Friday, July 31, 2009

Cash for “Clunkers”

Well, they're not really necessarily “clunkers”, they are just cars deemed politically incorrect by the Obama Administration.

Not too surprisingly, if you waive $3500 - $4500 dollars in front of someone on the fence about purchasing a car, it will get them to move*. Consequently, the program, budgeted at a billion dollars, has already a) run out of money; and b) been hit by serious systemic problems.

A significantly under publicized fact about this program: it's highly regressive in nature. If you can afford a new car payment, you may be in good shape. Though, under the old regime, a dealer would often give you a $500 trade for an undrivable / clearly unsafe vehicle, and somewhat more for a functional beater. The undrivables went to scrapyards, where still useful second hand motor and drive train parts helped poor people to fix their existing cars. The beaters went to auctions or lots where they were priced at levels poor people could afford.

Now they're mandated to be scrapped / rendered unusable. For all of the Democratic whining about about caring for the poor, when it comes time to do anything meaningful for the poor, they're putting money in corporate coffers instead.

One of the explicit goals of this program seems to be to deprive the poor and lower middle classes of affordable used parts to fix their current cars.

Just a piece with the stimulus bill – the system doesn't work as advertised, and Congress immediately realizes that it's going to cost more than they thought. Good to know that this will never happen to our healthcare.

* One wonders what an real economically powerful stimulus like a payroll tax holiday could have accomplished, in place of the “throw money at my political supporters” stimulus package we got.