Cash For Clunkers-The Feds Try Their Hand At Auto Incentives

Cash For Clunkers-The Feds Try Their Hand At Auto Incentives

From what we can tell, those that support the Cash For Clunkers, or CARS program, obviously have not checked the Federal Debt Total recently. If you are one of the supporters of this incentive, you have two major problems:


1. You know nothing about the automobile business. This program, like all new and "innovative" buying incentives, is doing nothing more than stealing future business. Once this program ends, and it will end, sales numbers will drop back down to 9 million annualized. Maybe less. Credit is still tight, and the economy is still bad. A few hundred thousand auto sales stolen from next year is not going to change that.

Another "outstanding benefit" from this program is that it disrupts the natural flow of an automobile's useful life. Where do you think these hundreds of thousands of clunkers would end up if they weren't destroyed? In the hands of those that are poor or lower middle class (what's left of them). The end result will be much higher prices in the "clunker market", and many of those who cannot afford anything but a vehicle near the end of it's life will not be able to own transportation.

2. You can't decide what this program is about, selling more cars or decreasing our dependence on foreign oil. If you want to decrease this dependency, you increase CAFE requirements. It doesn't cost the taxpayer anything. Of course, it doesn't buy votes either, does it?

Edmunds.com estimates that approximately 200,000 of these clunkers are traded in every quarter. Obviously, this number has been somewhat lower the last couple of quarters, but, new car sales have not stopped completely. Basically, the Feds (as new owners of a car company) decided to pay an incentive to folks to do something they would already be doing, or to do it a little sooner.

Good job!


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