The other day I called on someone at the corporate offices of a large Wisconsin automotive group that owned a number of foreign and domestic car dealerships. The conversation got around to government control of the auto industry. Suddenly the person with whom I was meeting left the room and returned with a hundred-eighty-six page document that she had downloaded from the Internet. She dropped it on the table where we were sitting and identified it as the government regulations for dealers regarding the cash for clunkers program.
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Cash for clunkers is a bill, written by congress, which is designed to remove as many gas guzzling older cars from the marketplace as quickly as possible. Here’s how it works: If you own an operating 1984 or newer vehicle that has been insured, registered to you for the past year, and gets a combined 18 miles per gallon or less, you can qualify. You can go to a website to discover whether your car gets less than 18 miles per gallon.
If you trade the gas guzzler in for a new car with a fuel efficiency rating that is four miles per gallon better, you can receive a $3500 voucher which will be applied directly to the new vehicle purchase. If the new vehicle has a fuel efficiency rating that is ten miles per gallon better, you can get a voucher for $4500.
Cash for clunkers seems like a good idea on the surface.
The plan is a boon for new car dealerships as consumers run to the showrooms to take advantage of the offer. Chrysler is even matching the subsidy with an equal amount of cash off the purchase of those cars that qualify for the program. Another industry that stands to benefit is the used auto parts market. Traded clunkers must be rendered inoperable and crushed, but not before the salvage yard strips off all the working used parts.
The cash for clunkers program will help beautify the highways. Some old cars are ugly, with hanging bumpers, rusted rocker panels and brandishing twenty-year-old bumper stickers. Eventually there will be no more rusted hulks lying at the bottom of ravines or out in farmer’s fields. Yeah, right.
Some environmentalists object to the cash for clunkers program.
Many environmentalists point out that a large number of perfectly serviceable vehicles with years of performance left will be pulled from the marketplace. In most cases, recycling older cars by repairing and reselling them makes more sense than relegating them to environmentally unfriendly junkyards.
There is another downside.
What’s to be done about young people just entering the job market who need a car to get to work but can’t afford a new one? How about the single mother who is barely making ends meet, owns a car that’s on its last legs and needs to replace it, but can’t afford new car payments? What about low income families who can scrape up just enough money for a used car? What are the thousands of people who own and work for used car lots to do when their inventories are dramatically reduced? And how about the traffic death toll that will climb as Americans increasingly drive smaller and lighter cars?
The government cash for clunkers program will pull tens of thousands of viable used cars from the market. According to my friend at the automotive group, there is nothing wrong with the older cars that they sell. They are reconditioned, safe, affordable, often sold with warranties, and ready to meet the transportation needs of a large segment of the population that just can’t afford to purchase a new or late model car.
Cash for clunkers is another example of a government program with high cost, estimated at over a billion dollars, which is stealthily picked from the pockets of just about everyone who pays taxes. This program looks great on the surface, but it was instituted with no consideration of the consequences.
And so it goes, whenever the government over regulates a segment of the free market, the little guy gets hurt.
Comments
Since the government has no money, the rebates being passed out are taxpayer money. So, instead of loaning U.S. car companies money, every taxpayer in America is now giving both U.S. and foreign car companies money. Money that might have been used to buy food, furniture, clothes, medicine, go on vacation, to pay for college tuition, or any number of other things at your discretion, is now being given to who the government wants to give it to and many companies will suffer as a result. That is the downside.
I agree and well said. I am a single mom that lives in AZ driving a 13 year old Jeep that does not blow cold air. I have nothing extra to save for a new car and have bad credit. It is the little people that really need the help and the government never thinks about us. Just spends money helping the crooks who got us to this point.
There is a flaw in that statement. As a car dealer I feel like I must point out that many of our customers that are comming in to cash in on this bill have already been in the market for a new car but their trade was not worth the hassle of only getting $500 or less. You must also take this into consideration with a new car comes a warrenty, with that comes service(in order to maintain the warrenty) with that comes work, people get paid, in turn they spend, with that comes more jobs because we can spend that money more openly. Just remember that this country needs the auto industry to survive, without it we're screwed. Nothing happens overnight, you must give it time otherwise your no better then those forign a**-holes who would love to see this entire country tank. We needed something like this for a long time. Heck, whoever thought of this deserves a damn medal!
Of course there are flaws in this article,
the right wing like to just make it up as they go.
The truth just gets in the way.
It's interesting how liberals like to point out that there there are "flaws" or "inaccuracies" in conservative opinion, but almost never use examples. When they do pont to an example, which is rarely, it is frequently based on a phrase taken out of context. Just saying someone is wrong doesn't make them wrong, unless you have a leftie mindset. With liberals it doesn't matter how accurate you are or how much research is done to produce the opinion, just being a conservative makes you wrong. period.
I agree we need these programs, and maybe a small team working it out. What we don't need is a room full of politicians having long, expensive lunches and then developing a large department to carry out the act.
If you need cold air blowing in the car, you need it. You can't arrive at work when its 115 degrees, dripping in sweat and expect to be taken seriously.
George Bush had this problem but it wasn't the temperature that was causing the perspiration.
"And how about the traffic death toll that will climb as Americans increasingly drive smaller and lighter cars?"
Your statement is based on what? Germany has about half the incident rate of traffic deaths that we do. I would put forth that if we all started driving smaller cars in the U.S., we would see the death rate decline. Oh, and you'd spend less on fuel. The truck and SUV 'race' that we've been on was encouraged by bad legislation. It's about time we see some encouragement in the other direction. A combined effort of developing new energy sources and reducing our consumption of gas will make us less susceptible to the whims of Arab states (many of which still provide some kind of support for radical Islamic fundamentalists.)
I have to defend the author on his statement about death rates in smaller cars. Here is a quote from justauto.com:
The non-profit institute cautioned that results of real crashes show that any car that's very small and light isn't the best choice in terms of safety. Driver death rates in minicars are higher than in any other vehicle category. They're more than double the death rates in midsize and large cars.
"People travelling in small, light cars are at a disadvantage, especially when they collide with bigger, heavier vehicles. The laws of physics dictate this," said institute president Adrian Lund. Death rates in single-vehicle crashes also are higher in smaller vehicles than in bigger ones.
Joe C. is citing germany as having less deaths to refute an arugment that smaller cars will result in higher traffic accidents? LOL. You've never been to Germany, Joe C.
Germany has much different standards than the USA does. For one, you have to be 18 to drive. Another is that you have to pay big bucks to get a license.
After going through their laws to get a license, you then have to have a car registered that meets their strict laws. 1/2 the beaters on the roads in most of the USA would not be allowed to drive in Germany.
If you made Americans abide by the same rules Germany does, there would be significantly less traffic and the poor would be unable to drive keeping a lot of uneducated pieces of trash out of the drivers seat resulting in fewer accidents.
I'm just curious where they're going to stack the 250,000 cars traded in (yes, that's a QUARTER OF A MILLION CLUNKERS). A literal sea of used antifreeze, lead-acid batteries, and tons of used tires dumped on an already overloaded landfill system. The dealers have to destroy the engine before scrapping them to get their government checks. NOBODY's going to take the proper amount of time to disassemble, categorize and store the spare parts that would be salvagable.
Using conservative estimates, that's enough CRUSHED cars to make a two-mile-diameter wall 100 feet tall around something...
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