"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.
Really seems to be working! (Score:5, Interesting)
Cheers
Re:Did I miss something (Score:3, Interesting)
Yes. I would trade-in my old 1987 Plymouth to upgrade to a Volkswagen 50mpg Diesel (Jetta/Passat), but unfortunately my car doesn't meet the strict qualifications. Which I find funny. If I had an old 17mpg pickup I would be allowed to get a 19mpg SUV and get the free congressional money, but an upgrade from an old 80s pollutemobile to a new technology car that gets twice the MPG and is about one hundred times cleaner* is verboten.
Yet more government illogic and inefficiency.....
That's the same kind of illogic that allowed businesses to buy SUVs and then write them off their taxes (during the Bush years). I expected such things from the SUV-loving Republicans, but not from the Green Democrats. I expected the Democratic Congress to pass a bill that encouraged more high-MPG carss, not just an excuse to trade one gas-guzzling truck for another gas-guzzling truck.
Oh well.
*
* Jetta Diesel == ULEV (ultralow emission vehicle)
* 1987 Plymouth == so dirty it's banned from sale within the U.S. (except as an older used car)
Re:Did I miss something (Score:0, Interesting)
I was.
My wife's 94 Jeep Grand Cherokee gets 11 MPG tops. Anymore I doubt it's even that seeing it's in 4x4 all the time (dumb idea Chrysler! Maybe that's why they have issues with the drive train? *smack*)
Anyhow, it sucks for us the way the program is setup. She got the Jeep about 6 years ago. It's been her daily driver since then.
There was a period about a year and a half when the rear end went out, because of Chrysler making it all time 4-Wheel drive. We were newly married and cash strapped from college and the real world, so the Jeep sat until I could get it fixed. I replaced the rear end with a replacement from the front yard only to find out the gearing in the diff was different, so I had to replace the front end too. The front end ended up needing a new U-Joint (after a bit of troubleshooting) so I pounded the old one out and a new one in.
As you can see, this took some time to do and afford, so we let it sit uninsured and unregistered to save money since it wasn't road going until it was fixed. After it was good to go, we re-upped the insurance and registration. Now, we re-newed the insurance and stuff well before we ever heard of this CARS program or had any idea it was going to be coming into existence. We called the insurance company to see exactly when we had renewed the insurance and such so we could finally trade the damn gas hog in and get a Honda, Toyota, or Saturn (she likes the Vue which has a Honda motor anyhow) car or smaller, more gas friendly SUV. December 2008. So even though the car has been owned for 6 years, and driven the whole time it was possible (so minus about 8 months), we are ineligible because we haven't had it insured and registered for a full year (short by 4 months and a few days).
So yeah, besides feeling left out by a program that should have had some exceptions to the 1 year of insurance and registeration above, I was going to use it. Even for the people who weren't going to get a new car until the CARS program came out, the $3500 and $4500 combined with the fact a lot of dealerships would double it put a less problematic and fuel hogging car into the price range of people like us who still have no extra money because of student loans, school and house, and were forced to drive whatever left over gas hogging car we could afford, which are typically the worst of their make/model for running efficiently.
Already Stale News (Score:3, Interesting)
Yeah. I think you did... (Score:3, Interesting)
I wasn't planning to get a car for several more years, but CFC made buying a car early worth it. I had an 05 Scion tC and a (clunker) 94 Dodge Dakota. Cash for clunkers put a new Mini Cooper S in my reach with almost no car payment. So I spent a month selling the Scion, and was due to turn in my clunker Friday morning when the money ran out and the dealer got shy of doing the deal. It left me in a bad spot because I didn't want to buy a car without CFC's at all, but I was now driving a mostly unmaintained unreliable car for a daily driver, since my perfectly good car was already sold. There was no warning things were about to go to crap with the program.
I was lucky things worked out by the end of Friday, but I spent a harrowing 9 hours camped at the dealer making sure I was first in line for any remaining funds in the program, and (slowly) submitting the paperwork to the cars.gov site. Cars.gov was so spotty that I participated in the document submission part (and had better luck than the dealer) to make things go faster.
I never would have gotten involved in the program if I'd known it could have run out at any minute and endangered my finances.
Re:Really seems to be working! (Score:5, Interesting)
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:Did I miss something (Score:3, Interesting)
>>>12%
We have very different definitions of good. When I shop I follow a policy of never buying anything unless it's at least 50% off, and often I get 60-70% off the price. That's why if I trade-in my ancient 80s pollutemobile, I would get a fifty mpg car. That's over 90% improvement, but I'm not eligible due to a stupid law.
The improvement I would make, in addition to the maximum of 17mpg tradein, I would mandate a minimum of 27mpg on the new vehicle - nearly 60% improvement. You could still buy an SUV at that level, if that's what you needed.
- So anyway at the end of the day, I'll still be driving my 1987 pollutemobile.
- And other persons will be trading a dirty 17mpg SUV for another dirty 19mpg SUV.
- The net effect on making air more breathable will be unmeasurable.
Re:Fuck you, this is about EVERYBODY (Score:5, Interesting)
Building a new car burns-up the equivalent of 50,000 miles worth of gasoline (2000 gallons). And if that new car uses an exotic technology like hybridization, then it burns even more energy to build the battery. This is because you need to burn fuel to drive the bulldozers or chisels that mine the metal or rubber, the fuel to move the metal/rubber to the factory, and energy to melt the metal/rubber/plastic into useable products.
Driving an older car is better for the environment (saves 2000 or more gallons), and smashing an old car truly is the equivalent to smashing windows just to "make work". The only time upgrading makes sense is if the old car is belching smoke, but as long as it keeps passing State Emissions Tests then it's cleaner than buying new.
It's especially a waste to destroy all the parts.
Those nuts/bolts/radiators/et cetera should be recycled into repairing other cars, but instead Congress chose to destroy them. Tehy are following the old "throwaway" paradigm rather than the greener "reuse" philosophy. Bad, bad, bad policy.
Re:Fuck you, this is about EVERYBODY (Score:4, Interesting)
I agree with most of what you are saying, assuming you are being sarcastic about the fiscally conservative part. It's sad that we seem to have no fiscal conservatives serving us, and those who are supposedly fiscally conservative want to keep extending this wasteful program. I myself drive an old car, with many, many miles on it. It actually gets pretty good mileage (about 30mpg), but I'm sure it's considered dirty, because it's not OBDII.
It makes me wonder, with all this "saving" of the environment we are doing, how much are we wasting resources, money and time, and how much pollution is in fact produced when we personally buy a new car rather than fixing an old car or continuing to maintain it. In the time that my car has served me, others would buy as many as 3 cars.
I'm all for that, as long as that's what the market allows them to do. But subsidies are ridiculous and wasteful on many different levels.
Re:Did I miss something (Score:3, Interesting)
When I shop I follow a policy of never buying anything unless it's at least 50% off
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.
The improvement I would make, in addition to the maximum of 17mpg tradein, I would mandate a minimum of 27mpg on the new vehicle - nearly 60% improvement.
That's reasonable... at least no less arbitrary than the current numbers :)
The net effect on making air more breathable will be unmeasurable.
That's not true. 12% is measurable. And that is the worst case - most new cars being purchased under the plan are sedans, not SUVs.
I'm not a big fan of the plan for other reasons, but you can't argue that it won't make any difference at all. It will stimulate auto sales, and it will reduce pollution and increase fuel economy. My criticism is that I believe there are better ways to achieve those goals without the government handing out money.
More info: (Score:3, Interesting)
G.M.'s Road From Prosperity to Crisis [nytimes.com]
The U.S. government bought 60% of G.M. [cbsnews.com], a company with $172.81 billion in debt and $82.29 billion in assets.
Death and Taxes poster [deviantart.com].
Fuck that (Score:3, Interesting)
I thought this recession was caused by our country's excessive commercialism. How is encouraging the same behavior going to help? $4500 is not going to help a poor family buy a new car, so this amounts to handouts to people who would have been approved for their car loans without it. Why can't I get a free $4500 to put toward my student loans since we are just throwing money around? I don't even own a car. I use public transportation for all my travel. I'm greener than a fucking shamrock. Stop giving my money to people more affluent than I am.
Re:Everyone Did (Score:5, Interesting)
The truth is that this recession has been driven by two things. The primary factor is that people panicked. EVERYONE freaked out, THE SKY IS FALLING. The second factor is simply a side effect of the first one, banks backed off on giving credit, even to people who were low-risk.
No, this is not what's driving the recession. What's driving the recession is that the amount of debt in the economy, especially the American economy, has reached critical mass. You really need to start reading some blogs like The Market Ticker [denninger.net], Mish's Global Economic Trend Analysis [blogspot.com], and Zerohedge [zerohedge.com] to get a true picture of what's going in the economy.
As for this particular "cash for clunkers" program, all it's doing is pulling forward demand for new vehicles. It will cause a short-term rise in demand now, but once the program expires or runs out of cash again, that demand will vanish and there will be nothing to replace it. Sales will have to return to their previous level or even go lower, as the people who buy new cars under this program certainly won't need to do so again for a few years.
At the macro level, all the debt in the system has produced a similar effect. All the demand, all the growth we've seen for years now, has been fuelled by debt. The debt just can't grow any more; everyone's maxxed out and now trying to pay it down. There's so much debt out there that clearing it out is going to be a long, painful process, and during that process we'll be lucky to stave off an outright market crash, let alone actually return to a growing economy.
Re:Fuck you, this is about EVERYBODY (Score:5, Interesting)
How long do you have to run the new car before the amount of fuel you've saved is more than the amount used to build the new car?
Never. It takes vastly more energy to produce a new car than the car will ever consume. Even thirsty old Volvo 240s will be thundering away well past the end of their 22-year design lifespan, still consuming 24mpg and *still* nowhere near the amount of energy it took to make them.
Even the more far-out wacky environmental groups are agreed on this - it makes no economic or ecological sense to keep churning out new cars that are only a tiny bit cleaner than the old cars they replace, taking ten times as much energy to produce.
Re:Not sure if it is stimulating the US car market (Score:3, Interesting)
Re:Clunkers is a clunker (Score:3, Interesting)
Baloney. The cars being traded in aren't long for this world anyway. The glass in a window essentially lasts forever. The broken window fallacy simply doesn't apply here. There's several other problems with this fallacy, outlined below.
Funny you should mention windows though. There's another stimulus plan for tax credits on energy efficient windows. I happen to have 6 windows that are all rotten and in need of replacement. I likely would have bought the cheapest window I could get that'd last, but with a 30% tax credit I chose the energy efficient model. Also, I likely could have waited another few years to replace them if I wanted t, but the stimulus plan means I have to do it this year or next.
The point being, I have to replace my windows ANYWAY. Doing it NOW rather than in a few years helps the economy when it needs help. I also gain the economic benefit of more energy efficient windows, which puts more money in my pocket to spend on other things. The broken window fallacy addresses none of these economic benefits.
Re:Did I miss something (Score:3, Interesting)
Which ironically enough, seems to be bailing out foreign car companies at a higher clip than the US ones.
Of course I have no data to support this - only the same rough estimates at best or anecdotal stories. This of course brings up yet another huge problem with this crappy program - no accountability. They get to say, "wow, look what a great success it is, it's out of money already!" But they have absolutely no idea about the people taking advantage of the program. Are they mostly rich/upper middle who would have bought a vehicle anyway? Was their clunker actually being used much? Some of the people I've heard, it's a kid's car & we're talking about the family's 3rd or 4th vehicle. Mom or pop get a new luxury car and $4500 off and junior now gets a '97 Buick instead of a '94. Again, I have no idea how many of the buyers fit this model - but neither does the government.