Curmudgeon's Corner

Cash For Clunkers Revisited...

Posted by Al Campbell on Aug. 10, 2009

Economy, Political, Quality of Life, Taxes

I have talked with several people who are involved in the automobile business and who have direct experience with the "Cash for Clunkers" program.  This program went through $1 Billion in about a week when Congress thought that would last until November.  Congress has now approved another $2 Billion and tells us that will take this program out through Labor Day.

The huge amount of money being deployed in this program is one thing.  We do not have it available but you and me will pay for it through taxes as the borrowings are repaid (to China, probably).  My discussion with these people was more oriented to what they thought of the program and what it would or wouldn't accomplish.

First, these were, in a couple of cases, people who had spent their adult lifetimes in repairing and keeping automobiles and small trucks running.  They were visibly upset over some of the beautiful autos and trucks that were brought to the dealerships for the $3,500 or $4,500 voucher from the government.  One came close to getting tears in his eyes as he talked about this "carnage".  Another used the term "euthanasia" to describe the process of dumping something into the fuel system that caused the engine to seize up after running for awhile thus destroying the engine and its primary components.  Which, of course, made these junkers much less desirable from the salvage companies' perspective.

Comments were made that many very useful units, that could've been the first piece of transportation for many disadvantaged people, were destroyed thus depriving those people of personal transportation.  I heard that organizations such as Rawhide were deprived of these vehicles to continue their programs of rehabilitating young people who've gotten off to a bad start.

Other remarks centered upon the fact that dealers had virtually nothing left on their lots that qualified for this program.  Some were now reduced to used vehicles only and the best of those were gone already.  This likely means that those dealers will suffer over the longer term as the result of this program.  The used care market will be very slow for months as the dealers try to replenish that inventory.  There might have been smiles for a week or two, but that would be short-lived according to these people.

All were vocal in saying that this was yet another example of Congress not having a clue as to what it was doing and as to how it might've better resolved the problem it was trying to resolve.  The "law" of unintended consequences is obviously alive and well in Washington, D.C., as is the concept of wasting taxpayer dollars.

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The Curmudgeon Blog today is titled "Durbin Double Speak".