Cash for Clunkers? as written on 8/9/2009

Did you get your new and more fuel efficient car yet? Not going to
take advantage of the "Cash for Clunkers" legislation that was passed
a few weeks back to help people get into more fuel efficient cars? Oh,
you already took advantage of the $4500 tax credit and got yourself a
new ride? You are welcome. Anyone who takes advantage of that program
should be thanking the taxpayers who actually have to pay taxes into
the federal government.

I never agreed with this program, although it has helped the auto
industry. Ford reported a 55% jump in sales thanks to the program but
out of the top selling models under the program, only one was American
made, the Ford Focus. Wouldn't you think that after the government
aided bankruptcies of Chrysler and GM that maybe they should have
stipulated that the cars should be American made? I am no fan of
protectionism, nor was I a fan of the "Cash for Clunkers" program
either, but what better way to spur the American economy than to
stimulate and sell American made inventory. The UAW would have been
happy, the tax payer would be happy to see profit coming out of the
industry they put billions into over the past eight months.

But that is just one of the problems with the "clunkers" program. Once
these vehicles are traded into the dealers and they fill out 22 pages
of paperwork, they must disengage the engine to no longer be operable
and the vehicle gets hauled off to the junk yard. Now that is
government efficiency. Instead of donating the cars to be used by
those unable to have a car, the car gets destroyed. Right now, we are
still in a recession, millions of Americans are still unemployed and
there is not a sign that unemployment will let up anytime soon.

The point in the program was to help get older, less efficient cars
off the road and to help car sales which had been falling over the
past few quarters. Many of the cars that have been traded-in were paid
for, I am assuming and were old enough to where the owner may have
only been carrying liability insurance. Under that assumption, the
discount that many of these people ran to take advantage of, put them
under a new automobile loan and higher insurance. Depending on the
financial situation of those consumers and one of their desires to
take advantage of the program was to lower their fuel costs. Did it
really? Now being assessed a higher insurance premium for full
coverage on top of a new loan, who really won financially? I would go
even further to say that there is a high possibility that we could be
bailing out a few of these consumers a few months or a year down the
road when they can not make the payment for their new car.

This program may have provided temporary financial relief to a few,
and to help slightly reduce the emissions of carbon-dioxide pollution
from automobiles, but should the government play that role in our
society? This $1 billion program has burnt through it’s original
allocation of funding and required another infusion of $2 billion to
keep it going into the fall. That is $3 billion of tax payer funded
giveaway to fund a few program to benefit only a small portion of the
public. I guess one could call it a small redistribution that will
have only a minute net-effect for the consumer when you get to the
bottom line.

Article as written in The Shorthorn