Friday, July 31, 2009
Cash For Clunkers Cashes Out
The government just blew through $1 billion in tax dollars in just one week in another alarming display of ignorance of the real world in which we live. The cash-for-clunker program is designed to get clunkers off the road and encourage people to drive cleaner, more fuel-efficient cars. That's all fine and dandy, but how much are they offering for your car? $4500! Who would not trade in their $100 clunker for $4500 or even $4500 credit on a new car!? Gosh, I could drive down any ol' street anywhere in the USA and pick up a clunker for $100. As long as I can get it to the dealer, I can make a quick profit of $4400!
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5 comments:
Well what are you waiting for?! Go buy some clunkers and sell them to the government quick! It would be a quick way for you to raise some funds! Hmmmm....Maybe I should check into that....where I can find out how to do that. Grandpa Osorio has a clunker sitting on his lawn right now that he needs to sell.
I believe that the notion was that if you sell your car for the government offer, you will need a new one or another one and that you will purchase and keep the cycle of car purchases going. Old cars need to get out of circulation because they pollute and are often gas guzzlers. I think that was the idea.
Does anyone know if the money offered by the government is required to be spent on a car? I was under that impression but I don't know.
Whether the money is spent on a new car or not, it is a waste of taxpayer money. Whatever the good intentions are, there are unintended consequences. In this case, the used car market will come under pressure, because the program mandates that the trade-ins be destroyed. They cannot be resold. So what are young people to do when they are considering their first car, which is almost always a used car. Fewer used cars on the market = higher used car prices. It is inevitable that someone will pay the price of government's misguided good intentions. As Ronald Reagan stated "The scariest words one can hear are 'I'm from the government, and I am here to help!'"
The program does not put any cash into any consumers hands. It is a deduction off the price of the car at the dealership. The dealer then files paperwork with the government and the government pays the dealership directly. The consumer sees nothing but the qualifying price reduction on the paperwork.
I plan on taking advantage of this if I can with a 1993 Ford Taurus that I have. Although I am not sure if I fully agree with the program in its entirety, I can see where it can help the car industry.
As a pundit said on TV today: It's a win, win, win.
A win for the dealerships, they are selling more cars.
A win for the car industry for obvious reasons.
A win for the environment because only cars meeting certain environmental upgrades can qualify.
The House yesterday voted to extend another 2 billion dollars to the program, the money (including the original money now all gone) was from the original stimulus package: stimulus that is actually working.
I am not concerned that young people must own a car. There will be plenty of them to go around and spending a bit more for them will only teach they young a good lesson in the value of money, a lesson they need to learn anyway.
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