"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.

Comments

Proof Congresscritters are Economically Dense

[commodore64_love]

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.

Old news, Funds already tripled!

[plasmacutter]

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.

Re:Clunkers is a clunker

[Culture20]

Then what I don't understand is that all of the car that are traded in, go straight to the car crusher.

To stimulate the streetsweeping and glassmaking markets, you have to go around breaking a lot of glass...
We're destroying perfectly usable vehicles (usually trucks or SUVs). This is destruction of wealth, not stimulus.

Re:Fuck you, this is about EVERYBODY

[TheRaven64]

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...

Re:Really seems to be working!

[TheRaven64]

You can argue about fuel efficiency

And you need to. How much fuel is required to build a new car, and to scrap an old one? What milage improvement do you need to get out of your new car for this to be a net improvement? It's not immediately clear to me that this program is factoring this into account. Unless you know how many miles a person drives per year, it's difficult to make this calculation. You also have to factor in future fuel efficiency improvements. If a car bought next year is more fuel efficient, but takes the same amount of fuel to manufacture, as one bought this year then waiting until next year to upgrade may result in less fuel being consumed in total.

Re:Really seems to be working!

[Bill Dimm]

the fuel savings nationally should be measurable

That's only true if the cars being turned in were being driven a lot. If retired people are trading in old cars that were only being driven once a week to go to the grocery store, this isn't helping the environment at all. In fact, it is hurting the environment because of the resources that went into manufacturing a new car that was unnecessary. That is why I have always advocated a substantial gas tax -- it creates an incentive to get a fuel-efficient car where the incentive is proportional to the environmental damage (and national security threat of relying on oil from the Middle East) that is actually being done. Further, the people doing damage are the ones that pay a penalty for it. The Cash for Clunkers program is not well aligned with improving the environment, and it rewards people for damaging the environment (i.e. those that bought inefficient cars) at the expense of those that were more responsible, since they will be paying more in taxes in order to pay for the clunkers being traded in.

Re:Really seems to be working!

[rrossman2]

Yeah, and the big issue is the dealerships/new owners may get screwed. There are a ton of cars yet the dealerships have to process via the CARS system. I guess it can take up to 3 hours per car to actually file the thing. The government ran out of money, and the dealerships still have many, many cars sold under the CARS program they are going to need to get CARS money for.

Problem is, the government is working at it's finest again. I'm not really for either party, so don't read this as me blaming one side or the other, it's just how it's been reported. The House has passed the extra $2 million, but it still has to hit the Senate. From reports, there's a few Republican Senators who are going to block the bill, or at least try to stall it long enough.

Why are they going to do this?? I don't have a clue. I understand they may not like the CARS issue, and maybe think it's a waste of money. But that raises a few points. One, it's helped save a lot of small car dealerships, at least for a time now. Two, the money that's been flowing around surely hasn't hurt the economy. Three, if the Senate shoots down the extra money, what's going to happen to the dealerships and new car owners who find out that even though their trade in + new purchase met the requirement of the program, the program ran out of money faster than anyone could believe so now the $3500 or $4500 per car is a no go? The dealership is basically stuck fronting the $3500 or $4500 until the government can get them the money as is. Without the extra influx of money to the CARS program, a *LOT* of dealerships may find themselves holding a *LOT* of $3500 or $4500 "discounts" that will take a struggling business market already and completely trash it.

Even if the dealerships went after the customer for the extra $3500 or $4500, a lot of them may not be able to afford the extra costs, or may have to sell the car off right away. While this may help the "new" used market segment, the customer is back to purchasing a cheaper, possibly less fuel efficient car to get around.

All in all, a confusing and maybe not completely thought out program, but with an even more poorly thought out Government Party "I'm not going to support it because it's another parties idea" possible blocking of money.

Re:Corporate executives are SOO much better right?

[folstaff]

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.

Re:Fuck you, this is about EVERYBODY

[tukang]

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.

Giving away taxpayer money causes inflation.

[Futurepower(R)]

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.

Re:Giving away taxpayer money causes inflation.

[djlowe]

The U.S. government has no money. In the entire history of the world, it is the entity most deeply in debt.

The problem with statements such as this is that they betray a fundamental lack of understanding of what "money" is. So, let's start at the beginning, in the hope that we can clearly understand what the true problem is.

We start from first principles. Let's assume for a moment that you are a farmer and I am a hunter. I want some of the bread that you make from the grain that you grow and you, in turn, want some of the meat that I have. We agree to a mutually-acceptable exchange: In return for your bread, I will give you meat, at an agreed-upon ratio.

This works for we two, and we're both happy with the arrangement, deeming it fair and equitable.

The problem, of course, is that such a system doesn't scale well. As the population increases, and other goods and services enter into the equation, simple barter becomes awkward and cumbersome. If I have the pelts from the animals that I kill, but no meat to spare, and you don't want them, lacking the skill, means or desire to turn them into clothing, for example, I cannot use them to obtain bread from you as they are not of value to you for such an exchange.

So enters into the equation the idea of using a common medium of exchange, which we'll call "money". In the beginning, it's something of universal value - coins, perhaps, made from metals that are sufficiently difficult to obtain in their own right so as to forestall just anyone from doing so, and thereby insuring that they will retain their value as such for awhile. Everyone agrees (for the most part), that this is a superior solution to barter, all things being equal (which they seldom are, but, we're just spinning a tale here, so it doesn't matter if our view of this fictional world is through rose-tinted glasses).

Now, instead of seeking to exchange my pelts for your bread, I've coins to do so: I sold my pelts to a tailor in exchange for them and so can obtain the bread that I want from you at a mutually-agreed upon rate.

You, in turn, take those coins and use them to purchase what the tailor has fashioned from them, a warm coat and some boots, perhaps.

Fast forward a bit: Time passes, the population grows more and more, and supply of goods and services outstrips the availability of money with which to exchange such. Trade suffers, people can't buy what they want, nor sell what they have, nor provide services: Money is scarce (By lack of the source materials, or perhaps by hoarding and manipulation - greed raises its ugly head).

Someone realizes that one way to correct this, is to change from using relatively rare metals for coins, to something that is easily created, script money - or, paper that, while having no inherent value unto itself, can nonetheless be used in place of them, so long as everyone agrees to it.

So, by the power of law, everyone does, and things get better, prosperity ensues. Until, of course, a few people get greedy. They realize that the key to riches isn't in the goods and services, but rather in the medium of exchange for such. Since everyone has agreed to use money to exchange them, and since there's next to no cost to create it now, why, all they have to do is get complete control over it.

That's where the Federal Reserve in the US, and other such institutions around the world enter into the equation, and also where ideas such as "fractional reserve banking" come into play: It's all about control over money now, because money is power.

And over time, money became not a simple medium for the exchange of goods/property and services, but something of value in its own right, while having no equivalent cost. That's also where things such as stock exchanges come from - just another fiction that everyone agrees to, which are useful, but another venue that the greedy can manipulate.

So, over time, there's a reversal - the economy is no longer fundamentally

Re:Did I miss something

[FlyingSquidStudios]

When I shop I follow a policy of never buying anything unless it's at least 50% off

Remind me to never eat meat at your house.

Re:Not sure if it is stimulating the US car market

[tepples]

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?