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"Cash For Clunkers" Program Runs Out of Gas
Ponca City, We love you writes "The Washington Post reports that Transportation Secretary Ray LaHood has called members of Congress to inform them that the 'cash for clunkers' program will be suspended because the program has run out of money, and congressmen say they intend to ask the Obama administration to divert some funding from the existing economic stimulus package to maintain a scheme that they see as genuinely stimulative. 'Clearly, this has been a very stimulative program that's got consumers back into the car market. It's our hope that possibly more funds can be made available,' says Cody Lusk, president of the American International Automobile Dealers Association." If there is more funding, though, a report on CNET says it may come out of money to have been set aside for renewable energy loans by the US government.
Cheers
I work for many car dealerships and know there's an IT admin somewhere in the fed govt that's having a really bad month.
The backend sites (fueleconomy.gov and esc.gov) are damn near useless - they mandate dealers scan in all the paperwork and upload as pdf, but it's basically been one big DDoS - all the dealers in the country trying to submit the deals right here at the end of the month. Been this way for days.
When you give people their own money back, they spend it.
Who'da thunk it?
Why, I think they could learn from this and practice some more evidence based policy by giving everyone their own money back, and then they could stimulate more than just Government Motors.
Linux - Because Mommy taught me to Share.
I'm still not in favor of this "stimulus". Not only is it for a group of people that have older cars. But it rewards those who were too irresponsible to buy "fuel efficient" cars to begin with. Honestly, 5 years ago you could have gone out and bought a Hummer, and now you can trade it in, and get a discount on your next purchase.
Then what I don't understand is that all of the car that are traded in, go straight to the car crusher. What about all of the families that are in need of a decent affordable car, but cannot afford to buy a brand new one? Why not give a tax credit to everyone who buys/owns a new vehicle that meets a certain MPG?
It just seems like this bill rewards those who are rich and were environmentally irresponsible over the last 10 years.
They estimated that $1 billion would be enough. They figured that would last for six months time.
It barely lasted 2 weeks.
This is why central economic planning doesn't work, and why shortages ran rampant throughout the Soviet Union and eastern communist countries. Simply put - Government politicians are no good at running an economy. They don't have the necessary skills.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
This was on NPR national coverage earlier this week.
Within 24 hours of the news getting out that the program was out of money congress rushed a pre-recess bill to the floor to make sure 2 billion they had in reserve for this program was authorized for disbursement.
Hate to put a damper on all the anti-government diatribes, but congress realized this form of stimulus has worked, and have been swift to see it continues.
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Buying a car is one of the most patriotic things you can do outside of buying a home
And if you can't afford either of those, the third-most patriotic thing you can do is smash some windows, because that puts money in the hands of the insurance claims processor, the workman who fixes the window, the glass manufacturers, and everyone that they buy from...
I am TheRaven on Soylent News
So this "stimulus" money:
Yes, this sounds like a brilliant idea to me.
And on the subject of "improving efficiency of the fleet" - look at the relatively low mileage targets the program has: they consider 26MPG highway to be an improvement? If they REALLY wanted to improve the fleet mileage, they would have insisted upon any car being purchase having at least 40MPG highway.
Sorry, this is just the "bread" part (with the ongoing MJ crap being the "circuses" part).
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What a great way to fix a recession caused by people who got into too much debt buying houses they could not afford! Let's make them get rid of their cars and buy new ones for more debt! Credit is the fuel on which the economy runs, you know. If these people stop spending, then by golly, we need to give them more money so that they can KEEP spending DAMMIT!
There is only one real difference between public and private management of the economy: The government is, at least mildly,ACCOUNTABLE.
Really? We should not forget where the current economic meltdown began. Congress, particularly one committee in the House, regulated and looked out for the interests of the nation monitoring the financial health of Fannie and Freddie Mac. Chris Dodd and Barney Frank, both high ranking members of that committeereceived the most political money from Fannie Mae and Fannie Mac over the past 10 years (Obama was in the top 3 as well [quite the coup for someone who has not been in politics that long]). Their failed oversight may have gotten Dodd a sweetheart deal on his home loan, but the rest of us? We get the to pay for the bailout. Those two knuckleheads are still on Congress.
When a company fails, it fails a percentage of the people. When government fails, it fails all of the people.
Accountability in government is a shell game.
And making a new car and scrapping the old one consumes no energy at all? How long do you have to run the new car before the amount of fuel you've saved is more than the amount used to build the new car? Before the pollution you've saved is greater than that of putting the old one in landfill?
I am TheRaven on Soylent News
I hate how in this whole auto debate everyone seems to ignore the Toyota plants in Kentucky and Michigan and the Honda plants in Ohio and Alabama. The Honda plant in my hometown directly or indirectly employs probably a third of my neighbors.
Moreover, both car companies are publicly traded in the US. I have some friends who have made a killing on Toyota stock in recent years.
Yes, GM is owned by America, and its American operations are bigger, but the car companies that actually make good cars are making a fair number of them here, too.
Your argument is a form of the broken window theory. If someone can fulfill their transportation needs by buying a used car vs a new car then the economy will be better off if they buy the used car. Why? Because in such a situation buying a new car is wasteful - some of those people you mentioned - salespeople, managers, workers, etc - could be allocated to generating other resources that actually are in demand and ultimately that will generate more wealth and utility for society.
So yeah, buy a used car if you want to save money
Again, that saved money can be spent on other goods and services which benefit also benefits the American public.
I see absolutely nothing in this story that in any way relates to Technology. This belongs in the Politics section, editors. Please stop cluttering my Slashdot frontpage with anti-government flamebait.
The reality is quite the opposite.
Without government bailouts, the worst a private company can do is to piss away their own money (and that of their clients who have hopefully done their risk-management homework) and go out of business.
When the government screws up, you pay them a trillion dollars at gunpoint so they can try it again.
He who lights his taper at mine, receives light without darkening me.
Uhhh... are you living in the same country as the rest of us? When corporate heads screw up, they leave the company with tremendous "golden parachute" severance deals, then go on to be hired by some other company at even higher compensation. They most certainly do not end up suffering the way free-market zealots say they should.
The Mongrel Dogs Who Teach
Agreed. The system makes no sense. There are people for whom an old car is not especially polluting, because they only drive it an average of 5 miles per week. Possibly it is a second vehicle that they keep at a country house. Perhaps they are usually outside the United States.
Giving away taxpayer money causes inflation. The inflation is not only in the dollar generally, but also in the price of new cars. Those who focus on the free taxpayer money they are getting may not realize that the dealer has raised prices.
To me, the "Cash for Clunkers" program seems like government corruption. General Motors failed because of consistent bad management, in which most of its cars were rated poorly by Consumer Reports.
Now taxpayer money is being used to support bad management, and the taxpayer money goes to support people who have enough money that buying a new car is a goal, instead of finding a job, or getting through university.
The U.S. government has no money. In the entire history of the world, it is the entity most deeply in debt.
I've discovered that U.S. citizens do not want to believe that their government is corrupt. When they are presented with evidence of corruption, most avoid awareness.
Remind me to never eat meat at your house.
http://twitter.com/OLDTELEGRAM
No, Medicaid covers that particular case. More often, the problem is "Sorry, you're not poor enough"....
"I do not agree with what you say, but I will defend to the death your right to say it"
Building a new car burns-up the equivalent of 50,000 miles worth of gasoline (2000 gallons). And if that new car uses an exotic technology like hybridization, then it burns even more energy to build the battery. This is because you need to burn fuel to drive the bulldozers or chisels that mine the metal or rubber, the fuel to move the metal/rubber to the factory, and energy to melt the metal/rubber/plastic into useable products.
Driving an older car is better for the environment (saves 2000 or more gallons), and smashing an old car truly is the equivalent to smashing windows just to "make work". The only time upgrading makes sense is if the old car is belching smoke, but as long as it keeps passing State Emissions Tests then it's cleaner than buying new.
It's especially a waste to destroy all the parts.
Those nuts/bolts/radiators/et cetera should be recycled into repairing other cars, but instead Congress chose to destroy them. Tehy are following the old "throwaway" paradigm rather than the greener "reuse" philosophy. Bad, bad, bad policy.
"I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
I do find it comical that this is being floated as a stimulus plan when it seems to be going to foreign car companies.
What is a "foreign car company"? If you mean "a car company that is foreign", consider that the shareholders live worldwide. If you mean "a company that makes foreign cars", consider that a lot of Honda, Toyota, Subaru, and the like have plants in the United States. Is a Toyota built in Ohio by American workers who pay U.S. income tax more "foreign" than a Ford built in Mexico?
The people who really need this program as the poor driving old clunkers, but they can't afford the new car or secure the financing for the new car (even after the discount). So the effect is that the most of the people taking advantage of this are the middle class, who are trading in older, but perfectly servicable vehicles, as part of the program. The "clunkers" name is a lie - many of these vehicles are problem-free, and feature functional modern safety and emissions systems. Many of these are families doing a "swap" - most families have a large family vehicle and smaller 2nd car, so trade in the old family vehicle for a new smaller car to get the voucher, then turn around and trade in the old smaller car for a new fuel-inefficient family vehicle.
Many people don't know what happens to the old vehicles either. The program requires that they be disabled on the dealers' lot, or face a fine. The prefered way of doing this is to drain the oil and pour a sand solution into the engine and run it to it seizes. Youtube is full of videos now of this procedure being done to these "clunkers":
http://www.youtube.com/watch?v=qjBilHH5z2A (late model Jeep Grand Cherokee getting destroyed)
http://www.youtube.com/watch?v=c-ZP6aG2xl0 (Rather nice looking Oldsmobile Aurora gets trashed)
http://www.youtube.com/watch?v=eOEqJIGnXRw (Late model Chevy Blazer/GMC Jimmy getting destroyed)
http://www.youtube.com/watch?v=4OhW9u9R49w (Nice looking Dodge utility van, apparently they just drained the oil on this one)
If you love cars, please don't click on these links:
http://www.youtube.com/watch?v=j3qXvDDhUpE (BMW 7-series getting destroyed)
http://www.youtube.com/watch?v=waj2KrKYTZo (late model Volvo S80 with the turbo option and Satellite Nav(?) getting destroyed)
So not only do these cars have to be scrapped, to add insult to injury, when the scrap yards get them the most valuable part of the car (the engine) has been permanently ruined. So as far as I'm concerned, this program is nothing more than a disgusting waste of a lot of perfectly good vehicles in some kind of bizarre bailout for the auto industry by using taxpayer dollars to buy new cars for people who don't need them, and removing perfectly good vehicles from the used car market. There is nothing green about it at all when you consider the environmental costs of replacing these non-clunkers with new vehicles and recycling the carcass.
(as a note, I'm particulary pissed about that Volvo... it's a nicer car than mine, not that my car is a bad car - but I can't trade it in for a voucher even if I wanted to because it gets 22MPG and now I get to watch nicer cars than mine get destroyed with my taxpayer dollars. As far as I'm concerned, the program running out of money is a good thing)
the government could help-out by lowering taxes
You must be new here. Lowering taxes gives the government less influence over those who vote for them.
I'd say you missed a lot. First of all, ever since I can remember, and right up until this second, businesses are allowed to write off any car they buy as an expense. So congratulations on having fully swallowed the anti-Bush Kool-Ade.
Second, the reason that you can't buy a 1987 Plymouth as a new car is because they kinda stopped making them in, oh, I'd say about 1987. There as never a ban on selling them new. If there was, you'd hardly be able to get a use one now, would you. And also, the 1987 Plymouth Colt got 21/26 MPG, ever so slight worse than the 1987 Honda Accord (21/27).
Democrats get elected by convincing everybody they're different from the Republicans. Less corrupt, anti big-business, yada yada yada. But it only takes a few months for people to realize that all they've done is elect the same guys, but with higher taxes.
The truth is that this recession has been driven by two things. The primary factor is that people panicked. EVERYONE freaked out, THE SKY IS FALLING. The second factor is simply a side effect of the first one, banks backed off on giving credit, even to people who were low-risk.
No, this is not what's driving the recession. What's driving the recession is that the amount of debt in the economy, especially the American economy, has reached critical mass. You really need to start reading some blogs like The Market Ticker, Mish's Global Economic Trend Analysis, and Zerohedge to get a true picture of what's going in the economy.
As for this particular "cash for clunkers" program, all it's doing is pulling forward demand for new vehicles. It will cause a short-term rise in demand now, but once the program expires or runs out of cash again, that demand will vanish and there will be nothing to replace it. Sales will have to return to their previous level or even go lower, as the people who buy new cars under this program certainly won't need to do so again for a few years.
At the macro level, all the debt in the system has produced a similar effect. All the demand, all the growth we've seen for years now, has been fuelled by debt. The debt just can't grow any more; everyone's maxxed out and now trying to pay it down. There's so much debt out there that clearing it out is going to be a long, painful process, and during that process we'll be lucky to stave off an outright market crash, let alone actually return to a growing economy.
How long do you have to run the new car before the amount of fuel you've saved is more than the amount used to build the new car?
Never. It takes vastly more energy to produce a new car than the car will ever consume. Even thirsty old Volvo 240s will be thundering away well past the end of their 22-year design lifespan, still consuming 24mpg and *still* nowhere near the amount of energy it took to make them.
Even the more far-out wacky environmental groups are agreed on this - it makes no economic or ecological sense to keep churning out new cars that are only a tiny bit cleaner than the old cars they replace, taking ten times as much energy to produce.
Mod this guy informative if nothing else.
If these cars were going toward recycling it would be one thing, but destroying many of the perfectly good parts just to prevent it being sold as a used car later on is incredibly wasteful.
Bureaucracy expands to meet the needs of the expanding bureaucracy.-Oscar Wilde
It's designed to get inefficient cars off the road and to stimulate the auto industry and all of the companies in that employment chain.
The second two points are true. The first point is just window dressing. The program only gets the second-tier polluters driven by well-to-do middle class people off the road. The third tier polluters, the serious beaters driven by people who can't afford a new car at all, not even with a $4500 incentive, those cars will just stay on the road longer. The government is basically reducing the supply of relatively safe, relatively non-polluting vehicles to the lower classes--- what my wife likes to call the "No Airbags for Mexicans" program. Pollution reduction is just a candy coating to get people to swallow what is actually a gigantic handout to a grossly mismanaged industry.
If a job's not worth doing, it's not worth doing right.
- Now today that same suit still costs about quarter-ounce of gold, but 300 dollars paper money.
Except that, these days, a person would have multiple suits, all sorts of clothes, a couple of cars, more food than you can possibly eat, houses that are quite frankly beyond anything all but the richest in the 1920s could have dreamed of, video games, air conditioning, TV, and more.
Because of this, you could make the argument that the 300 paper dollars is worth far more than the 5 paper dollars was in the 1920s.
All of that was made possible because when you have fractional reserve lending, you create pools of money that can be invested in the creation of new products. If we had to wait for someone to dig up gold, we'd be worthless.
What goldbugs never fail to appreciate, is that gold doesn't have anymore "natural" value than paper money. Gold's supposed value is just as much fiat as paper money is. Whether you declare your money to be based on gold, based on paper, based on apples, or oranges, or an entire economy, money is always going to be fiat. The only non-fiat money this country had was the bank notes of the late 19th century and that turned out to be a disaster.
What the hell is gold actually good for? At least a dollar can help me light a fire or wipe my ass with it. Can't do that with gold. Gold's a terrible metal to make stuff with.. its too soft. All it is kinda shiny. But who cares about a kinda shiny rock when you have LCD screens that shine way more.
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