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Was the Cash for Clunkers program a good idea or a bad idea?

Asked at Massachusetts Street on August 25, 2009

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Photo of Dan Murray

“I think it was a bad idea because as a taxpayer, I didn’t appreciate my tax dollars being used for someone else to buy a car.”

Photo of John Federico

“It was a good idea … it helped keep jobs at the local automobile manufacturer (GM’s Fairfax plant) and brought in new jobs to the state of Kansas. ”

Photo of Patti Triplett

“I think it was good for some people … if it helps you get a new vehicle, cool.”

Photo of Caren Lowe

“I think it was beneficial for a lot of people.”

Comments

bd 5 years ago

I agree with Dan also, I don't have a clunker but I need a newer car, so I can't use the program that is using my tax $'s . There is also a problem that the lower income buyers can't afford a new car and the recycled affordable clunkers are not availible for resale to them!

So who wins? The middle class clunker owners and the salvage companys? Definetly not the lowers class !

YOUR TAX $'s AT WORK!

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Adrienne Sanders 5 years ago

Salvage companies don't win b/c the cars engines have to be ruined completely. I think it's a very short sighted plan. It gets some gas-guzzlers off the road and gives auto workers and car dealers some business in the (very) short term. Getting rid of the low MPG cars is the only good that comes of it, and really that's a tiny, tiny drop in the bucket and doesn't do anything to reduce oil dependence.

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Flap Doodle 5 years ago

Like the O'dude says about Medicare, it can be both good and bad!

" “Medicare and Medicaid are on an unsustainable path. Medicare is slated to go into the red in about eight to ten years. I don’t know if people are aware of that. If I was a senior citizen the thing I’d be worried about right now is Medicare starts running out of money because we haven’t done anything to make sure we are getting a good bang for our buck, when it comes to health care”.

Five minutes later:

“I do think it’s important for, particularly seniors who currently receive Medicare, to understand that if we’re able to get something right, like Medicare, then there should be a little more confidence that maybe, the government can have a role, not the dominant role, but a role in making sure the people are treated fairly when it comes to insurance.”"

http://hotair.com/archives/2009/08/25/obamateurism-of-the-day-104/

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Bassetlover 5 years ago

I was listening to Dave Ramsey yesterday and he made a good point about the Cash for Clunkers program. He hates the program because he feels the majority of people who traded in their clunkers ended up with new cars they can't afford to begin with! And that their willingness to take on additional debt will just snowball into bigger problems down the road.

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Matt Warman 5 years ago

I agree with Dan, it was a bad idea. The Gov't should stay out of the free market economy. Now there are some old clunker airplanes I see on the approach path to the airport over my house. If they want to set up a program for those...

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cfdxprt 5 years ago

All it did was shift the demand curve forward on transactions that would have probably taken place anyway. This means that we should expect auto sales to fall through the floor now, since anyone looking to purchase used the program. I suppose we can't expect gov't to understand economics though. They'll just try to pass clunkers II to stimulate demand.

Environmentally, exchanging 750k cars with a little better gas mileage in a nation of 200m cars is less than a drop in the bucket.

But at least they did something...

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RoeDapple 5 years ago

autie (Anonymous) says… "I suppose it was OK if it saved a bunch of jobs. But again I wind up being the dumbass middle class guy that goes to work everyday, pays through the nose for health insurance etcc "

bd (Anonymous) says… "So who wins? The middle class clunker owners and the salvage companys? Definetly not the lowers class !"

Sorry autie and bd, this is just a quirk of mine. We may be middle income, but "class" has nothing to do with this. I know, and I'm sure you all do too, there are a lot of lower income people and families that are considerably "higher class" than someone like, oh let's say, Bernie Madoff....

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BigPrune 5 years ago

Traded in my clunker and got me a new Kia!

Now I look for a refridgerator cause Obama gonna give me some money so I can get me a new Samsung fridge I got my eye on.

Thanks Obama!

I am so happy to help out the American worker!

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RoeDapple 5 years ago

You're repeating yourself Prune, it's boring...

Is this you?

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ksdivakat 5 years ago

I want a TV stimulus!! I want a huge HD, TV with all the bells and whistles!! I NEED it to stimulate panasonic, JVC, and mitsubishi, and I also think that a huge flat screen HD TV with Blue Ray would be the bomb!

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BorderRat 5 years ago

It may have already been stated, but I didn't see it. How much of the money for this program was used for "administrative fees, etc" and how much actually made it to the public?

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Stuart Evans 5 years ago

it's recently struck me that this country voted in a Community Organizer for president. sure he can rally nearly any group of people into a frenzy. But what did he really organize? Were his organizations successful, or just a large group of people chanting inane slogans? isn't he really just a sheep herder? and are the sheep being led to the meadow, or are they being led off a cliff?

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jafs 5 years ago

I usually agree with a lot of your posts, logic, but I have serious concerns about this program.

  1. By completely scrapping older cars, we're destroying many possibly usable parts/metal/etc. - that's not environmentally friendly.

  2. By encouraging people to buy new cars, we're helping dealers, but hurting other mechanics (since dealers usually have warranties which are voided if anyone else works on the car for the warranty period).

  3. If people are going into debt for the new cars, that may become a problem down the road.

  4. The actual increases in mpg are too low - you could have gotten $3500 for a car that simply got 2-3 mpg more.

It seems to me that the program should have saved any usable materials from the older cars, allowed folks to buy used as well as new cars, and required a larger increase in mpg to qualify.

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imastinker 5 years ago

Logic,

I own several cars. All are large american made v8's (clunkers or guzzlers) and a newer pickup truck. I consider the purchase of the pickup truck to be the worst investment I have ever made. I can afford another new car, but will not buy one. Maintenance on our 13 year old town car is much cheaper than a new one. Someone that can barely afford to maintain an older car has absolutely no business getting a new one.

So I should help pay for the neighbors to keep up with the Jones's? Or are you advocating that my children pay for it since Obama would rather pass the burden of his programs to future generations?

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Kat Christian 5 years ago

I think its crappy when I'm low income yet can't afford to buy a new car yet my tax dollars go to pay for someone who probably can buy a new car but is getting a cut rate deal. Plus they get low interest or no interest payment. Someone is getting rich off of this - the CEOs of the car companies. Its corporate welfare and I think its crap. That money could have been spent elsewhere instead of giving it away like that. I try not to think about it because it only p!! me off.

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Stuart Evans 5 years ago

musbhiorlo (Anonymous) says… i didn't like the program because it was only for idiots who had purchased large gas guzzlers, what about the good decent Americans who would never buy a gas hog? what did they get for free?


psst.. your smug is showing. some people didn't buy large gas guzzlers. they bought what was new at the time, or they bought what they could afford, or they bought what they needed. I'm so sorry that we can't all cram our little whiny bodies into a prius and be as eco-friendly as yourself.
and what do you get for free.. you get to keep being a pompous ass and continue to consider yourself one of the few good, decent, Americans.

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Stuart Evans 5 years ago

Sunshine, if you're low income, are you even paying taxes? sure they take some out of your check every week, but don't you probably get back more at the end of the year than you put in?

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bad_dog 5 years ago

"Maintenance on our 13 year old town car is much cheaper than a new one."

That really doesn't make much sense imastinker, unless you never change the oil/air filters, headlights/wipers, or balance/rotate/align/replace the tires on your car. Maintenance schedules are often more user friendly and inexpensive now than they previously were. My late-model Toyota hasn't cost me a cent for maintenance aside from oil changes/tire rotations-ordinary maintenance you experience on any car. If any component on your car fails whether as a result of maintenance or wear/tear you will be responsible for paying the entire cost to repair/replace it. That isn't the case with a new car under warranty-assuming you haven't abused the car.

As for some of the comments regarding destroying otherwise good cars and their parts and the alleged environmental impact, the engine is the only component destroyed by the program. Auto salvagers are given 30 days to strip any usable parts after the car is turned over to them by a dealer. If an auto salvager doesn't want a given clunker part at this point in time, chances are good the market isn't going to improve for such parts. In addition, merely because a part isn't recycled into the used car part market doesn't mean it's headed to the landfill. The steel, iron, glass and plastics are often collected, recycled and remanufactured into other new products.

With respect to the affordability issue, the most popular cars sold under the program were Toyota Corollas, Honda Civics and Ford Focuses. If you can't afford the payment on one of these models, you probably didn't qualify for the factory only financing. If for example, you take a $15,000 Corolla less the $4,500 incentive, you are left with $10,500 to finance assuming you make no down payment. Toyota offers 0% for 4 years on the Corolla-about $219/month. That's $7.30/day for a new car. If that's too much for your budget, you can lease one for $99/month, or $3.30/day. That sounds pretty affordable for most folks. Throw in the mpg savings, worry free driving for 60k and it looks economically viable for most budgets to me. If not, I guess you have to look at your priorities and determine whether you can make any adjustments or just do without it.

Finally, I really don't think the CEOs of car manufacturers are getting rich off this program. Many manufacturers obtain significant amounts of their corporate profits from associated financing entities. Given many of these financing entities are providing financing for these sales at 0%, exactly how are they getting rich? If anything, they are likely operating at a loss for these loans given they have to pay employees to issue and process all the paperwork and then service the loans over their lives. In addition, they are taking all the risk of financing at little if any reward, at least aside from clearing out inventory. That leaves only the profit margin obtained by the car sold on a per sale basis.

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jafs 5 years ago

logic,

If it's true that they'll use any usable parts/etc. I'm glad.

My experience with dealers' service departments is that they're overpriced and no more reliable than independent mechanics - but I agree there are a lot of bad mechanics.

We have older cars and probably spend a few hundred dollars a year on maintenance/repair instead of a few hundred a month for a new car loan. Also, older (non-computerized cars) are often cheaper and easier to work on. And, new cars will cost more to insure/register/etc.

The debt issue is a personal responsibility issue, but it's worth considering unintended consequences with programs like these.

I am just often disappointed with government attempts that have a good idea at the core but fail to implement it well.

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Ricky_Vaughn 5 years ago

Gee, if everyone's so upset about the Clunkers program, why don't we just let W run this country again for another 8 years........shudder

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jafs 5 years ago

And, JR, how much energy is it taking to dispose of the old cars?

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jafs 5 years ago

Agnostick,

I imagine the money comes from our insurance premiums.

Salvage yards provide a lot of usable parts from cars that are towed there.

Again, I think the program would have been much better had it mandated the use of any usable parts/material in the original cars, allowed for the purchase of more efficient used cars as well as new, and required even more in the way of increased mpg.

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jafs 5 years ago

Well, if the clunkers had to get less than 18mpg to qualify, and you could get $3500 for increasing less than 3mpg, a car getting 19-20mpg could qualify.

My 1991 Ford Escort gets 20mpg - do you really think we can't do better than that almost 20 years later?

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