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C.A.R.S. - Car Allowance Rebate System - Cash for Clunkers. Call it what you want to, but I call it another failed government program.What? A program that was supposed to last three months with it's initial financing but ran out of money - due to its popularity - in less than a week a failure? Why yes ... as a matter of fact ...
In honor of full disclosure, let me say that I looked into this program when it first came out. I drive a 1998 Chevy Cavalier. Cavy (as I like to call her) has been a GREAT car. Not only does she have economic value, but she has emotional value as well - she is the only car Cam has ever "known". She's made it through five Minnesota winters and now 6 Chicago winters. She's been run in to a couple of times (minor dents) but has never been wrecked. She's been EXTREMELY cost efficient - with routine maintenance, she's never needed any major repairs. But with her odometer at just under 140K miles, there has been talk of trading her in on something a little newer.
Here it was! A government program that I was paying for that I could actually use! Hot damn! I didn't qualify for the mortgage programs (that's what happens when you make your payments on time), and I watched helplessly as the government bailed out banks (while allowing HUGE bonuses to be paid to people who allowed them to fail) and the auto industry (who ignored the need for more fuel efficient cars, allowing foreign auto makers to fill that "niche") wondering just what I was getting for my money (other than a nation further in debt). Then came C.A.R.S.
Cavy seemed to be a perfect candidate - less than 25 years old - I've owned her and insured her since conception - her fuel economy is sliding - I just knew she'd qualify for the program ... or not ...
What I didn't know was that the program based eligibility on the "new" (as in 1998 - when Cavy was born) combined city/highway fuel economy. That number needed to be at 18 or below. Cavy? In her prime she was rated at 23. In other words, my 13 year old son might be embarrassed to ride in Cavy due to her "clunker" status, but the government thinks she's a gem! Seems the term "clunker" might be a bit subjective since the government deems a 2008 Hummer H3 4WD to be a "clunker," but not my 1998 Chevy Cavalier ... hmmm ... I beg to differ.
Maybe I am just a wee bit bitter, but just for
In a nutshell, the goals of the program are to help the environment and to stimulate the economy. Can we all agree on that? OK ... let's look at those two points.
Supporters of the program say that the higher fuel efficiency of new cars (reducing the use of fossil fuel) and the increased demand for new cars (helping out the failing auto industry ... again ...) offset the economic value of the scrapped "clunkers."
"Reduction" in fossil fuels ... OK ... One could argue - logically - that forcing someone to keep their gas-guzzling "clunker" might actually result in a greater reduction in fossil fuel consumption. If they are paying more to run their vehicle, they will likely try to drive it as little as possible.
The flip side of this is that, generally, new cars are more fun to drive. Couple that with the fact that the more fuel-efficient cars cost less to operate and you have someone who may have been limiting their driving actually driving more. And what about the energy it takes to scrap old vehicles and produce new ones? Couldn't that process increase the use of fossil fuels, negating any benefit of the additional fuel efficiency of the new cars?
Sure, we've seen an upsurge in new vehicle sales since C.A.R.S. was implemented a week ago, but many (most?) of the people who have traded in "clunkers" would have likely upgraded to more fuel-efficient vehicles within a year or two anyway. That just means we'll see an increase in new cars sales now, and they'll likely flat line again in a year or two.
And since when is moving money from one taxpayer’s pocket (mine) to the pocket of another taxpayer (that 2008 Hummer H3 4WD owner) sound economics? The subsidy doesn't add to net national wealth, or reduce the national debt, instead it moves a bunch of quarters from one bucket to another, and it pays the taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway.
This is a clear case of government policy favoring one industry (one they just bailed out - coincidence?) at the expense of others. The program does help consumers who can take advantage of it, and it certainly boosts profits and employment in the auto industry, but it's funded by all other taxpayers, harming consumers and industries that are not supported by the program.Let's call C.A.R.S. what it is - a redistribution of
The government was close when they required "clunkers" to be scrapped - they should be scrapping C.A.R.S.
*EDIT* In my original response to Hubman's comment, I stated, "... no part of the vehicle traded in can EVER be used again." I have since edited that comment as that statement is UNTRUE!
According to 49 CFR § 599.401 (c) (1) (the Federal Regulation governing this program):
The disposal facility may: Sell any part of the vehicle other than the engine block or drive trainIn other words, the only parts that must be shredded are the engine block and the drive train.
It was not my intent to distribute erroneous information to support my position (as some of my readers *cough*Matt-Man*cough* have accused me of doing), but rather was a honest case of not being thorough in my research before responding to a comment that addressed a topic that was not part of my original post.
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40 comments:
Besides your points, which I agree with, my issue with the program is the supposed environmental benefit, yet the program mandates that every car be crushed and not resold (though I think they may pull the engines and a few other parts...). So let's do something good for the environment by increasing the amount of garbage we produce? I don't get it.
Besides maintaining the military and building roads. And a few other minor activities, Most federal government agencies and activities are pure money pits. Inherently unconstitutional efforts by the federal government are a major source of where our tax money goes and is wasted. Having said all of that, you know we all love Uncle Sugar!
Like the drug we know we shouldn't be using. Uncle Sugar keeps taking care of us. I could go on for ever about where the federal government is and shouldn't be. But why waste time when I can wrap it up quickly.
We love Soylent(money)Green and Soylent Green is us.
Dana, you are so right!
We have the technology to put solar panels on Hybrids helping them be even more fuel efficient. Until I start seeing Government shake their dependence on big oil, I will never believe anything they say....
It is a stupid program. But just look at this problems this program has caused and think about what would happen if the government takes over health care.
Back to clunkers, my dad has completed the clunker exchange and I am in the process. We both had to agree to a full criminal background check. You are ineligible for this program if you are parole or probation, if you have child support or alimony arrears over $1000, if you are more than 60 day in arrears in any federal student loan re-payment or if you have federal or state tax liens.
I think my industry needs a boost and the government should subsidize divorce to the tune of a few billion dollars. I mean, divorce lawyers are suffering too. Hasn't the auto-industry gotten enough?
I agree. I think the government should not be allowed to implement any new programs and be forced to disband any current program that doesn't help every single taxpayer. It's only fair. Cheers!!
Very informative. I was kinda clueless about the whole thing. But I'm really glad to know what Karen posted. That makes me feel a little better about this big steamy pile that is CARS.
I need to read back and see where you were so critical of the previous administration and all of its very serious missteps - or were you just part of the rank and file?
Karen, I've got plans for a national health care post - just need to get my ducks in a row (which the government isn't making very easy).
And I will fully admit that had Cavy qualified for the government handout, I'd have been right there in line seeing what VW could do on a Jetta. *That* would be my little jab-to-da-man ... buying foreign!
Matt-Man, I think the government should not be allowed to implement any new programs that continue to REWARD the people who didn't do the right thing in the first place! Those of us who *do* the right thing (in this case, buy a fuel efficient vehicle 11 years ago - before it was the "cool" thing to do) continue to get screwed without so much as a reach-around.
Real Live Lesbian, Karen's comment enlightened me as well, and I have to say those are not all "bad" ... although you have to wonder what will happen to your name if you come up as owing child support, etc. Seems like the government would then have all the information they needed to take action not related to buying a vehicle.
doggybloggy, there is a HUGE difference between bashing the policy and bashing the man. This policy is garbage packaged in a pretty box, but it still smells really, REALLY bad.
And for the record? The last 4 years of the Bush administration were a MESS. The man forgot the basic principles and policies of his party undermining not only it, but the country as well.
Do the right thing? You mean do what you did? Is that what the "right" thing is?
Are you saying that when the government dictates what the "right" thing to do, it is intrusion, but when you dictate what the right thing to do it's okay and that people who exercised their free market right which I am sure you believe in when buying a car some years ago, it's wrong?
Additionally, how is the CARS program "harming" as you say, a certain group of consumers and industries?
Cheers!!
Okay, I'm going to post about this tomorrow, but I have the opposite situation. My car is classified as a clunker but it's actually a great car.
As for targeting one industry over another, we do that all the time. There are very nice, one time only tax credits available for buying a new home, or your first home, etc. As well as tax credits for buying new, energy efficient appliances and other "stuff."
I'm also sure you were really, really opposed to the big tax credit Bush gave people for buying an SUV, but not a fuel efficient cars? Right?
The environmental side of the argument is silly. There really can't be any positive environmental advantage to this program for several reasons. The most important of those reasons is that you only have buy a car that gets 22 mpg. 22 mpg isn't all that impressive.
But, I think proof that this program is actually pretty good as a stimulus program and is actually working is the fact that republicans want to filibuster it in the senate. If it wasn't working they wouldn't be trying desperately to stop it. And the people who suffer from IOHS wouldn't be so angry about it either. ;-)
Oh, and your Cavvy? Shouldn't have lost that kind of efficiency. If it was getting 23 mpg when you bought it, it should still be getting pretty close to that. If it's getting less than 18 now there's something not right there. My mother had one for 13 years, when she traded it it was still getting mid 20's mpg.
Aaaaaaaaaand I don't see the problem with the things Karen was saying. Every "conservative" I know screams about wanting to drug test anyone getting public assistance, and putting other restrictions on them just like the ones Karen was talking about (which we do). Is it now an outrage to do that middle class folk getting gov't money? We should only treat poor people like that?
Matt-Man, in this case, yes! Doing the "right" thing as in what I did - in this particular instance - not in all (by far). We've know for DECADES that fossil fuels were limited, but all of a sudden, now that the government is giving handouts, it's an *innovative* environmental policy? PULLEEASE!
I'm saying that when the government REWARDS people for doing the wrong thing (by the government's definition, not mine - although in this case they happen to be the same definition) it is a *failed* policy and rewards bad behavior.
And the free market right to purchase "gas guzzlers"? I take no issue with that - now learn to live with the decision you made. So sorry gas prices went up - maybe people should have taken that into consideration when buying that 2008 Hummer (I do like saying "Hummer" in a post related to political policies)
The C.A.R.S. program hurts the majority of consumers and industries by taking $$ that might have been spent on ... say ... clothing, or appliances, or in Karen's case, divorce attorneys, and funneling it all into one industry which has ALREADY been bailed out by the government.
Jay, the fact that your "clunker" is a great car is one of the MANY things wrong with this program.
And you are right - government (not this administration, but government generally) supports special - or should that be THEIR OWN - interest. That doesn't make it "right."
Remember though, this isn't a tax credit - it's a HANDOUT ... or reward, if you like the government's choice of words better. The government is offering a REWARD to individuals who decided fuel efficiency was not important when purchasing a car and now can't afford to drive said car. I'm sorry - that's just silly.
Cavy actually gets better than her 23 mpg rating - I average between 25 and 30 mpg depending on the type of driving I'm doing and the season (cold weather does a number on the poor old girl).
Your point on the "qualifications" is a valid one (like you were waiting on validation from me). My issue isn't so much with the qualifications as it is with what the government DOES with that information should you not meet them, and again, that isn't an issue with this particular administration, but one with BIG (i.e. nanny) government generally.
didnt the government help you buy a home?
When did I mention anything about it being an environmental issue?
As for the Government taking money away from people buying groceries, clothes, and divorce attorneys is bogus.
People can spend their money on whatever the hell they want in the free market. Just because the government offers a program doesn't mean that people have to put their dollars there.
Your argument along these lines goes like this...
Government official "A" says, "Hey I have a great plan to help move the auto industry. Maybe kick start them into hiring some people back down the line, and get consumers to spend."
And the you come along and say, "Well that's a lousy idea because it doesn't help everyone, especially me. So, let's not help either."
Brilliant!! Cheers!!
doggybloggy, did I get a handout from the government to help purchase my home? Absolutely not!
*MY* 5 years of honorable, military service to this country resulted in many benefits, just as employment generally results in benefits. One of the BENEFITS (not reward, not handout) and part of my total compensation package (in addition to the $13K/year starting salary) was a guaranteed mortgage loan that eliminated the requirement of a 20% down payment. I'm still paying the same amount for my house and, should I default on the loan, I will OWE not only the bank, but the Federal Government as well.
Nope! Not a handout - not by any "logical" definition.
Matt-Man, you just don't like it when I'm right!
You didn't specifically say environmental issue, but since that was the bulk of my argument as to one of the two reasons this program is a failure, I assumed you were staying on topic with your generalities.
Are you implying that if the government decided to offer a rebate for, say clothing, that resulted in a significant reduction in their cost (25%-50% on average) that people wouldn't run to WalMart to purchase up clothing? The free-market is "compromised" when the government (not the industry) sways our purchasing decisions. Sure, we can still spend our money wherever we want - but when we stand to get something for nothing (or at least at a significant savings) it certainly tips the free market in a specific direction.
My argument goes more like this ...
Government official "A" says, "Hey I have a great plan to help move the auto industry. Maybe kick start them into hiring some people back down the line, and get consumers to spend."
And then I come along and say, "How can we help the *most* people and reinforce good decisions previously made, as well as rewarding good decisions made now that have a long-term, positive effect, rather than rewarding the people who made poor decisions, reinforcing the notion that the government is there to bail them out when they do."
"Remember though, this isn't a tax credit - it's a HANDOUT"
Tax credits are also handouts. They're subsidizing or REWARDING people for doing something they should have already done. Like by much more efficient appliances or those GAWD-awful low flow toilets. Or for businesses to actually cut down on the pollutants they dump into lakes and rivers. I know you're going to say "No, you're getting to keep a little more of YOUR money through a tax credit." Yes, but at the expense of someone else. Those credits have to be paid for, and they get paid for by someone else paying a little more through direct taxes or fees or whatever. They're not free!
Yeah, this is a direct cash infusion. Which we see is actually a much better stimulus idea than tax breaks or funding for pork barrel projects.
But, the idea that this is being done at the expense of other industries isn't right. While the country is in a recession, the auto industry is in a straight up depression. This program was designed to lower inventories and move cars off lots and give the manufacturers the opportunity to crank up some of their lines again and get people who are on furlough back to work. And for all the other businesses and industries that are affected by the auto industry, which include lots and lots of small businesses.
No industry exists in a vacuum. Any stimulus of any industry, like the auto industry, or housing or the airlines or whatever, has the added benefit of stimulating the industries that are their suppliers or rely on them for business.
And, let's not keep pretending that there aren't gov't programs to help other industries. They're just taking different forms than this direct cash infusion. If you want to help "the most" people, then you should just give a $1,000 check to every single man woman and child in this country without any conditions, no matter their employment status or whether they are taxpayers or on public assistance or whatever. But, that would OMG SOCIALISM!!!
Is the program perfect? Of course not. It's a government program. haha ;-)
Our government has programs for the rich and programs for the poor, but the tax paying backbone of America (what we used to refer as the middle class)- is quickly becoming the working poor... This program annoyed me too because it was one more benefit designed to keep regular people in debt, by using the power of greed.
Generalities? I was very specific as to what I was arguing. And while you discussed the environment and say it is the bulk of your argument your thesis and closing is that the program should be scrapped regardless.
You also presuppose crucial "facts" in your post. You say that people will more than likely upgrade in a year or two anyway, and that people will drive more with a new car. Where do you get that?
Also...I didn't realize the clothing industry was in dire straits and needed help.
Lastly you are either uninformed or disingenuous when you responded to someone by saying that no parts are allowed to be re-used.
Condensers, batteries, tires, radiators and catalytic converters are being re-used. And when you get down to it, the car itself will be re-used as scrap metal.
I'm sorry that others are getting something that you aren't, but I'm not getting welfare, medicare, medicaid, or many other programs, but I'm glad it's there.
Simply because someone is getting or deciding to participate in something that you aren't doesn't mean you are being harmed. Cheers!!
Jay, I understand the "plight" of the auto industry, the question becomes one of what is the best way to handle it and the "recessed" economy. I think this program was sold on benefits it could never provide because it sounded better than saying "We're bailing out the AMERICAN auto industry ... again ... because now the government "owns" it and we want to make sure we get ours.
You talk about many other businesses benefiting from this cash infusion, but isn't it also true that "most" of those businesses RELIED on a booming (or at least holding ground) auto industry for the majority of their cash?
We are really getting in to an entirely different discussion here (although related), but part of my issue with this program is that it puts nothing more than a "band-aid" on the problem. We aren't addressing WHY the auto industry failed - why the economy tanked - we're throwing money at it in hopes that it goes away. It never does, at least not for long.
buffalodick, and see? I didn't even go there! Although I would hope *crosses fingers* that banks have learned their lesson and are being a little more cautious with their lending practices.
I think the main problem here is the word "clunker"..it should have referred to a 'gas-guzzlers'
If we can take some of these beasts off the road, it is a good thing.
Hubman, engines have to be destroyed (i.e. oil drained and replaced with a sodium silicate solution - a "surprise" boom to *my* industry as this was a product we carried for an ENTIRELY different purpose) and drive trains must be disabled as well.
we're doomed, I am so tired of BIG government and their ulterior motives. Special interest is just far too prevalent in government.
Joker_SATX, and this program isn't doing a damned thing to reduce our dependence on fossil fuels, no matter how pretty the package might look.
Matt-Man, my presupposition of "facts" comes from several market predictions based on the current rate of the economic recovery. They are as "factual" as any prediction can be. I did not represent those statements as anything other than assumptions.
I have edited both my response to Hubman as well as my original post to address my error regarding the use of scrapped "clunker" parts. I did not do the research I should have done before responding to Hubman's comment.
It was not disingenuous, although you seem to believe (and state frequently) that insincerity and selfishness are my primary motivators in most of my opinions.
Of course, I *am* a "conservative" therefor my opinions are ALWAYS motivated by selfishness, greed and an attempt to keep the little guy down so that I can have MORE. I can't possibly have the opinion that it's just a bad program/policy based on economics, long-term success of the auto industry as well as the country.
That's quite disappointing when you look at the logistics of this program. Gah.
"We aren't addressing WHY the auto industry failed - why the economy tanked - we're throwing money at it in hopes that it goes away. It never does, at least not for long."
This is the ONLY thing we're doing about the auto industry? I must have dreamed that GM and Chrysler declared bankruptcy and had to re-organize (again). And I must have dreamed the eliminating of thousands of white collar and blue collar jobs. And the elimination of different divisions. And the restructuring of labor contracts and pay cuts and benefits cuts. And all that other stuff that has been happening.
Hey, are those changes going to save the auto industry? We'll have to just wait and see. But, again, let's not talk as if this is the ONLY thing being done.
Jay, I didn't say it was the ONLY thing being done, but those things you mention?
GM and Chrysler declared bankruptcy and had to re-organize (again). And I must have dreamed the eliminating of thousands of white collar and blue collar jobs. And the elimination of different divisions. And the restructuring of labor contracts and pay cuts and benefits cuts.
Those weren't done to PREVENT the auto industry from failing (for the most part) but were done after it had already failed. Is the industry addressing the root cause of the failure? Let's hope so, 'cause band aids only cover up the problem.
Totally get it. My big fear was that people would have a "Clunker" that was totally paid off, trade it in for the $4500 and then have a big ol' car payment because they had to buy a brand new car. Ad to that that some of the dealership were "hiding" the other rebates available to customers from the manufacturer so they could make more money and we have people spending money on things they really don't need because it seems like a good idea.
Save the trade in. Wait a year or two get 20% up for a down payment, put that down on a gently used energy efficient car and finance it for no more than 4 years with a payment of no more than 10% of your gross pay. THAT, my friend, is how you do it right.
Thanks for spelling it out for people like me who don't have the energy to really look into it.
We didn't qualify either so we just traded in our oldy(92) and bought the new one any way.
I don't get why they have to destroy any of the parts. I realize they should be disassembled but why can't the engine block and drivetrain be resold?
"Soylent Green", I rest my case!
Being one of those pinko reds under the bed, I don't have a problem with tax-funded stimulus-packages during a recession. Keynes showed how we can all gain far more than we lose when it's done well.
"When it's done well". Hmmmm.
We have a similar car trade-in scheme over here in the UK which has, it seems, been successful in terms of take-up. However, there is virtually no UK car industry. Even the cars made here are owned by foreign companies.
In other words, the UK taxpayer is helping to support the German, Japanese, Korean and -yes- the US economy! We're all heart :-)
I know this doesn't really add to the conversation but I saw this on someecards.com and immediately thought "oh hey, someone heard Dana!"
http://www.someecards.com/card/3168
Ah! It's been a while, so I'm going to savor this moment.. A new comment on Dana's page.. *Gets a nostalgic tear*
I don't really have a problem with the "Cash for Clunkers" program, per se, but I've got a problem with those who immediately took advantage of this well-intentioned but poorly planned idea.
If this had truly been a well thought out program, it would have targeted folks at or below the poverty level first, and been working to assist these folks in getting reliable newer transportation.. I mean, most of the cars that they drive aren't doing so well on the road, and they certainly don't do much for the environment, regardless of what emissions tests they pass!
When you have some mid-upper class person buying up cars for a couple hundred dollars, then trading that car in for a serious upgrade to get a HUGE cut in their payments? Yeah, that's sheer exploitation.
Case in point:
I have a friend at work that bought an older GMC SUV from a co-worker who couldn't keep up the maintenance costs on the vehicle. Less than a day later that same friend took this GMC to a car lot, and traded it in on a brand-new Ford Explorer.. Yet this Exporer that he purchased didn't even come close to the MPG standard that I assume was supposed to be the intent of the program!
If you ask me, there's too much of the blind leading the blind, and not enough folks with the ability to see helping those who need it anymore!
Great post Dana!!
Isn't one of the major points of the program is that a vehicle older than what, a 2003 model?, that gets less than 18mpg is taken off the road in favor of a vehicle that gets at least 4mpg more than the vehicle traded in. That 2008 Hummer isn't going anywhere, is it?
I do agree that the program ought to be tailored a tad and focus on older vehicles, lower income folks, and exclude all the high end, grossly inefficient SUV's with original price tags in excess of say $30K or so. Wouldn't mind seeing them get more aggressive with the targeted mpg increase too.
And when is Detroit going to pull their heads out of their collective asses and start designing/building a fleet of vehicles that gets 30+mpg?
(I secretly heart the VW TDI vehicles. 50mpg? It is SO on my list of shit to get!)
Bond, Oops! I just gave credit to Jay for your Gas Guzzler suggestion. I would have liked the program to require vehicles to have at least a 10 MPG advantage over the vehicle traded in - and I do understand that to receive the max cash, that is a requirement.
Vixen, the program - in my opinion - just isn't what it was sold to the public as. Call it what it is - a program to put more $$ into the auto industry and put the American consumer further into debt.
Vanessa, but I think a big part of the idea *was* to get people spending money on things they really don't need because it seems like a good idea.
Evil Twin's Wife, I don't think I have the energy to look into any more either!
Lu', not sure Lu, and not even going to hazard a guess!
Ro, thank you for sharing your stimulus with us! Wait ... that sounds a bit dirty, doesn't it?
NY Diva, *giggle* I needed a little lightheartedness on this topic - thank you for sharing!
Jormengrund, welcome back! Although there are always schemers looking for something for nothing, I would think that the requirement of the vehicle being owned for 1 year would be a difficult one to get around.
Brian, I actually looked up the Hummer on the eligible vehicle list and it *was* eligible for the program. As far as I know, the only requirement on the age of the vehicle is that it cannot be more than 25 years old. I don't believe there is a minimum age requirement.
And yes, let's hope Detroit has learned its lesson from all of this.
took me hours to read the comments...
I think I'll hold off and weigh in on your heath care post.
off to read Jay's take
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