Cash For Clunkers: The Debacle That Keeps On Giving

There were so many things wrong with the cash-for-clunkers program that it was hard to keep up with them all. The program quickly ran out of money, there were horrible paperwork snafus, a large percentage of the money was used for foreign cars, perfectly good cars were destroyed during the process, they’ve only handled about 70% of the payouts and 8.8% of the applications have been rejected. In other words, about 1 in 10 people had their car destroyed to get a discount on a new car and the government is, at least at this moment, denying them the money they were promised.

Setting all that aside, the program achieved no goals, there was no higher purpose, it was just giving people money for the sake of giving them money.

The trade-ins certainly weren’t significant enough to reduce gas consumption around the country and although there was a temporary boost in sales, the auto-industry is paying the price on the backside for it now:

When Congress gave away $3 billion for buyers to trade in their “clunkers” and buy new cars in August, lawmakers thrilled as buyers swamped showrooms to take advantage of the big discounts. “Cash for clunkers has captured the public’s attention . . . (it) has the possibility to truly jumpstart our economy,” said Rep. Candice Miller (R., Mich.). Other, more sober analysts, warned that the clunkers program was only stealing from future sales.

September sales are in, and sobriety can take a bow.

Edmunds.com reports that “September’s light-vehicle sales rate will fall to 8.8 million units . . . the lowest rate in nearly 28 years, tying the worst demand on record. After the cash-for-clunkers program boosted August sales to their first year-over-year increase since October 2007, demand has plunged. In at least the last 33 years, the U.S. seasonally adjusted annual rate has only dropped as low as 8.8 million units once – in December 1981 – with records stretching back to January 1976.”

“Many people regard February as the darkest month of the recession, but even then (sales were) higher, at 9.1 million units,” adds Edmunds.com statistician Zhenwei Zhou.

Long story short, after spending 3 billion dollars, all we have to show for it is the destruction of hundreds of thousands of perfectly serviceable cars which could have gone to charity or the poor.

Meanwhile, Obama is touting the program as a success:

“That program was good for automakers, consumers, and our environment,” Obama said of the Cash for Clunkers programs, “and the Chevy Cobalt that you build here was one of GM’s most sought-after cars under that program. Dealers across the country started running out of it and needed you to build more.”

How in the world can anyone in their right mind look at a program like cash-for-clunkers and think, “Wow, I’d love to have the people who ran that program making my health care decisions for me, too!”

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