Cash For Clunkers Redux

I posted last week on the turbulence that the now-passed Cash For Clunkers bill was going through as it made its way through a cantankerous Congress. Miraculously, the bill passed. Now, for some reason, the media is having a go at the bill, calling it everything from confusing, to useless, to environmentally insignificant, to economically petty.

I'll address some of these claims. First, as for those calling the bill confusing, well, I pity the fool. If you have a car that's less than 25 years old (i.e. bought 1984 or after) and that car gets 18 MPG or worse combined fuel efficiency, then you can trade that car in for a new car and get some government green for your effort. How much? Well, that depends. If your new car scores an fuel efficiency improvement of 4 MPG over your old car, then you get a $3,500 check. If your new car is 10 MPG more efficient than your old one, you get $4,500 in the mail. Yes, I know, that is so complex -- I almost had to do some addition to figure it out.

If you or someone you love is still having trouble understanding it -- or if you're still staring at the on-the-bricks beater that decorates your front lawn -- then I suggest you check out CashForClunkersheadquarters.org to get all the info. (If you're having trouble understanding this because Spanish is your preferred language then look here.)

Other criticisms of the bill boil down to the claim that the bill isn't an immaculately conceived and all-encompassing piece of legislative perfection. Bradford Plumber at The New Republic gripes that though the bill could boost auto sales by 10%, the improvement is actually small compared with Germany's auto industry jump of 40% after the passage of a comparable bill. What Mr. Plumber neglects to mention is that the American auto industry dwarfs its little German brother, which is why a 10% jump in US sales is staggering (especially during an industry crisis).

A few others have lamented that the program is too short (its first round lasts July to November) and, of course, some hard-line environmentalists are muttering about those old cars still being useful and that the new, more efficient, and more environment friendly vehicles the bill advances are wasteful. (I hear the drumbeat of "sustainability" pounding somewhere in the background.) This reminds me of Russel Kirk's formulation of the essential difference between conservatism and liberalism: the former is the art of the possible; the latter, the art of the ideal. People saying the bill doesn't do enough are in essence saying that the bill isn't perfect by their own private standard. This kind of thinking neglects (1) that the bill is part of a political process navigated by compromise and (2) that massive change in a country the size and complexity of the US begins with first steps, not first leaps.

The bill is an effective first round. If it goes well there will be a second round and a third, etc. It's true that you probably could keep that old P.O.S. that's vomitting all sorts of environmental unmentionables into the air, and you could save some money, and feel like you've done well by the impovershed nations of the world who can't afford a Prius let alone a 1986 hot pink Camaro. But the goal here is fleet replacement -- something that we're poised to achieve in a very short amount of time if financial incentives and automotive alternatives are available.

At the end of all this, I can only recommend that people check it out for themselves. Look here for the official bill website and search the CashForClunkersHeadquarters.org site to find certified dealers you can talk to about up-greening your ride.

Comments

[Bladernr1001]

Why should I give my hard earned tax money to someone else so they can buy a car...that is the real problem with this. Yet another unconstitutional use of our tax money.

[olmossy]

Yeah I would a lot rather gave it to some Investment Bank.

[ImmanuelGoldstein]

Would you like a nice hat to go with that straw man argument?
In fact this bill is nothing more than an upper class bailout. If you are diving a car more than 10 years old a $4500 credit isn't going to make buying a new car genuinely affordable either.

[jaundicedview]

Another irony here is that cars in the target years for scrapping ,especially those from the 80s got better fuel economy than the bloated monstrosities sold today. About all that will be eligible for the program are old Ford Crown Vics, Chevy Caprices and Buick Roadmasters. Some of those "Clunkers" are out there getting fuel economy numbers that a Prius can only dream about. Fortunately, those are off the table.

[iblogleft]

I think they should have added a used car option as well. I would love to see estimates on how many people are willing to get into another loan with a bank these days. As a matter of fact, I would love to see the percentage of people that actually qualify to get a loan at all.

[robin50]

And what happens with the cluncker? And who makes the payments for the new cluncker? My car gets around 28 mpg it has less than 70k miles on it. It is "paid for" and I expect to get 200k miles out of it. I did my last car. I know, according to advertising, I should get rid of all my current appliances and buy more energy efficient. So far I've not been convienced. Something has to be done with the old, And even with the new there is waste and it's not exactly environmently friendly manufacturing them. Or maybe it's just me, I have a problem getting new when the old is working.

[jaundicedview]

When those cars are crushed, most will be crushed whole, tires, plastic ,glass, upholstery and all and shipped to China. There they will be set on fire in open pits to burn away all that rubber and plastic (real environmentally friendly) , turned into Chinese Rebar, and shipped right back over here. That's a lot of energy used and pollution caused in the name of "Environmentally friendly"

[JScott]

Don't think Camaro's were ever made in hot pink unless an Earl Schieb (for a Mary Kay rep or it was for Angelyne) was done to it.

[LeonBNJ]

They also should have included several other requirement for the vehicle to be traded-in: it must be in roadworthy condition; have a 'clean' title and not used as a taxi, a rebuilt wreck, a flood car; have over 90,000 miles on the odometer.
As to the programs in the UK from sites I go to, there have been reports of little old lady specials with as little as 12,000 miles on the clock or reasonably fuel efficient older cars being traded in and crushed. They should make sure some of the better trade ins are dismantled for parts to help out those that can't afford to buy a new car.

[twogunmojo]

more to the point....a 2002 toyota land cruiser is worth between 17500 and 22500....and gets 13 miles to the gallon....so i could trade it in on a new dodge challenger r/t with 370 horse power and an mpg of 23 on the highway....add the 4500 to 17500 and my new muscle car will cost me 10000....thats the way to green up the world....hahahahahaha.....

[gfs5541]

To be honest, I think the bill is dumb too, but for a different reason. Before the stimulus package, the original version of this bill also had vouchers to switch to Mass Transit options. Now, it's a complete "give me" to the auto industry and the bill doesn't make a restriction for American-made cars only. Not only that, you can trade your clunker for a Prius or a Honda Insight or get one of those 30-40 MPG diesel cars from Germany without helping the American Auto Industry.

[twogunmojo]

lets see...my '95 4runner is paid off....its in great shape....it gets about 15 to 18 mpg....i can take it to any restaurant in town and the valet will park it...i can take it into the woods (oh no!!) and 4 wheel up and down the trails and creeks....and on monday drive it to work again...if gas goes to 5 dollars a gallon i can still afford to drive it....tell me again how going into DEBT is good for me....and if you were really concerned about the environment..why not give me 4500 dollars to make my car more fuel efficient....or buy a used car that gets better gas mileage...or a new motorcycle that gets between 50 and 70 mpg....

[gfs5541]

Okay, first of all, no one TOLD YOU to dump your "paid for", reliable, but gas-guzzling clunker. However, if you could afford to get a loan and you were tired of said "paid for", reliable gas guzzler, then there's help.

[twogunmojo]

you call going into debt help....this bill helps no one but the car industry of which gm now owes us...thats you and me...50 billion dollars....nice of you not to address any of the other points i raised...

[frantaylor]

Hey I have an idea. Let's pick out a whole bunch of really bad ideas and then reimburse everyone who makes them.

Of course this will solve all our problems and really give a great lesson to people: make lots of stupid mistakes, maybe someday someone will reimburse you for it.

[BitJam]

Bingo! Or to put it another way: let's give billions in tax dollars to people who are easily duped by advertising and make bad choices.

[jafd]

Salutations, gentlefolk.

Speaking as an unemployed car salesman ...

Let's face it - This is a subsidy for the middle class (who are, usually, the folks who buy most new cars)

If someone bought a gas-guzzler a couple of years ago, and has been wanting to get rid of it, but has found that its resale value has dropped to the point where he can't afford to get rid of it, or he's 'upside-down' on his car loan (owing more than the resale value), now he has an opportunity to get the economical new car he's been wanting.

And - we hope - the factories will be humming, the showrooms will not feel like tombs, and people will have money in their pockets again.

[twogunmojo]

and how will this bill erase his debt...or stop the upside down problem.....

[robin50]

I live in a rural area. There isn't any taxis here let alone mass transit. To me a car is a neccessary and expensive evil to get you from point a to point b. That is all it means to me. Sorry but I will keep my "paid for" car hopefully for at least 200,000 miles.

[You]

The web site cashforclunkerswhatever makes no sense.
Step 1, visit itself for more information. thanks.
Step 2, use the MPG calculator. what MPG calculator?

I gave up. What stupidity. Me, I mean. Must be me that's stupid.

[WorkingClass]

Many of the working poor cant afford a car. Those of us who can are driving those clunkers your talking about. There are many used car lots in my town where I can walk in with $1,200.00 cash and drive off in my new old clunker. If you know what you are doing you can by one for 6 or 8 hundred. We cant afford to buy a new car. Even if we could make the payment we could never pay the insurance. The cars you want to get rid of are our rolling stock. When you have taken away our beaters we will all be on foot. Thanks a lot.

[ejhickey]

I agree. Although i drive newer car (5 years old) for many years I drove older cars that I could buy for $2000 or less. I paid cash for them and when they need to get fixed I paid cash again . I think I probably saved a lot money by NOT buying a new car when insurance and interest costs are also figure in. Buying s new car is not a was or practical solution for many people.

This program hopes to take one million used cars off the road and crush them. That will certainly increase the price of the remaining used cars simply because there will be less used cars.

[Justin Case 1]

i agree with you. over the last 20 years i have owned 7 cars not one of them cost me more than $500. when they needed repairs i thought about how much money i had already saved by not having finance co. mandated full coverage ins. a car is a device to get me from point A to point B and back again. i know people who are paying over $1000 per month for the car and insurance. i don't need a car to give me ego gratification. what fools these mortals be.

[BBackSoon]

I also drive used ‘Beaters’. If they car has under 150k miles, I feel like I have stepped up.

This bill has nothing in it for me. But I understand the idea, it is for the upper middle class people that bought that new Escalade or Tahoe and now would like to get something more fuel efficient but are still upside down.

The issue I have is that many people will simply go out and pick up a $500 wreck and trade it in with the SUV and get a deal. The problem is that $500 car might have been my next one.

[BobLablah]

Dumb program.
Easy solution: Raise gas taxes $2 per gallon.
Big problem: Prez has no balls to do it.

[hwystar]

"Dumb program."

I agree 100%. --- Just not for the same reasons.

The actual impact on the environment of producing a new automobile is incredibly huge compared to the difference in environmental impact in actual use between the old car and the new one. It would take more than a decade, and probably decades just to catch up to the old car after building the new car, with regards to the impact rendered on the environment of building the new car, and then years of use producing less impact and getting better mileage to pay for the financial cost of the new car compared to maintaining and using the old car.

Another point is that fixing and keeping older vehicles running and in use is actually much less expensive financially, and much more friendly to the environment than the resources expended and impact to the environment of building and buying a new car.

Sure, it may be helpful at giving GM or Chrysler a softer landing, but it is not better for the environment at all, so don't insult our intelligence.

[hwystar]

"Easy solution: Raise gas taxes $2 per gallon."

Disagree 100%. Nothing is more regressive than a sales tax on gas. Working class people have to buy gas to get to work and do their jobs. This would not help them at all, and would do nothing to slow the free fall of the "middle" class into poverty. And those who are not economically disadvantaged will not be affected that much by such a tax, and their behavior would not be changed that much. They will still drive gas hogs and not cut into their driving habits that much. Most Americans live and work where there are no viable public transit options that are practical in real use. People still believe they need to get to work and get home, and run errands. Go figure.

I understand that the existing system that has evolved is unsustainable as it stands. But we have to find resolutions that actually work to resolve the problem, actually make the situation better, not worse.

Like I said, this may be good for GM, and slow their free fall some, or cushion the landing a little, but don't even try to claim it would in any way reduce the environmental impact.

[BobLablah]

So helping the working class today is more important than saving the world?
The run up to $4 a gallon proved that higher prices = less driving. And people live and work where there is no public transit because it's been cheap to do so. Improving the environment will not be cheap or easy for anyone. If it was, it would be done already.