A Cash for Clunkers update

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Back in 2009, the Cash for Clunkers program was envisioned as a $3 billion tax-payer funded boost to the economy by offering a $4,500 rebate on used cars to be applied towards a new one. The thought was that this stimulus program would aid a flagging auto industry, bump economic activity and get older less-fuel efficient cars off the street and thus, out of the environment.

Turns out none of this happened as hoped for. As we’ve chronicled in previous posts, Cash for Clunkers has resulted in Clunker’s remorse for people who jumped on the $4,500 rebate and found themselves in a 5-year new car lease that, as it turns out, they could not afford (and the housing/financial crisis was all Wall St.’s fault?) and for a car that a year later they no longer wanted.

Cash for Clunkers also shafted lower/working class families out of perfectly serviceable used cars that they could have employed to get to and from work, school, the market, the doctor, etc. By taking 690,000 used cars out of circulation, it bumped up the price of used cars further putting those cars out of the reach of affordability for those who needed it the most. With transportation mobility comes upward economic mobility and Cash for Clunkers did its part in snuffing out that dream for many lower-income American families.

Cash for Clunkers also shafted charities out of used cars that would’ve been otherwise turned over to them for refurbishment and then turned back over to that charity’s targeted need.

And, as studies have shown, Cash for Clunkers was merely “sugar” as it did temporarily spike auto sales but all it was doing was stealing demand from later on down the road. Overall, net car sales remained flat.



Now, as it turns out, Cash for Clunkers, on top of everything else was/is, horrible for the environment as well.

According to E Magazine, the “Clunkers” program, which is officially known as the Car Allowance Rebates System (CARS), produced tons of unnecessary waste while doing little to curb greenhouse gas emissions.

The program's first mistake seems to have been its focus on car shredding, instead of car recycling. With 690,000 vehicles traded in, that's a pretty big mistake.
According to the Automotive Recyclers Association (ARA), automobiles are almost completely recyclable, down to their engine oil and brake fluid. But many of the “Cash for Clunkers” cars were never sent to recycling facilities. The agency reports that the cars’ engines were instead destroyed by federal mandate, in order to prevent dealers from illicitly reselling the vehicles later.

The remaining parts of each car could then be put up for auction, but program guidelines also required that after 180 days, no matter how much of the car was left, the parts woud be sent to a junkyard and shredded.

Shredding vehicles results in its own environmental nightmare. For each ton of metal produced by a shredding facility, roughly 500 pounds of “shredding residue” is also produced, which includes polyurethane foams, metal oxides, glass and dirt. All totaled, about 4.5 million tons of that residue is already produced on average every year. Where does it go? Right into a landfill.

E Magazine states recycling just the plastic and metal alone from the CARS scraps would have saved 24 million barrels of oil. While some of the “Clunkers” were truly old, many of the almost 700,000 cars were still in perfectly good condition. In fact, many that qualified for the program were relatively “young,” with fuel efficiencies that rivaled newer cars.

And though the point was to get less fuel efficient cars off the roads, with only 690,000 traded in, and over 250 million registered in the U.S., the difference in pollutant levels seems pretty negligible.

But all that vehicular destruction did more than create unnecessary waste for the environment. It also had some far-reaching economic effects.

Fully 60% of a car’s recyclable value is in its engine and drivetrain but by federal mandate, the car’s engine was to be filled with a sodium silicate solution and left to rust away in perpetuity in a landfill near you.

Because it was a brief program and because it had a limited scope, Cash for Clunkers, of all the Keynesian gimmickry employed by the federal government, provides perhaps the clearest and best example of the negative consequences that result from the government injecting itself into the marketplace.

Cash for Clunkers: no net positive effect on auto sales, a bain to this country’s charities, sticking it to lower-income families and, now, horrible for the environment. What’s not to love about all that?


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Forget about "the war on women"....

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... who's paying any attention to the war on the poor?


Alternate headline: Doubling down on stupid


We have previously made note of what a disaster the administration's Cash for Clunkers was as $3 billion dollars to goose demand for new cars took perfectly fine-operating used cars off the market which had the obviously predictable results of raising the price of existing used cars which made them less accessible to lower income folks and charities who would be in the market for the same.

In case anyone wondered, cars are important:

For more than a century, efforts to help the disadvantaged have focused on education, healthcare, nutrition and housing. Almost nothing has been done to help the working poor afford cars, despite research that indicates it would help alleviate poverty.

About 1 in 4 needy U.S. families do not have a car, according to the Annie E. Casey Foundation. That's a serious handicap for the millions of Americans who don't have access to robust mass transit.

A nationwide survey of 353 people who bought cars with help from a nonprofit group called Ways to Work found that 72% reported an increase in income. Of those who were on public assistance when they acquired a car, 87% were no longer receiving it a few years later.

Other studies have found that low-income people were more involved in community activities and had better access to healthcare after getting cars, while their children participated more frequently in after-school programs.

"You're more likely to have a job and less likely to be fired," said Evelyn Blumenberg, a professor of urban planning at UCLA who studies transportation and poverty. "It's just a no-brainer that low-income families need cars."

Yet there are almost no state or federal programs to meet the need.

(italics, ours)

Let that sink in for a moment. It's not necessarily that there is no federal program in place to meet the car needs of the poor, there was certainly a program that resulted in worsening this scenario in Cash for Clunkers.


And the situation is not going to be getting any better.

he Corporate Average Fuel Economy (CAFE) regulations that President Obama announced last summer will make it impossible for 7 million lower income consumers to buy a new car according to a National Automobile Dealers Association (NADA) study released today.

“While you can mandate what automakers must build, (ed. note: a dubious assumption, at best) you can’t dictate what customers will buy, nor can you dictate if a bank will make a loan,” New Mexico Ford dealer Don Chalmers said today.

Obama's proposed CAFE standards, which will begin taking effect in 2017, raise minimum average vehicle fleet fuel efficiency to 54.5 mpg by 2025. The Environmental Protection Agency and National Highway Traffic Safety Administration estimate that this regulation will raise the average price of passenger cars and light trucks by $3,000.

“The unintended consequences of the proposed fuel economy increases are clear,” NADA Used Car Guide analyst David Wagner said. “If the price of a vehicle goes up by the government estimate of almost $3,000, millions of people will no longer be able to finance a new vehicle.”

This isn't rocket science, gang. If you are going to start mandating increases in technology outside of market demand, that is necessarily going to have an effect on the price of that technology.

The very class of people statist claim to champion are getting screwed by statist policies. Again, even that, as we have seen over the years isn't rocket science.

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So, what was all that about, again?

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In the news today:

Americans are holding onto cars and trucks longer, pushing the average age of a vehicle to a record 10.8 years.

The Polk research firm said Tuesday that the average age of a car last July was 11.1 years, while the truck average was 10.4.

Unemployment and the sour economy have caused people to put off buying cars and trucks.

And $3 billion poured down the drain of Keynesian gimmickry ain't gonna change any of that.

Cash for Clunkers: the gift that keeps on giving

At the height of the Keynesian gimmick known as Cash for Clunkers, we noted that charities weren't too hot on the idea as the program succeeded in taking older, lower gas mileage, but certainly serviceable cars off the market. The very types of cars favored by lower-income folks to get back and forth to work.

It appears now that we are discovering one of the legacies of Cash for Clunkers.

For more than a century, efforts to help the disadvantaged have focused on education, healthcare, nutrition and housing. Almost nothing has been done to help the working poor afford cars, despite research that indicates it would help alleviate poverty.

About 1 in 4 needy U.S. families do not have a car, according to the Annie E. Casey Foundation. That's a serious handicap for the millions of Americans who don't have access to robust mass transit.

A nationwide survey of 353 people who bought cars with help from a nonprofit group called Ways to Work found that 72% reported an increase in income. Of those who were on public assistance when they acquired a car, 87% were no longer receiving it a few years later.

Other studies have found that low-income people were more involved in community activities and had better access to healthcare after getting cars, while their children participated more frequently in after-school programs.

"You're more likely to have a job and less likely to be fired," said Evelyn Blumenberg, a professor of urban planning at UCLA who studies transportation and poverty. "It's just a no-brainer that low-income families need cars."

Yet there are almost no state or federal programs to meet the need.

(italics, ours)

Let that last sentence sink in. Cash for Clunkers destroyed 700,000 cars. You don't think that a good chunk of that 700,000 cars, were they still around, could be meeting the needs of the poor and low income families in this country?

There was a federal program, alright. But it was a federal program that absolutely shafted people who need wheels to get to work, to go shopping, to take their children to the doctor, etc.

"Those cars could have been used for very needy working-class families," said Carolyn Hayden, a Glendarden, Md., transportation consultant. "It will go down in the annals as a missed opportunity."

More like a fantastically horrible idea. Think about it: $3 billion to essentially keep people unemployed. What's not to like about that?

The Keynesian gimmickry employed by the Obama administration to get us out of the recession were intended to be quick-hitters to boost the economy. What were finding, however, is that as short-lived as these programs were they have a legacy and a human cost that will be felt for years.

News item of the day

News ledes that make you wonder upon which planet the New York Times and/or the Obama administration are currently residing.

As the economy worsens, President Obama and his senior aides are considering whether to adopt a more combative approach on economic issues, seeking to highlight substantive differences with Republicans in Congress and on the campaign trail rather than continuing to pursue elusive compromises, advisers to the president say.

Elusive compromises like Porkulus, Cash for Clunkers, Cash for Caulkers, car company takeovers and ObamaCare all which enjoyed zero bi-partisan support and which did nothing for, and can be argued, did further harm to the economy. Those elusive compormises?

Mr. Obama plans to spend time this weekend considering his options, advisers said. The White House expects to unveil new job-creation proposals in early September

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Can't wait to see how the same old Keynesian gimmickry is going to be re-packaged and re-spun in just a few weeks.

So far, most signs point to a continuation of the nonconfrontational approach — better to do something than nothing — that has defined this administration. Mr. Obama and his aides are skeptical that voters will reward bold proposals if those ideas do not pass Congress. It is their judgment that moderate voters want tangible results rather than speeches.

“If you’re talking about a stunt, I don’t think a stunt is what the American people are looking for,” the White House press secretary, Jay Carney, told reporters on Wednesday. “They’re looking for leadership, and they’re looking for a focus on economic growth and job creation.”

Actually, give "nothing" a try. Seriously. Give it a whack because nothing they have tried so far has done any good. And stunts? Mr. Carney, kind sir, stunts and demand-side gimmicks are all this administration has offered up.


And as for our wondering about re-packaging failed Keynesian policies, it doesn't look like Team O is going to even worry about any slick re-branding because it's mainstream economic theory, dontcha know?

A wide range of economists say the administration should call for a new round of stimulus spending, as prescribed by mainstream economic theory, to create jobs and promote growth. It is clear that the House would never pass such a plan.

The campaign meme of the Obama adminstration which will be dutifully parroted by their water-carriers in the media has been set and you won't be surprised to know the crappy state of the economy has nothing to do with them but rather the fellow that preceded Obama and those damn pesky Republicans that keep getting in the way of allowing the administration from further ruining the economy.

Remorse

$3 billion in tax-payer money to simply dislocate demand to the left, raise prices in the used car market and screw over charities that depend on the tax write-off incentives for those donating used cars...

Now, who wouldn't be down for all that Cash for Clunkers would provide?

Well, you, apparently.

Thousands of people who leased cars last year as part of the Cash for Clunkers program are having second thoughts and are trying to get out of their leases, reports LeaseTrader.com.

The program provided up to a $4,500 rebate if a person signed at least a five-year lease for their car.

A year later, that money has long been spent and people realize they are stuck with the car for four more years, says John Sternal, LeaseTrader.com spokesman.

"I think it's Cash for Clunkers remorse," Sternal says, whose company helps hook up people who want to trade out of their leases with those looking for a lease.

Some drivers want out of the lease for financial reasons but for others it's just not wanting the car.

Sternal notes that a five-year car lease is a really bad deal for most people who usually lease a car because they want to drive the latest model.

He says it will be very difficult for Cash for Clunkers lessees to trade a lease with four or more years left on it because most traders want a shorter lease, he says.

The only other choice is to break the lease, but then the lessee must immediately pay the remaining payments, which often amounts to more than $10,000.

He says the issue in status-conscious Southern Californians is not so much about the money, but the car.

"They woke up last year and saw the Cash for Clunkers program and thought they they could help the environment and the bunnies and the trees and got smaller, environmentally-friendly cars," Sternal says. "Now they look at that car and think about the really nice car they used to have and think 'I want something roomier, more luxurious. This contract is bad and I'm not in love.'"

Priceless... Unfortunately, however, as the first paragraph above stated it is not.

This is so very reminiscent of the home-buyer credit and the HAMP programs concocted by Team O that enticed potential buyers and mortgage-holders into deals they could not possibly sustain given the economy.

Instead of staying out of the market for a while and/or accepting foreclosure terms, then renting in order to build up capital to get back into the housing market when personal fiances were in better shape, the feds dangled cheap money and the implicit promise of pain-free home-ownership to millions of Americans.

And, similarly, instead of staying in their perfectly good-operating "clunker", the American public was lured into unsustainable lease deals by the feds who dangled the double-whammy of cheap money and doing something good for the environment.

Frivolous spending of tax payer money for hopelessly distorted housing and auto markets with landfills full of used cars to show for it: is there anything else you would like accomplished with social engineering-minded Keynesian gimmickry?

What this also should represent is a toxic combination of people unwilling to make rational decisions in difficult economic times and a government all too willing to subsidize those poor decisions. Got moral hazard?

Exit question: a bailout for Cash for Clunker remorsers?


H/T: Hot Air

They get it... they really get it.

The Associated Press and Reuters are probably two of the guiltiest parties in seemingly being shocked, shocked by continual bad economic news by their continual use of "unexpectedly" when reporting out on higher unemployment, lower GDP figures and rising home foreclosure rates.

It begs one to ask: "Have not these guys been paying attention?" and "Just what is it about porkaholic Keynesian gimmickry that would lead them to believe it is going to turn the economy around?"

So we must give credit where credit is due to the multi-colored fishwrap USA TODAY for their headline:

As expected, August auto sales crater

Comparison with last year skewed by cash for clunkers

We were so overcome with emotion upon seeing that headline and sub-headline we almost broke down in tears. Tears of joy, friends, tears of joy.

Car and truck sales dropped sharply in August from a year ago, the result of a massive hangover from last August's cash-for-clunkers federal rebate fiesta that made it the best car sales month of 2009.

Industrywide sales were down 21% from last August, to 997,468, the worst August total since 1983, according to Ward's AutoInfoBank. The month's seasonally adjusted annualized sales rate of 11.47 million, however, put it about on par with the sales rate through most of this year.

Toyota was one of the biggest losers, with sales cratering 34%. It had been one of the biggest beneficiaries of last year's stimulus program, with many consumers opting to use their $4,500 rebate on Toyota and Lexus vehicles. Sales of Corolla, one of its top cash-for-clunkers cars, fell by more than half.

Federal rebate fiesta? Somebody at USA TODAY is having too good of a time.

Sales will continue to putter along at an anemic pace for the foreseeable future, several auto executives said on conference calls to discuss August sales. There is little on the horizon to persuade customers to come back to showrooms, they say.

Emily Kolinski Morris, Ford senior U.S. economist, noted there's little to support optimism in economic data on consumer confidence, jobless claims and other indicators: The data show "lower momentum for auto sales the next three to six months."

Recession-battered consumers are saving more, she said, which will hurt sales in the near future.

Don Esmond, Toyota's senior vice president for sales, said the company is continuing its relatively generous incentives program through September to keep customers in showrooms. But Toyota senses customers are more interested these days in saving than buying a new car, he said.

"It's understandable why consumers keep putting off major purchases," he said.

But he doesn't think the government should bring back another major car-buying stimulus program. "I think the best thing for the industry is consistent growth brought from real demand, not stimulus brought into the marketplace," he said.

Unlike the broader main stream media, it would appear that auto execs and the writers at USA TODAY expected Cash for Clunkers to distort the market just as it has.

And perhaps when the rest of the media takes off its "O"-colored glasses, they'll realize that there is nothing unexpected happening to the economy whatsoever.

Cash for Clunkers: revisited

Say you're out of work, your spouse is out of work or you're under-employed but in dire need of some vehicular transportation. Obviously, in this economy and being in the financial circumstance that you are, you are leaning heavily towards the used car market.

But before we get to cruising down to the used car lot, let's go back to a previous post where we whined that Cash for Clunkers was $3 billion poured down the drain "for absolutely nothing".

Ah, how wrong we were.

Car buyers on average paid $1,800 more for a used vehicle in July than they paid a year ago at this time, according to Edmunds.com data. That's a 10.3 percent increase, bringing the average cost of a 3-year-old vehicle to $19,248. The price of a Cadillac Escalade spiked nearly 36 percent. "A lack of confidence in the economy is driving more people to used cars, putting upward pricing pressure on a limited supply of vehicles," said Joe Spina, a senior analyst for Edmunds.

There's a tricky aspect to this analysis, because last summer was marked by a used-car buying frenzy spawned by the Cash for Clunkers program. Spina said the effects of that program are hard to isolate precisely. "So many economic factors affect automobile sales and prices. It's believed that the program delayed purchases prior to the program and also pulled sales forward while in place," he said. "The program also eliminated inventory of older vehicles that were traded and then scrapped."

Of course, you shouldn't be buying an Escalade anyway so the social engineering benefits of CfC are obvious.

So we were off on our assessment of Cash for Clunkers. Way off. That $3 billion of tax-payer scratch accomplished quite a bit, most importantly, by distorting the market by artificially reducing the supply of used cars and as a result, hosing over working families that would be in the market for used cars.

H/T: Instaglen

What others are saying

Entrance question: Are the New York Times' columnists all confined to the same living quarters? Even if it does have the carbon footprint of Friedman's crib?

Mom sends them downtown everyday with their sack lunch and the identical note folded up on a 3"x5" card.

All of that could have been pulled together under the umbrella of job creation — short-term and long-term. In the immediate aftermath of Mr. Obama’s historic victory, and with the trauma of the economic collapse still upon us, it would have been very difficult for Republicans on Capitol Hill to stand in the way of a rebuild-America campaign aimed at putting millions of men and women back to work.

Maybe they were all on holiday together as well in February of '09, a mere month into the new Presidency, when all $800 billion of Porkulus passed but our recollection is that the Obama regime has very much indeed, with Keynesian brute force, focused on jobs every step of the way and with the entirely predictable results.

The meme for '10 (and '12?) has emerged: Porkulus, son of Porkulus, Cash for Clunkers, Cash for Caulkers and Home-owners' assistance programs to name but a few were entirely insufficient if unworthy of mention altogether, the Democrats and the President really need to get serious about the economy and job creation this time around.

Cash for Clunkers FAIL

Because of the complexities of large economies, it's difficult to determine the effects of stimulus efforts by the government on those economies. Cash for Clunkers, however, was short enough in duration and concentrated on one particular area of the economy so that its effect could more accurately be gaged.

Below is the US Census data for auto dealer sales.

(please click to enlarge)



The dotted line represents the averages for the sales during the month of CfC and the month after.

As we predicted, all CfC did was spike the demand to the left with no overall net effect on auto sales as the areas under the two spikes above and below the dotted line (during and immediately after CfC) reveal.

$3 billion for absolutely nothing. Yet another refutation of demand-side Keynesian gimmickry upon which our recovery efforts have been modeled.

H/T: Coyote Blog

Thank goodness, he’s black

As viewed through the prism of a statist, what else gives them cover for the Obama agenda? After all, wasn’t it the statists/progressives who were caterwauling about the cozy relationship the Bush administration had with big business and in particular Big Oil and weren’t we constantly scolded by the same people about the public/private sector hand-in-glove “corporatist” relationships developed between Wall St. and Capitol Hill.

What are we then to make of a forced government take-over of General Motors and Chrysler, the specter of which was compounded by a rather curious deference being paid to the unions at the expense of the secured creditors during the bankruptcy proceedings?

And what are we to make of this tax on the bailed-out Wall St. firms in light of the fact that the government’s special pets, the aforementioned Big Two and the government sponsored entities, Fannie Mae and Freddie Mac, also the recipients of hundreds of billions of dollars of bailout tax dollars, will be exempt from “paying their fair share”?

What also is to be made of these horribly conceived and dubiously executed demand-side incentive dog and pony shows like Cash for Clunkers and home-owner assistance programs where the government is again injecting itself in an unprecedented manner into the private markets (another indirect source of Fannie, Freddie and Wall St. bailouts)?

Faced with a government take-over of the healthcare industry where personal choices and freedoms will certainly be curtailed, has the statist broke out his "Keeep Your Laws Off My Body" t-shirt and marched in full-throated opposition?

But we’re asking all this of the wrong people. “We” all know how we feel about it, so we are asking it of the statists and progressives - those supporters Obama’s Bailout Nation and the debt-bomb it is creating?

We’ve received the answer. In light of the overwhelming evidence showing the Bush administration’s incipient crony capitalism being child’s play compared to the economic fascism or “corporatism” as practiced by the Obama administration, is there any chastening or at least a sober recognition that these are not the people they’ve been waiting for? Hardly.

You’re all just a bunch of racists!

Temple of Mut and one of the organizers of the San Diego tea party takes a look at the tea party movement one year on from its inception, here.

Economics 101: Skin in the game

All the ranting and raving we’ve been doing about sound vs. doomed-to-fail economic policy on these pages for the past two years is summed up in a succinct, 3-1/2 minute manner in this video below from reason.tv.




We’re glad she hits on the concept of skin in the game, for an economic system cannot operate as it should if there are no consequences for risky business practices which is precisely what we have seen in this country’s own economy since the advent of Bailout Nation.

The endless bailouts and horrible demand-side programs like Cash for Clunkers have distorted the markets and have prolonged this recession and, in fact, are leading it to a double-dip recession.

From the Dept. of Inevitability..

…under the direct supervision of the Czar of “We told you so” but also indirectly supported by the Bureau of “Go figure” with some funding assistance via “Hit upside the head with a 2x4”, comes this news:

After the shopping binge inspired by the government's "Cash for Clunkers" incentive program ended, U.S. auto sales plunged in September and the industry sunk back to the depths from which it started, figures released Thursday showed.

The reports of monthly sales numbers confirmed predictions that some of the spectacular gains of August had merely been achieved by moving up sales that would have happened in September.

The results raised doubts from some economists about the effectiveness of the $3 billion federal program as a stimulus.

General Motors' sales fell 45 percent compared with a year ago, and Chrysler's dropped 42 percent. Sales at Ford did comparatively better, declining just 5 percent. Compared with August, however, Ford's sales in September plummeted 37 percent, slightly more than the other two.

And further proof that an Ivy League affiliation should not be confused with any actual intelligence:

Alan Blinder, a Princeton professor who was among the first to push an auto sales incentive program in the United States, doubted it provided much stimulus, in large part because it was in effect for only a month.

"Most of the idea of any stimulus is to pull spending up from the future, but it doesn't make any sense to design a program that only pulls up spending by one month," said Blinder, a member of the Council of Economic Advisers during the Clinton administration. "Why in the world would you make it a one-month program? The Germans didn't do that. The British do that. When I designed a mock version of this I was thinking of it as a one-year or two-year program."

Big Al, why stop at just one or two years in that case? Seriously, why not just make Cash for Clunkers a permanent program so we can turn in our “clunker” every 6 months or so, have that destroyed and purchase another new car with $4500 help from the government? Auto workers stay employed, perfectly fine automobiles get destroyed, you run up more personal debt and the government continues to pile up more public debt… everybody wins!

We're having trouble coming up with a government program that from top to bottom was as ill-conceived, poorly executed and as counter-productive as Cash for Clunkers. We welcome opinions to the contrary

Taking stock of a very unsavory development

The national debate… and we say that in the most overarchingly generic of terms... is now officially pegged-out. To be precise, one-side of the debate is officially pegged-out.

In an interview yesterday Jimmy Carter told Brian Williams that an “overwhelming portion” of the animosity displayed towards Barack Obama is racist in nature.

Capt. Ed makes the point that if you believe as Carter does then you must also believe that any criticism of Israel is overwhelmingly anti-semetic. Both points follow the same logic

We plop all this squarely at Obama’s feet. (Thud) There it is champ, own it.

He’s had ample opportunity to admonish his people for the careless chucking-around of such a serious accusation but he has shown no inclination to do so which causes us only to further question whether he desires to be this country’s leader or merely a shameless pol peddling his legislative agenda at any cost.

Should we be surprised, though? We’ve seen his surrogates, water-carriers and fans in action for about a year and a half now and we know what they are capable of.

Let’s dust off an oldie but a goodie. The Obama-celebrity pledge.



“I pledge to be a servant to our President”... “I pledge to be of service to Barack Obama”

Does this sound like the type of critcal thinking that is going to respond in a logical fashion when being challenged on policy matters? Do you think that you are going to illicit anything but stuttering disbelief and possibly ear-piercing shrieks charging apostasy if you dare question the Dear Leader?

If you think we’re spending a bit too much time on this… get over it because we are at once bemused and infuriated at these developments. Bemused as we see the President’s lackeys twist themselves into fits of rage as they can no longer compete in the marketplace of ideas and are reduced to playing the card of last resort and infuriated, as the implication suggests, we are racist for merely opposing Obama’s policies.

For providing solid evidence that Cash for Clunkers is economically and environmentally dubious, we are racist. For taking a sober look at healthcare reform and concluding that while there are no actual death panels, because of the way Obamacare is wired it will tilt the playing field towards the probability of the same results and for that we are racist. And for suggesting that the President has been less-than-forthcoming about how it is he will pay for healthcare reform, we are racist.

By this logic again, when we do commend the President, are we suddenly washed clean of the sin of racism?

Unfortunately, this (race) horse is out of the barn and barring some sort of miracle it’s going to be a pretty miserable next 3-1/2 years.

We forgot one

Proving that Cash for Clunkers is the gift that keeps on giving…

But many of those cashing in on the clunkers program are surprised when they get to the treasurer's office windows. That's because the government's rebate of up to $4500 dollars for every clunker is taxable.

"They didn't realize that would be taxable. A lot of people don't realize that. So they're not happy and kind of surprised when they find that out," Nelson said.

That $4500 isn’t quite so $4500 anymore, now is it?

It just never seems to end – the unintended and unrealized consequences of C4C keep churning out and will do so for years.

Exposed: the horribleness of Cash for Clunkers

(Warning: graphic and disturbing imagery contained, herein)

We’re not sure there are enough ways to describe just how excrable the C4C program is but we hope these two short videos give you a visceral sense of the awfulness of C4C.

The first is a visual how-to on killing a perfectly good automobile. We checked out some other videos on YouTube and the disgust displayed by the people (auto dealer mechanics) who are forced to do this because of this program was palpable.



The clip below talks about how the C4C program is hurting charities and the used car market. And the best part? The clip was made while the program was burning through its first billion dollars…. before Congress signed up the program for another $2 billion more.



So, let’s see: Distort the new car market by displacing potential buyers over the next several years? Check. Environmental dubiousness because of the considerable carbon footprint to make a new car and the fact that new cars get driven more often and for longer than older ones? Check. Hurting charities? Check. Damaging the used car and used engine part markets by killing perfectly serviceable automobiles? Check. Spending $3 billion we don't have? Check.

Enticing Americans to take on more debt load? Check. Creating a bureaucratic nightmare where dealers have only been re-imbursed for approx. 7% (as of last Thursday)of rebate applications? Check. Creating a bureaucratic nightmare to where the Treasury Department is having to siphon off employees from the FAA to handle these rebate applications from the dealers? Check.

Honest to pete – what’s not to love about Cash for Clunkers?

The next Cash for Clunkers casualty?

The most recent estimates indicate that GM plans to make 200-400 Chevy Volts in 2010 and then about around 10,000 in 2011. These numbers are down significantly from predictions a few years ago of 60,000 Volts in the first year. CNET, though, thinks that the actual number of plug-in hybrids, like the Volt, that will use LG Chem's lithium-ion packs that GM can make a year is actually 70,000. CNET is also willing to put a price on the Voltec system's pack: $8,000.

Hey, that’s great but who’s going to buy this car? We’re reasonably confident it won’t be the people who cashed-in on the Cash for Clunkers program this past month.

And this represents why the Cash for Clunkers program, though in existence for just a matter of weeks, will have aftereffects that will be felt for years. By effectively shifting the demand curve to the left, C4C displaced a whole group of buyers for these allegedly green cars.

The instant gratification promised and delivered by C4C has distorted and damaged the marketplace for the Volt. Your tax dollars that propped up a stimulus program that destroyed hundreds of thousands of perfectly serviceable cars will now be used to manufacture and market a car for which there will be a drastically reduced market demand.

The curtain drops on the most stupendous and excellent economic stimulus plan, ever.

The Obama administration will end the popular $3 billion Cash for Clunkers program on Monday, giving car shoppers a few more days to take advantage of big government incentives.

The Transportation Department said Thursday that the government will wind down the program on Monday at 8 p.m. EDT. Car buyers can receive rebates of $3,500 or $4,500 for trading in older vehicles for new, more fuel-efficient models.

Transportation Secretary Ray LaHood said the program has been ''a lifeline to the automobile industry, jump starting a major sector of the economy and putting people back to work.'' He said the department was ''working toward an orderly wind down of this very popular program.''

The White House has touted the program's success in providing a targeted boost to the sluggish economy since its inception in late July. Through Thursday, auto dealers have made deals worth $1.9 billion and the incentives have generated more than 457,000 vehicle sales.

So, if it’s been so wildly successful then why does it have to end?

But the administration needed to put a halt to the program to avoid surpassing the $3 billion funding level. Consumers were on pace to exhaust the program's coffers in early September and dealers have complained about long delays in getting reimbursed for the car incentives.

Since when has any administration of recent ilk ever been worried about busting the budget? Go back to Congress and just ask for more. It’s been done once before and do you think that Congress will turn down something that has been a “lifeline” to the auto industry and has been “putting people back to work”?

On a more serious note, yes, it is indeed time to pull the plug on this environmentally-dubious and economically-shaky program though this does not appear to be at all why the administration is doing so.

Though this does provide some temporary relief to workers who have been called back onto the job to cover the orders, what happens when the artificially-spiked demand curve caused by the 457,000 vehicles that have been sold under CfC drops off drastically over the next several years.

A more level demand curve of new car purchases over the next few years has been wiped-out to say nothing of the demand curve for the used-car market as a result of 457,000 cars, a goodly portion among them being perfectly serviceable, being eliminated entirely.

Good riddance, CfC, may we never see your kind again.

The sadly obligatory cash for clunkers update

Well, the one thing that can be said for CfC is that it is coming along precisely how you would expect a program to come along where the government inserts itself between the seller and the buyer. These sort of things are nothing if not predictable.

The plan's popularity, plus confusion among dealers over its rules, has contributed to administrative gridlock. The Department of Transportation, which runs the program through its National Highway Traffic Safety Administration, indicated to auto dealers Thursday that it would add staff to address the backlog of unpaid applications for clunker vouchers.

Dealers say the government is putting them in financial peril. The law requires dealers to deliver a new vehicle to qualifying customers, even if the government payment hasn't yet arrived. The government says it will reimburse dealers within 10 days of the applications' approval.

But dealers say payments have been slow to arrive. "We've got 155 clunkers on the ground and no money in the bank," says Earl Stewart, owner of the Earl Stewart Toyota dealership in North Palm Beach, Fla. "We're selling ourselves into a very negative cash-flow situation."

And when the federal government has only reimbursed auto dealers for 2 percent of the claims they’ve submitted, one can see why they are a bit skittish right now and kinda makes you wonder where the first $1 billion dollars went now that we have anted-up for $2 billion more.

According to the Transportation Department there are 225 people reviewing claims and to date their have been 338,659 vehicles sold under CfC for a case load of 1,500 per reviewer so, yeah, this thing might require some staffing up.

So, beyond the absolute lunacy of the CfC effectively being its own “death panel” for perfectly functioning automotive assets, the administrative goat rope that CfC has become is everything you could imagine it to be.

Face it. You love that new car smell.

Before we get into yet another reason why the Cash for Clunkers program is counter-productive, we heard a commercial on the way home from work just now from Father Joe urging people to forego the government program and give him their clunker in exchange for the tax write-off. Get a tax break, give to charity and don’t take on a new car payment that you may not be able to afford even with the rebate. Sounds reasonable to us. The mere fact, though, that this San Diego-based charity felt compelled to pay drive-time bucks on a national talk radio show is circumstantial evidence that Cash for Clunkers is adversely affecting the charity sector, as well.

And right on cue, as we were searching for Father Joe’s Auto Donation site.

Cash for Clunkers launched right before his peak donation season, Father Joe said. He wishes Congress and the White House had considered charities when devising the program.

"To me, the idea would have been donate your car to a charity, get a $4,000 write-off, then go spend it," Father Joe said.

Father Joe obviously has his priorities skewed. To hell with the poor, it is Gaia that must be served.

But how is Gaia being served when:

The article noted that "Newer cars are driven more than older cars. On average people drive their new cars and trucks about 25 percent more than they do their 10-year-old vehicles." So, even if the new car's fuel economy is much better than the older car's fuel economy, that will not matter much if the owner of the new car drives that car much more and according to this article, he or she likely will be driving the new vehicle a lot more than the older one.

Aside from the gathering of empirical evidence, the notion of driving your new car more often and for longer than your clunker stands up to intuition and natural human behavior… especially for men out there whom we feel confident we can speak on behalf.

Part of the reason you bought that new car was, well…. it was to drive it. Outside of city traffic and freeway gridlock, driving is fun. And this CfC program could not have come along at a better time than summer as it flows into fall with its great driving weather throughout most of the country to re-enforce this point. Your self-fulfillment through odometer rollovers: 1. Environment: 0

That road trip up the coast or out to the Grand Canyon that you were putting off because you did not have full faith and confidence in your clunker is back on again. Your wanderlust: 1. Environment: 0

And lord knows, chicks dig new cars so the thought of your game being stepped up by ownership of a new car will not be accompanied by the notion that your hot new ride will be grounded in the driveway very much. It’s all about exposure. Your libido: 1. Environment: 0.

As you can see, a program that gives the shaft to the poor with the added benefit of raping the environment is normally the exclusive domain of the Republicans so it’s comforting to know that bipartisanship is alive and well on Capitol Hill.