Monday, October 5, 2009

How To Waste $3 Billion

Cash for Clunkers a clunker.
Transportation Secretary Ray LaHood declared in August that, "This is the one stimulus program that seems to be working better than just about any other program."

If that's true, heaven help the other programs. Last week U.S. automakers reported that new car sales for September, the first month since the clunker program expired, sank by 25% from a year earlier. Sales at GM and Chrysler fell by 45% and 42%, respectively. Ford was down about 5%. Some 700,000 cars were sold in the summer under the program as buyers received up to $4,500 to buy a new car they would probably have purchased anyway, so all the program seems to have done is steal those sales from the future. Exactly as critics predicted.

4 Comments:

Anonymous Anonymous said...

If you remove old windows and replace them with new insulated windows, you save money in the long run.
People still shelled out $10,000 or $15,000 or $20,000 for cars.

It's silly to say the purchases stole from the future because you can say that about any purchase. The actual problem was that people were holding back buying and waiting for the future, thus weaken the present with an imbalance. The program not only worked, it also saved car dealerships from going under, so now more will be available as the economy recovers.
The new cars will not only save the drivers gas in the long run, but save them on repairs and maintenance during the recovery. For some older cars, the repairs exceed the value of the car.

Think of the stimulus this way: you've got to travel 300 miles to get something important done, but you only have enough gas to get you 250 miles. The clunkers program was like the government helping out with gas for those last 50 miles.

October 5, 2009 at 12:42 PM 
Blogger steve mcdonald said...

I don't think people were going to just buy anyway - rather, I'm sure statistics showed that the clunkers program swayed buyers from searching for quality pre-owned models or extensive repairs on existing vehicles in favor of new models due to the government incentives not to mention the added incentives from dealers.

The issue that's out there is that the clunkers program may not have been so successful in reducing the number of gas guzzlers out there...

October 6, 2009 at 11:14 AM 
Anonymous Anonymous said...

"I'm sure statistics showed..."

I'm sure you should actually check the statistics before making such silly and uninformed claims.

It absolutely reduced the gas guzzlers begin driven. Each new car replaced and took of the road a low MPG car.

Swaying people to a new car is better than tossing money down the hole for expensive repairs on old cars. The quality pre-owned cars will do better as well, since they aren't competing with the lower-cost clunkers.

October 6, 2009 at 7:56 PM 
Blogger steve mcdonald said...

i'll pull up the report whenb you reveal your identity. ready when you are!

October 6, 2009 at 10:18 PM 

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