pound bicycle shed. Then they spend even more time on the proposal to buy a new coffee maker. Parkinson argues that no one in the committee understood nuclear power plants, so they accepted the (somewhat fishy) proposal from the experts without discussion because they didn't want to look dumb. But more of them are likely to understand the difference between sheds with a corrugated steel roof and a shingle roof. And everybody understands coffee.

People can't comprehend a trillion dollars. They don't understand the banking laws. They haven't studied economics. They don't know what went wrong, or how a trillion dollars fixes it.

But they have a perfectly good understanding of $4500 rebate on a new car. So that's what they're going to discuss.

[wmansir]

Clunkers program could drive used car prices up

I saw this story reported on my local news tonight. I almost laughed when the anchor introduced it by saying ~"The popular Cash for Clunker's program could be having some unforeseen consequences...." It was only unforeseen by those who don't believe in supply and demand economics.

[sracer]

Originally Posted by wmansir

Clunkers program could drive used car prices up

I saw this story reported on my local news tonight. I almost laughed when the anchor introduced it by saying ~"The popular Cash for Clunker's program could be having some unforeseen consequences...." It was only unforeseen by those who don't believe in supply and demand economics.

Well, it is only theoretical at this point. Besides, this is a one-time deal. There MIGHT be a momentary rise in used car prices. But it is worth repeating, the purchases of cars used or new has dropped over the last 6 months as unemployment rises to 10% or higher (depending upon how it is measured).

That reduction in demand for cars (used and new) would have caused prices to drop (theoretically). So if anything, it is wash.

[GizmoDVD]

What'll be funny is when this 3 Billion dries up car sales will fall yet again...and even worse this time. I wonder if I'll still be at my job during that time...hmm.

[hal9000]

Originally Posted by GizmoDVD

I work at a dealership - we've turned down many. That's the rate of people who likely succeeded in getting financed. Many banks won't touch people 650 or below right now.

Just because they have good credit does not mean they will actually pay their payments. Alot of these people are barley getting by and thought getting $4,500 for their running car was fantastic. Reality will smack them in the face when they get their first car payment of $250+. As soon as they hit rough times and can't pay BOOM car gets repo'ed and now they have nothing.

Right on the fucking nose! Come Christmas time, once the honeymoon of the new car payment wears off, all these people that shouldn't be involved in this program are going to go further into debt once they start Christmas shopping.

I predict a couple of months into 2010 we are going to start seeing news reports of an uptick in repos.

[Pharoh]

Originally Posted by sracer

Well, it is only theoretical at this point. Besides, this is a one-time deal. There MIGHT be a momentary rise in used car prices. But it is worth repeating, the purchases of cars used or new has dropped over the last 6 months as unemployment rises to 10% or higher (depending upon how it is measured).

That reduction in demand for cars (used and new) would have caused prices to drop (theoretically). So if anything, it is wash.

Yep. The current demand for used cars is relatively speaking non-existent.

[kvrdave]

I heard an owner of a car dealership in Portland on the radio. They have about $200,000 that they have fronted in the CFC deal and now have to wait on the government to pay them. Imgine if many of these are built up and there isn't enough money. Obviously congress would pay the bill because that is makes more sense than letting these places go under because they took part in a government program.

[Dr Mabuse]

Originally Posted by Pharoh

Yep. The current demand for used cars is relatively speaking non-existent.

A friend I have who owns a dealership says the exact opposite, that used cars are gold, they are the majority of sales, and that the bidding at the auctions routinely goes well above book values for the wholesale price paid.

[al_bundy]

few months ago dealer paid me $9250 for a 2005 Toyota Matrix with 26000 miles and a carfax collision record. it was listed for $11000 a week later and i didn't see it on autotrader two weeks later

[wmansir]

It could be regional but around here the used car market is hot. Gas guzzlers have taken a hit the last couple of years, but regular cars are still up even after gas prices dropped.

[nemein]

More questions about the "greenness" of the program are starting to be raised...

On another note, I thought Obama made some sort of promise about transparency, but it seems it might be harder to do than he thought. Seems to be about par for the course so far IMHO. Big ideas and grand speeches but the details are a lot muddier and difficult to deal w/.

http://news.yahoo.com/s/ap/20090813/...s_not_so_green

SPIN METER: $3 billion buys not-so-green vehicles
AP

WASHINGTON – Transportation Secretary Ray LaHood, the nation's top car salesman in recent weeks, has cited the Obama administration's best-seller list of mostly smaller, fuel-saving cars like the Ford Focus to describe the success of the Cash for Clunkers rebate program.

But what LaHood and other administration officials usually don't mention is that some trucks and sport-utility vehicles that get less than 20 miles per gallon, like the Ford F-150 truck and one version of the Cadillac SRX Crossover, also are being purchased with the new government subsidies. Both are bulky vehicles weighing more than 6,000 pounds when loaded that boast at least 248 horsepower.

Just how many consumers used the federal rebates to buy these larger, not-so-green vehicles is unclear. The Obama administration has declined so far to release detailed records of purchases under the program being compiled by the Transportation Department, listing every clunker deal requesting rebates. The Associated Press requested the data July 31.

The Transportation Department distributes regular summaries of sales from the clunkers program and has used the electronic sales information from dealers to bolster arguments that Americans are dumping gas guzzlers for gas savers. But its failure to release detailed records means the public can't verify those claims.

"Today almost 200,000 new fuel-efficient automobiles averaging 25 miles per gallon are on the road instead of gas-guzzling trucks and SUVs," LaHood wrote on his official blog just before Congress voted to spend $2 billion more for the government rebates last week.

Even the Top 10 list of mostly smaller, fuel-efficient cars that LaHood has cited as evidence of the program's success is being questioned. A different Top 10 sales list produced by Edmunds.com, an auto consumer Web site, from dealer sales data shows fewer small cars and more large vehicles like trucks and utility vehicles make up the best sellers.

Both lists of top sellers include, for example, the fuel-saving Toyota Corolla, and the clunkers program by its definition is encouraging consumers to dump older, less fuel-efficient cars for new, more efficient models.

But the program, now expanded to $3 billion and offering rebates of up to $4,500, isn't limited to the best gas savers on the market. And that's good news to Beny Ledesma, general sales manager at Williamson Cadillac-Hummer in Miami.

The dealership has sold three 2009 Cadillac SRXs — the six-cylinder engine model — through the clunkers program, he said, and is finishing paperwork on two more. Ledesma hopes to sell the other 14 at the dealership, along with some of the Hummer H3Ts on the lot that are eligible for clunker rebates.

Both vehicles get about 18 mpg, considerably less than the 25.3 mpg average that LaHood has attributed to new cars purchased under the clunker program.

"The Cash for Clunkers is definitely generating traffic for Cadillac and Hummer," Ledesma said.

It's not just Honda Civics and Toyota Priuses, two cars that get as much as 29 mpg and 50 mpg respectively, that people can buy with the $3 billion in government rebates. They can also buy versions of the 2009 Lexus RX 350 or 2009 Lincoln MKX, both pricey five-passenger utility vehicles that get about 19 mpg and are capable of towing a small boat.

Buyers must have trade-ins that qualify for such deals — comparable vehicle types with at least 2 mpg less in fuel efficiency than the new purchase. And the new vehicle can't cost more than $45,000.

Even a high-end 2009 BMW X3 crossover utility vehicle, priced at just under $40,000, counts as a gas saver eligible under the government program, with 19 mpg.

White House spokeswoman Jen Psaki said the administration is reviewing the AP's request for the clunkers transaction data that would show all cars purchased and traded under the program, and their fuel efficiency ratings. She said new vehicles purchased are raising the average fuel economy of cars and trucks on the nation's highways and "getting the dirtiest and most polluting vehicles off the road."

Dealers have submitted requests for rebates on 292,447 vehicles sold, at a cost of about $1.2 billion to the government, according to sales data summarized by Transportation Department officials.

It shouldn't come as a surprise that less fuel-efficient vehicles are being purchased with clunker rebates, said Lena Pons of the watchdog group Public Citizen. Congress agreed to loosen fuel efficiency requirements under the program when it passed the initial legislation earlier this year.

Pons said Public Citizen also is seeking sales data from the program to determine whether it has led to drivers replacing larger trucks with smaller cars, or whether vehicles purchased under the program are only marginally better in fuel efficiency.

[Birrman54]

"Stimulus"

[fujishig]

I can't see why anyone is surprised at this point. They relaxed the mpg requirement because they didn't want to give an "unfair advantage" to imports. They restricted the clunkers to cars made after 1984 due to pressure from car collectors and antique car parts sellers. Does anyone really still think the point of this was to reduce pollution?

[cpgator]

How many people are really trading up from a 'clunker' to a Cadillac SRX?

[fujishig]

Originally Posted by cpgator

How many people are really trading up from a 'clunker' to a Cadillac SRX?

Apparently, at least 5 and (they hope) 14 more just at that one dealership...

[cpgator]

Originally Posted by fujishig

Apparently, at least 5 and (they hope) 14 more just at that one dealership...

So it would seem that the vast majority of cars purchased under the program are fuel efficient.

Either way, i think it is a good program, and the best use of stimulus money I have seen.