So, the CARS programs has been a huge success, a shot of adrenaline for an ailing industry. What now? Do we fund it again? And what about when the entire $4B is expended? What does the auto industry, now saved by yet another artificial, taxpayer funded influx of capital, do then? Do they then try to survive on their own in a market now depleted by the CARS program of a large number of new-car buyers? Or will this artificial market support now need to be continually funded over and over to prevent another collapse of the industry?
History is repleat with artificial taxpayer-funded support structures to protect industries. Can anyone name me one that has gone away? Even the tobacco industry is the beneficiary of millions in federal subsidies while at the same time we spend countless millions to convince people to stop smoking.
What now, guys? Do we forever have another mouth to feed? Is this simply another “agricultural subsidy” type program that we now have to support forever?
Saturday morning ( at work )and you want me to type AND think all at once.
'nuther cup-o-joe…
The first, short term, thing that comes to mind has to do with the ideas voiced herein of the credit extended to many people, solely due to this program, who would not otherwise be purchasing anything of this dollar value.
For me, 30 years here at a Ford dealer, this means a wave of repossessions unlike most other sales waves. About six months from now our used car lot will be full of 2009 vehicles and the wave will continue to cycle from this one glut of sales. From warranty service, maintainence service, to accessory sales and resale of the repos.
As for the long term, we endure many waves through the years and within each year. This is just another one of those and we must not lose sight of the impending slump that follows every wave. We will load the savings accounts now to compensate for the next ebb.
The program was intended to jump-start an ailing industry that was dead in the water. It also was intended to motivate consumers to use less imported oil by moving towards more efficient vehicles. Four Billion Dollars is NOTHING compared to the $Trillion$$ dollar amounts shoveled into Fannie, Freddie, Goldman, AIG…It’s NOTHING compared to the $500 Billion a year shoveled into our Military / Industrial Complex. Half of our economy depends on Government spending. Get use to it.
Our beloved “Free Market Capitalism” has serious, serious shortcomings. It has ALWAYS needed wars or injections of Government cash to keep it going. Left to it’s own designs, it would have collapsed a long time ago…The only thing unusual about “Cash For Clunkers” is that it’s a highly visible bail-out that Joe Sixpack can participate in directly…Joe needs to learn he must take 10% of his windfall and contribute to his congressman’s re-election campaign (like Goldman-Sachs does) to smooth the troubled waters…
The ROOT CAUSE of all this angst is the rapidly growing income disparity in our country. The rich are getting VERY rich while Joe Sixpack can no longer qualify for a new car loan…
Repost of item on previous thread.
Success or not is in a person’s perspective. The reality is the point you made, the program will end. When it does showrooms will be empty again for awhile. Any big sale takes buyers out of the market after they have made their purchase. At some point the program must end and there is a lack of business for a month or two.
If the demand is to keep it going then it moves from a stimulus program to an entitlement program. We certainly don’t need another social security program only this one is for the auto industry!
In general I’m an Obama supporter. I think this program is OK, but when will it end? That I’m concerned about, it has to have an endpoint.
I don’t think it will go on forever in this form, but the door is now open for incentives to modify how people choose to keep and get rid of vehicles. Some of us with storage space have owned or now own vehicles that are not energy efficient, but we use them only a little. Lots of people have an old pickup truck that gets used a few times a month, but they keep it because it’s worth nothing to sell, and its useful. With this program taking thousands of these vehicles off the market, I guess this type of ownership will fade away. Maybe its OK because they are polluters, and our families really don’t always love them like we do, but it is change.
Lots of cheap used cars are vanishing. College students and folks with very tight budgets are going to have problems. People in cities who drive few miles often use big or inefficient vehicles because the cost per mile doesn’t mean much; they drive very few miles. Their lives will change if the government finds ways to siphon off these cars.
On the other hand, pollution levels may be affected by getting these vehicles off the road.
So, yes, some type of program like this will survive and become standard. We, the people, don’t always like change, and sometimes we just have to change because we’re killing ourselves with the old ways. Maybe the solution is to put a Federal tax on vehicles based on their EPA average miles per gallon, so inefficient vehicles pay more every year, regardless of age. That way there is income to balance the cost of incentives at trade in.
Your subsidy analogy is apt. Congress plans to add another $2 billion already. I suspect that it will go on for a long time and end up being a $20 billion program unless we stop it. Unless thase who oppose it howl louder than those that want it, it will go for a very ong time, $2 billion at a time.
Between the trillions shoveled into the financial industry, the billions already shoveled directly into the auto industry, the trillion projected by the CBO as a cost of the healthcare program, and now this additional subsidy program, I somehow find it hard to take the term “revenue neutral” seriously.
I’m not feeling economically stimulated here.
Well, it already ran out, so I guess we’ll see. The thing that really chaps my hide, is the trade ins, which I believe are supposed to be in good working order are to be shredded or crushed… Aren’t there lots of people who could use good working order, inexpensive cars? Isn’t there any impact to adding these cars to the dump, and utilizing materials for creating new ones? Another ridiculous program, based around a poorly thought out idea, with huge amounts of money tossed it’s way to MAKE it work.
Actually, $4B was approved and only the first $1B has been appropriated. They’re now discussing appropriating another $2B from the approved $4B.
Yeah, your points are excellent and I agree with them.
One other sad effect that’s already reared its ugly head is that because the vehicles that would have become used cars are being removed from the marketplace, used car prices have risen.
The laisez faire Republicans in the auto business are acquiescent regarding such market subsidies. But then, aren’t all Republicans so very altruistic.
Used car prices were already going up because with new car sales cut in half, available used cars were also cut in half.
The available cars that get less than 18MPG are surprisingly few…My '92 V8 Crown Vic will not qualify! So I suspect most of the “clunkers” are beater pick-up trucks…
I see your point, but there were enough qualified deals to go through $1B in one week.
I still don’t like it, but I respect that opinions differ on this.
Tom & Ray have a discussion going on over on the “general Discussions” board…
Only a pompous Loony Lib makes you pick up a dictionary when reading Car Talk.
How’s that for altruistic?