"Cash For Clunkers" Program Runs Out of Gas 594
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.
Backend sucks (Score:4, Informative)
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.
Re:What about the traded in cars? (Score:4, Informative)
Actually no, they pour some chemical into the engine of any car traded in on this program. This chemical ruins the engine and makes it impossible to use. They then crush the car for scrap.
There will not be one used car from this program on the road after it is traded in.
Old news, Funds already tripled! (Score:5, Informative)
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:Did I miss something (Score:3, Informative)
Just as an FYI, 17 to 19 mpg improvement is actually pretty good - almost 12%. And at 17 mpg, that's a lot of gas compared to a 12% improvement between, say, a 25 mpg sedan and a 28 mpg replacement.
But yeah, the program has a lot of flaws. I'm not a big fan of it anyway.
Re:Not sure if it is stimulating the US car market (Score:5, Informative)
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.
Wrong category (Score:5, Informative)
Re:Clunkers is a clunker (Score:4, Informative)
Then what I don't understand is that all of the car that are traded in, go straight to the car crusher.
The entire car isn't crushed; the only requirement is that the drive train be destroyed. The recommended method from the feds is to drain the engine of oil, fill it with some sand, and turn it on. The rest of the car is sent off to the parts yard.
It was deregulation that caused this (Score:4, Informative)
The "Financial Services Modernization Act" of 1999 is mostly to blame for our current mess. If we hadn't allowed banks to merge into such large conglomerates, none of them would have been "too big to fail" and the bailouts would not have been considered.
When foreign based companies are allowed to lobby congress and achieve a very high rate of return on their lobbying dollars, there's no hope for the people.
Re:Did I miss something (Score:4, Informative)
Your math is wrong, though it's not entirely your fault... mpg is a terrible measure of fuel economy because it is a non-linear scale. Convert everything to gallons and it will all become clear.
100 miles in a 17 mpg car is 5.88 gallons
100 miles in a 19 mpg car is 5.26 gallons
So trading from a 17 to a 19 mpg car saves you and the earth 0.62 gallons.
100 miles in a 25 mpg car is 4.00 gallons.
100 miles in a 28 mpg car is 3.57 gallons.
So trading from a 25 to a 28 mpg car saves you and the earth 0.43 gallons.
Lesson: don't simply look at the MPG of a car - do the math and see what you really save. You'd be shocked, but switching from a 34 mpg car to a 55 mpg car won't actually save you very much in gas...
Re:Did I miss something (Score:5, Informative)
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 [youtube.com] (late model Jeep Grand Cherokee getting destroyed)
http://www.youtube.com/watch?v=c-ZP6aG2xl0 [youtube.com] (Rather nice looking Oldsmobile Aurora gets trashed)
http://www.youtube.com/watch?v=eOEqJIGnXRw [youtube.com] (Late model Chevy Blazer/GMC Jimmy getting destroyed)
http://www.youtube.com/watch?v=4OhW9u9R49w [youtube.com] (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 [youtube.com] (BMW 7-series getting destroyed)
http://www.youtube.com/watch?v=waj2KrKYTZo [youtube.com] (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)
Re:Clunkers is a clunker----NOT! (Score:2, Informative)
Re:Really seems to be working! (Score:3, Informative)
That's just a LOT of worry and speculation about something that we don't even know about yet. I haven't heard anything about dealerships not getting the cash for their voucher. I haven't even heard that this is a real possibility. Can you provide a reference that this is either happening, or a real possibility? Otherwise it sounds like you're just making this up.
Re:Did I miss something (Score:2, Informative)
If I had an old 17mpg pickup I would be allowed to get a 19mpg SUV and get the free congressional money,
Wrong! The new car has to get at least 10 mpg more than the trade in to get the maximum rebate and at least 4 mpg more to get anything at all. So 17 -> 19 mpg gets you a whole lot of jack shit.
Try looking it up first! [cars.gov]
Re:Did I miss something (Score:4, Informative)
The new vehicle has to be at least 4mpg more efficient for the 3500 rebate and 20mpg more efficient for the 4500 rebate.
(Not that I agree with the program in the first place)
Re:Fuck you, this is about EVERYBODY (Score:3, Informative)
I won't argue the merit of your case, but you are confusing the parable of the broken window [wikipedia.org] with a sociological theory [wikipedia.org] which alleges to describe the positive effect that ameliorating environmental blight can have on curbing negative social interactions (i.e. that fixing broken windows can reduce crime).
Re:Did I miss something (Score:3, Informative)
I would mandate a minimum of 27mpg on the new vehicle
The minimum requirement for the $4500 is 22 mpg for a car + 10 MPG improvement over old car. Granted the SUV requirement of 15+2 is not as large, but it makes as big of difference.
IE if you go from 10MPG to 15 MPG (50% change) over 100k miles you save 3400 gallons. if you go from 25 to 50 MPG (100% change) you save only 2000 gallons over the same miles.
Which is a big reason why the hybrid/electric cars don't (currently) make much economic sense, when a 310HP V6 camaro vs a prius only saves about 200 gallons, or $500 per year. or comparable cars would be a yarus vs a prius that would save maybe 120 gallons a year ($300) yet costs $10,000 more up front, thats 600,000 miles (up to a million miles if you borrowed the money at just 2% interest) for the prius to pay for it's self. (I guess thats my path anyway, compared prius to yarus, prefered the cost/pep of the yarus, but liked more than twice the ride of the camaro @ 2* the price of the yarus, but same $$ as the prius.)
Re:Did I miss something (Score:3, Informative)
Re:Giving away taxpayer money causes inflation. (Score:5, Informative)
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:Giving away taxpayer money causes inflation. (Score:5, Informative)
Wow, what an insightful post.
If you haven't already seen it, take a look at Money as Debt [google.com], which expands on what the parent said in a 45 minute video. Good (and scary) stuff.
Re:Fuck you, this is about EVERYBODY (Score:3, Informative)
Here's one article [slate.com] that tries to put some numbers behind this idea (buying new efficient vs. re-using old clunker). It compares a new Prius (plus its manufacturing energy) vs. a used Corolla (no slouch in mpg). The new Prius wins out (573 million BTUs over its lifetime for gas+production of Prius vs. 701 million BTUs for gas only for Corolla).
There's other data out there support this idea. Obviously it depends on the cars under comparison, but there are some winning scenarios under cash-for-clunkers.
Re:Did I miss something (Score:3, Informative)
If the new vehicle is a category 1 truck that has a combined fuel economy value that is at least 2, but less than 5, miles per gallon higher than the traded-in vehicle, the credit is $3,500. If the new category 1 truck has a combined fuel economy value that is at least 5 miles per gallon higher than the traded-in vehicle, the credit is $4,500.
A category 1 truck is a nonpassenger automobile. This category includes sport utility vehicles (SUVs), small and medium pickup trucks and small and medium passenger and cargo vans.
A category 2 truck is a large van or a large pickup truck, based upon the length of the wheelbase (more than 115 inches for pickup trucks and more than 124 inches for vans).
Now, I copied that from the FAQ, but I actually looked up the relevant section in the law as well:
the term `category 2 truck' means a large van or a large pickup, as categorized by the Secretary using the method used by the Environmental Protection Agency and described in the report entitled `Light-Duty Automotive Technology and Fuel Economy Trends: 1975 through 2008';
and then the EPA report (which explains the classification method in Appendix A)
The truck size classification scheme used in this report is based primarily on published wheelbase data. For cars, vehicle classification as to vehicle type, size class, and manufacturer/ marketing group generally follows fuel economy label, Fuel Economy Guide, and fuel economy standards protocols; exceptions are listed in Table A-3. The classification of a vehicle for this report is based on the authors' engineering judgment and is not a replacement for definitions used in implementing automotive standards legislation.
An old 17mpg pickup might very well be a category 2 truck, but even if that were the case, every SUV is category 1 truck regardless of size (even the Yukon XL--that was the one I checked--the EPA report wasn't terribly helpful there. This legislation seems awfully slipshod...).
Thus, by buying a 19mpg SUV to replace an old category 1 or 2 truck, you would in fact become eligible for a $3500 worth of 'free congressional money.' To get the full $4500, you would need a 5 mpg improvement (i.e. a 22mpg SUV).
Now, if you wanted to instead replace an old (big) category 2 truck with a new (big) category 2 truck, then the new truck would need to be 1mpg more efficient for the $3500, or 2mpg more efficient for the $4500.
The SUV classification standards are pretty hilarious as well. Here is the explanatory language in the rule:
The term "passenger automobile" and its definition are taken from the agency's fuel economy statute. The definition excludes vehicles that NHTSA has determined are 1) not manufactured primarily for transporting persons and 2) vehicles that are capable of off-highway operation.
So...SUVs are classified as non-passenger vehicles because they are capable of off-highway operation! I'm sure that is a huge use case for all those Escalades. In fact, it goes on to say that currently 2WD SUVs are eligible as well, as long as the model is also available in 4WD, although they are discontinuing the application of that rule in 2011. Someone can try to make the argument that this is at least as stimulating as just giving GM the money directly, and at least lots of people get (part of a) car out of it this way, but arguing that this is some kind of significant environmental program is just laughable.
Re:Fuck you, this is about EVERYBODY (Score:1, Informative)
there is nothing "fiscally conservative" about this plan and most people that call themselves "fiscally conservative" probably oppose it. I do. This is being pushed by people "fiscally liberal" who want to spend money we don't have to fix a problem that the program won't fix.
Re:Yeah. I think you did... (Score:1, Informative)
So what you're saying is that you bilked the government out of funds in a manner that is completely outside of the use they were intended for. The money was to get people out of junkers and into newer more efficient cars. Instead, you got out of a newish efficient car and into a new car with a bit better mileage. You just happened to unload your junker you had on the side, as well.
Thanks, I'll be paying for your Cooper S now when my tax bill comes due. Dick.
Re:Giving away taxpayer money causes inflation. (Score:2, Informative)
And now in more practical terms:
- When my grandfather was a young lad (1920s) he could buy a suit with quarter-ounce of gold, or about 5 dollars paper money.
- Now today that same suit still costs about quarter-ounce of gold, but 300 dollars paper money.
Notice how the gold kept its value, but the paper did not. By constantly printing more-and-more money the Federal Reserve is erasing people's wealth. If for example my grandfather had decided not to buy a suit, but instead kept his 5 dollar greenback under a mattress, he'd have lost personal wealth (he couldn't even buy a tshirt today, much less a suit). It would almost be funny if it wasn't so sad.
Every year Americans' saved wealth declines by about 4% (and rising), thanks to the Fed's constant printing of paper, and devaluation of existing paper. Today you have $100,000. Next year it's value will be equivalent to just $96,000. And so on.
Re:Giving away taxpayer money causes inflation. (Score:1, Informative)
The above says some good things (Like how so many people just seem to assume that the basic structure we have now is the right way) but it repeats one common fallacy that gets repeated too often.
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).
Historically that's not what's really happened, and thinking about it theoretically in terms of supply and demand that's not what we should predict. What has happened and what we should expect when production increases and the supply of money remains relatively static (or just doesn't go up as much as production) is that the value of money increases, and prices drop in proportion. Even if the medium of exchange is so rare that it cannot function as currency it can still be an effective medium of exchange through mechanisms such as bank notes (e.g., a bank note entitling the holder to 1e-12kg of gold).
Also, notes such as the above are where fractional reserve banking actually originated. http://en.wikipedia.org/wiki/Fractional-reserve_banking
"Prior to the 1800s, savers looking to keep their valuables in safekeeping depositories deposited gold coins and silver coins at goldsmiths, receiving in turn a note for their deposit (see Bank of Amsterdam). Once these notes became a trusted medium of exchange an early form of paper money was born, in the form of the goldsmiths' notes.[3]
As the notes were used directly in trade, the goldsmiths observed that people would not usually redeem all their notes at the same time, and they saw the opportunity to invest their coin reserves in interest-bearing loans and bills. This generated income for the goldsmiths but left them with more notes on issue than reserves to pay them with. A process was started that altered the role of the goldsmiths from passive guardians of bullion, charging fees for safe storage, to interest-paying and interest-earning banks. Thus fractional-reserve banking was born."
Re:Did I miss something (Score:1, Informative)
I've grown terribly tired of the kool-aid analogy, so let's at least limit its use to valid criticisms...
A car or truck weighing under 6000 lbs has a maximum first-year depreciation of about $3000. As part of the Bush tax acts, Section 179 [wikipedia.org] of the tax code, was revised to allow a vehicle over 6000 lbs to be depreciated up to $100k in the first year. Have a look at a list of 6,000 GVWR vehicles [alphaleasing.com], and you'll see Escalades, Hummers, and the like. Exactly the SUVs our friend was referring to. In 2004, the tax code was revised by congress to limit the deduction to $25k for vehicles not meeting certain criteria relating to cargo & passengers. Still enough incentive to steer a whole lot of consultants and real-estate agents doing 1-person commutes away from getting something reasonable...
Re:Giving away taxpayer money causes inflation. (Score:2, Informative)
An interesting video but it is very wrong when it tries to draw a distinction between what is calls "debt money" (i.e. fiat money) and "value money" (i.e. gold backed money). It misses the fact that all money whether fiat or gold backed is actually debt.
Neither paper money nor gold money have direct utility to you as an individual. Their utility comes from the promise that they may be exchanged for goods with more direct utilities. Thus money is in essence a promise of future utility. "Promise of future utility" is another word for debt.
Re:Did I miss something (Score:3, Informative)
That's great for your capital costs, but you are confusing recurring and capital costs. You are talking about spending tens of thousands of dollars in capital costs to save a couple hundred per year. If you are looking to save money, don't look towards diesels or hybrids.
He's looking to trade in a 1987 car for a 2009 one. His current vehicle is 22 years old, so there may be maintenance issues cropping up. Oil, filters, belts and such should still be easy to get, but people who can rebuild carbs are getting rarer and more expensive.
Now, the choice of diesel can be a smart one. For example, I mostly drive highway miles. Right smack in the Diesel efficiency range, I'd be better off avoiding the hybrids though. It all depends on his driving habits.
Oh, and a 17 to 19 mpg improvement wouldn't be enoug - from the site [cars.gov] it's 3.5k for '4 to 10 mpg increase', 4.5k for more than 10.
Of course, he was probably talking about the truck rules, which would mean that the SUV would have to qualify under the truck class. Many today don't.
Why doesn't the 1987 Plymouth qualify? To much mileage? We'd need the model and preferably the engine size to tell more. Plugging in a Reliant, 2.5L, 3 spd auto, you get 3 mpg too much. Ouch...
Personally, I would have subtracted like .5 mpg per year of age beyond 10, just to bias the program towards getting rid of the old ones. Of course, there's nothing preventing commodore64 from buying the volkswagon anyways, he just doesn't get $3.5-4.5k from the feds for buying a foreign car.