Taxpayer Cash for Clunkers

I have spoken to a number of people with differing viewpoints on the cash for clunkers program. I think we all agree that it was not well thought out in terms of logistics. Rumor has it that dealerships are getting rejection letters on their submissions and paper-work is backing up - at the dealerships and government desks. Due to g0vernment rejections, some dealerships are quitting the program. And a program planned to last to perhaps November is shut down the first week because no one can predict how much has been spent to date. Yep, another government brain freeze.

Aside from the usual government major F-up factor, let's have a discussion on the pros and cons of the program. One pro is that car dealerships are getting some sales. I have gotten comments, however, that we are kicking the sales can down the road. Those with a clunker are taking advantage of the program and will not buy another car for years to come. To this I say, so what. Dealerships are desperate for sales and the fact that they are getting perhaps a bit of relief now at the risk of future lagging sales is not to me a big deal. They will in time sell what they sell and they need to be prepared for an extended down-turn from the past.

Another comment I saw said this program is taking cheap used cars out of the market for those who can only afford cheap used car transportation. I admit that a lot of gas-guzzling cars (including my 1995 Ford Explorer) will leave the market and that might put a bit of a pinch on used car supply, but right now I see no shortage of used cars at decent prices on the lots (I was at some today) so I am not sure this is going to be a big problem. After all, the low car sales the past couple of years has led to a burgeoning used car supply.

I am also told that scrap metal prices are diving due to the program. Unless you are a scrap metal salesman, is this really a problem?

Overall, I like the program, despite its flaws and, yes, I hope to take advantage of it. Yes, some taxpayer money is being spent here, but in my mind a much wiser expenditure than the tens of billions on AIG, Citigroup and Bank of America. The latter three are all companies that got us into this mess and we can, I think, do much better without them.

Disclosures: I still own a clunker.