You see, I had a 2001 SUV that was bought from a “fine upstanding”car dealer only 3 years ago. Last February the frame fractured at the point where the rear suspension attatches. Since we still owed a little money on the car, & neither the manufacturer nor dealer wanted to help in any way, we had a frame shop repair the damage at a cost of $1800.

I filed a complaint with NHTSA about the defect & found that they are investigating the situation already as there have been several failures in the past year.

It was at the NHTSA web site, while checking on the progress of the investigation, that I first learned about CFC. I followed the progress of the bill, and a week before the “Official Start” of CFC found a dealer who was doing early deals on CFC . We traded our 16mpg rated (13.7mpg actual avg.) frame rotted, unsafe gas guzzler for a small wagon that was rated at 29mpg but has been getting 34.5 mpg.

We additionally have since that day, purchased a roof rack & kayak attatchments from a boat dealer and have enjoyed a couple trips to the seashore now thatwe can do it without re-financing the house to buy gas.

Is CFC a winner ? For my family it has been. It’s about time that a program came along that can help a working family for a change. Thank You all for your help.

I’m sure the Windstar that Charlie Pyles described above wasn’t getting anything like its EPA rating, with a bum transmission, exhaust system, and who knows what else.”

…So the CFC program can use optimum EPA ratings to evaluate who gets the cash, but Kimmel can’t use the same numbers to evaluate how well the cash is being spent? That’s not flawed, that’s hypocritical.

And what’s my consolation when I buy an affordable, efficient car and maintain it, while I subsidize the Charlies of the USA buying shitty cars? Why do I have to buy my car AND his?

Yeah, there’s been a huuuuuge demand for more public transport in the U.S.

If we had truly accepted the laws of supply and demand, there would have been a lot less clunkers and more public transportation in the first place and we never would have sold WMDs to nice arab “moderates” like Saddam Hussein.

dlw

“Furthermore, the fallacy of the broken window assumes an involuntary loss of property which requires an expenditure to replace it, resulting in not being able to spend that money on other things.”

-Isn’t this precisely the role that taxes play in this situation?

“This is different, it just means that people that were planning to get rid of their old cars anyway are doing it earlier than they had planned.”

-And the baker intended to replace his window in the broken window parable… Simply because he may have planned to replace it some day far off in the future does not mean that the principle is any different.

Ian, please explain. Knittel used the mpg figure reported by CNN for the average the clunker traded in. “According to a recent CNN report, the average mileage of clunkers was 16.3 mpg;” How do you know that the cars’ original mpg was assumed?

It is also worth noting that “numerous reports suggest that consumers are
trading vehicles that were not being used” (Knittel). He assumed 12,000 miles a year.

I apologize for putting words in your mouth, but at least acknowledge that governments have done some pretty horrible things in the name of economic problem solving.

As for the efficient window subsidy, do you have any idea how many old, drafty windows there are out there? If efficiency was the ultimate goal, the government could go door to door writing checks for each old, drafty window, just as it could have continued the cash for clunkers program indefinitely.

Why didn’t they continue C4C until all cars were efficient? Or why not go door to door writing checks to replace drafty windows?

BECAUSE THAT TAKES LOTS OF MONEY. Money that can either be printed, or taken from someone else. And there are administrative costs that USUALLY run over budget. Now if you think C4C was an efficient subsidy, ignoring the fraud involved, exhausting funds MONTHS before it had planned to, then why doesn’t government subsidize all economic activity? Or just set prices? Wouldn’t that be efficient? No, because there’s no way to know how the millions of products and inputs out there are valued by the millions of market participants.

The government subsidizes mortgages. Now, one out of three are under water because easy credit and tax breaks means more demand for houses than there otherwise would be. The government subsidizes farm prices and it mostly benefits multi-billion dollar companies, and we pay more for groceries. So, the argument that the government already subsidizes a lot of things and no one complains is not a good argument for more subsidies, or that it’s not “Hurr, wealth redistributionz! Socializm!! ZOMG!”

Matt

Hardly! My trade-in was worth $500 prior to this program. I gained $3,500. Makes it a winner in my book!

Why don’t you shut your pie-hole, and let me make my arguments for myself? Thanks!

You ‘broken windowers’ still don’t get it. I think I can safely say that no one would start breaking the windows in their house just because the government offered them a subsidy.

However, if you were already thinking about replacing the old, drafty windows in your house with new, efficient ones, an incentive might make you do it a little sooner. Hey wait! That happens all the time, yet strangely this does not result in people running around screaming “Hurr, wealth redistributionz! Socializm!! ZOMG!”

And that’s what CfC is. It is precisely analogous to a state or federal incentive for buying new energy efficient windows. And please don’t come back with “but they don’t make you break your windows to replace them” because that will make you look really, really stupid. And I hate to see that happen.

-Ian

The article also makes reference to “using politics to pay people … to hold crops off the market, or to produce ethanol that may use more energy in production than it adds when burned…”

C4C is not a unique act of “government charity” (aka, wealth redistribution by use of force). It typically happens when the federal government considers itself an impartial arbitrator of economic problems, when in fact the >$3 trillion, 20-25% of GDP bureaucracy is saddled in special, misaligned interests, **that actually contribute to or exacerbate economic problems**.

Was it charity to take $3 billion of U.S. employers’/job creators’ money and give it to auto manufacturers **all over the world**? Now those job creators might have created jobs overseas so it could have been a wash, but most of them have and would create jobs in the U.S. if they weren’t punished tax-wise in many cases for doing so.

Was it charity to deprive independent car mechanics of customers who have been occasionally repairing those “worthless” clunkers?

Was it charity in the Great Depression when the government *destroyed* pigs in order to raise prices while thousands starved?

Ian would argue that it wasn’t all bad because the pigs parts could have been feed to other animals or used as fertilizer. But try that one on someone who hasn’t eaten for a few days.

Ian,

C4C is destruction of assets, i.e. destruction of wealth. Period. If a car is just as valuable as its parts, then why pay people good wages ($80k/yr + benefits) to assemble them in the first place? Yes, it’s not a complete loss, but how valuable is a part that only works in a car that the government discourages people to drive? The raw materials are valuable, but not nearly as valuable as they are in a working vehicle that takes someone to their job everyday.

Broken glass can be recycled or sold to artists, but you’re not going to suggest we all break our windows to jump start the economy, are you?

The way I see it all of you who are complaining about the spending on this program, but if you were in Michigan and out of work and the company you worked with came back to you and said it is time to get back to work because “Cash for Clunkers” cleared out the inventory then you wouldn’t be complaining. Have some empathy for folks who need the help. You want to fight something then fight the wasted money on government contracts and defense spending.

Friday, August 21, 2009 Update: Informed sources are projecting that the total $3 billion directed to Cash for Clunkers will be fully expended by Monday and the program will be winding down at that point. Some projections indicate that 700,000 new car sales, including a Cash for Clunkers component, are on the books or will be by Monday. There’s some talk of more funding for Cash for Clunkers, but with congress out of session until after labor day, that can not be immediate. Naturally, it will be some months before the car dealers themselves are fully reimbursed for qualified Cash for Clunkers purchases through the program.

Proponents call it a win win for the environment and the economy and the charities we represent indicate that a slow down in car donation proceeds (if any) has not been as severe as some had initially projected. Volume of car donations for us has been flat and a modest 7.5% decline in gross resale prices of donated cars seems to be the average.

Cash for Clunkers (the Car Allowance Rebate System act, also known as CARS), was recently passed by congress and signed by President Obama. It is an innovative new program designed to get gas-guzzling cars off the roads and motivate people to drive more fuel efficient cars. It is intended to replace older vehicles with new ones that are safer and pollute less. Supporters claim it will help jump-start auto sales and the U.S. economy, while also providing environmental benefits and increasing energy security.

How it works: to be eligible for $3,500 or $4,500 worth of federal money (some terms vary for trucks).

* Your vehicle must be less than 25 years old on the trade-in date
* Only the purchase or lease of new vehicles will qualify you for the federal funding
* Trade-in vehicles must get 18 miles or less per gallon
* Vehicles must be in driving condition, plus registered and insured for the full year prior to the trade-in
* The bill is intended to be a boost to struggling car dealers and anybody who wants a new compact or hybrid, and to help the environment, and who wouldn’t support that? Unfortunately, this legislation won’t help everyone. Here are some reasons that will prevent many people from taking advantage of the Cash for Clunkers program:

The gas mileage rates are so low that only very poor mileage cars like SUVs or trucks will qualify. Those who do qualify have to buy or lease a new car to get the money; just getting rid of an old junker gets you nothing with Cash for Clunkers. If the value of your trade in is more than $3,500 or $4,500 then you don’t get any additional money from the government.

The Cash for Clunkers legislation, as originally written, covered “approved” clunker vehicles for new car purchases from July 1st to November 1, 2009. For technical reasons re-determining what cars would qualify, the start date was subsequently delayed from July 1st to July 24th. Car dealers and legislators were all very surprised at the huge initial response such that by midnight, July 30th, the program was halted given the projection that the initial one billion dollars of funding had been all used up by vehicle purchases that are already in the system. The House of Representatives acted very quickly and the next day, July 31st (the last day of the congressional session prior to the August recess) passed a two billion dollar refunding of Cash for Clunkers. The Senate, with the same extraordinary speed, passed the same bill, Thursday, August 6th barely a couple hours before they also went on summer recess at midnight. Now, President Obama has signed it and the program can be restarted very soon. Stay tuned to this site for breaking news on this topic. Some proponents suggest that even with the additional two billion dollars in funding that the program will again run out of money long before November and that additional funding should be provided.

Fortunately, if you don’t meet all the criteria for getting the Cash for Clunkers payout, you still have other good options for getting rid of your old car. Vehicles that don’t qualify for Cash for Clunkers are still ideal car donations. When you donate cars, trucks, vans, RVs, boats or even real estate you get rid of your unwanted property, help a non-profit of your choice, and itemizing taxpayers get a write-off.

Hundreds of charities do invaluable work all across the country, and car donation funds are an important part of their revenue stream. Pete Palmer, co-founder of The Vehicle Donation Processing Center, Inc., states that his company “assists more than 400 charities who do great work and depend on car donation to pay for it. We handle it for them and in so doing we’ve put more than sixty million dollars in their hands — net-net, after all expenses were paid. Every penny of that sixty million dollars went to charities for their charitable missions.”

Now during tough economic times many people want to take advantage of every opportunity for a little extra income, however some Cash for Clunker qualifiers might find the extra dollars are outweighed by other benefits of donating a vehicle to a charitable organization via one of the reputable car donation organizations.

* You will feel good about helping a worthwhile cause
* Some car donation companies offer free vehicle pick-up
* Many will take any vehicle, running or not
* Plus the tax write-off for itemizing taxpayers.
* And to thank you for deciding to donate your car to charity, instead of participating in the Cash for Clunkers program — when you donate your car to one of our 400+ fine charities — just tell your operator you’d like the $300 Free Grocery or Gasoline Rebate when you make arrangements with us for the free car donation pick up.

A vehicle donation political coalition is reaching out to Congress to get a bill passed that makes car donation even more attractive. The passage of U.S. House of Representatives Resolution 571 will help the situation by reinstituting some of the tax benefits for vehicle donation to charities which were withdrawn by Congress in 2004. Accompanied by the economic downturn, those limitations have resulted in an average 52% reduction in vehicle donations according to industry sources. Currently, taxpayers are only allowed to deduct the fair market value up to a maximum of $500 or what the charity sells the car for, whichever is greater. Under HR 571 taxpayers would be allowed to ascertain and deduct the Fair Market Value up to $2500 for their car donation, and the appraised value over $2500. As of the end of June this bill is showing promise and has been co-sponsored by twenty Representatives from both sides of the aisle and every region of the country.

It’s important for the public to realize that Cash for Clunkers is not the best answer for everyone. Learn more about Car Donation and charities it supports.

According to the government, you are quite exceptional in that regard. Keep it up!

But please, don’t let me interrupt your willful intellectual dishonesty.

Way to go not responding to my argument, but rather using a strawman. I’m not sure if you noticed, but I was responding to the first of Mr. Yandle’s three arguments, not the other two.

But since you bring up the destruction of assets, you would probably be interested in the fact that the assets are not being destroyed, but sold off as parts or recycled into valuable raw materials.

Furthermore, the fallacy of the broken window assumes an involuntary loss of property which requires an expenditure to replace it, resulting in not being able to spend that money on other things. This is different, it just means that people that were planning to get rid of their old cars anyway are doing it earlier than they had planned.

Of course, the entire argument is a fraud anyway, since it makes the assumption that the point of the CfC program was either A) to reduce carbon emissions for the lowest price, or B) to make us ‘rich’, whatever the heck that means in this context.

As for the third argument, it’s so insane it really isn’t worth my time to argue.

-Ian

Little homework is needed to prove the failure of Cash for Clunkers. Bruce Yandle has sited the “Broken Window Fallacy”. The argument is completely relevant. I suggest you do some homework.

Broken Window Fallacy”,

Destroying capital wealth does not somehow create new and additional wealth. It wastes wealth as resources have to be consumed to replace the wealth that was there before. That means further misallocation of resources in a direction where the natural market would not have otherwise gone.

Destroying our property does not make us rich, even if done voluntarily.

I recommend you reading “Economics in One Lesson” by Henry Hazlitt. He goes into good detail on this.

I’m sure the Windstar that Charlie Pyles described above wasn’t getting anything like its EPA rating, with a bum transmission, exhaust system, and who knows what else.

It’s amazing how so-called experts can try to pull the wool over your eyes, while making some of the most basic errors in their initial assumptions. It’s good to know that Mr. Knittel and Mr. Yandle are here to spread FUD without doing their homework first. Looks like this time they ended up looking dumber than the government economists they like to lampoon.

The government was naively trying to cut foreign oil dependence by reducing consumption, and consequently reducing emissions. The idea that a tax cut would further the goals set out here is wrong; it might spur some consumer spending, but there would be much less chance that the goal of raising the country’s mpg average would be realized.

But we don’t know this. The new vehicles might yield less carbon exhaust per mile, but that’s not the same as yielding less carbon exhaust.