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The Almighty Buck Transportation United States Politics

"Cash For Clunkers" Program Runs Out of Gas 594

Posted by timothy
from the spend-all-you-want-they'll-print-more dept.
Ponca City, We love you writes "The Washington Post reports that Transportation Secretary Ray LaHood has called members of Congress to inform them that the 'cash for clunkers' program will be suspended because the program has run out of money, and congressmen say they intend to ask the Obama administration to divert some funding from the existing economic stimulus package to maintain a scheme that they see as genuinely stimulative. 'Clearly, this has been a very stimulative program that's got consumers back into the car market. It's our hope that possibly more funds can be made available,' says Cody Lusk, president of the American International Automobile Dealers Association." If there is more funding, though, a report on CNET says it may come out of money to have been set aside for renewable energy loans by the US government.
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"Cash For Clunkers" Program Runs Out of Gas

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  • by Hognoxious (631665) on Sunday August 02, 2009 @08:14AM (#28915769) Homepage Journal
    Is anybody going to buy a new car just because of this handout? Seems like it's juust giving a bonus to anybody who was going to buy one anyway.
    • by MightyYar (622222) on Sunday August 02, 2009 @08:20AM (#28915819)

      Since $4500 just about covers what a typical new car loses by being driven off of the lot, I'd say it makes someone buying a used car at least consider buying new this time around. If I had a $600 clunker sitting around, I might go for it even though I usually buy used.

      • Re: (Score:3, Interesting)

        Yes. I would trade-in my old 1987 Plymouth to upgrade to a Volkswagen 50mpg Diesel (Jetta/Passat), but unfortunately my car doesn't meet the strict qualifications. Which I find funny. If I had an old 17mpg pickup I would be allowed to get a 19mpg SUV and get the free congressional money, but an upgrade from an old 80s pollutemobile to a new technology car that gets twice the MPG and is about one hundred times cleaner* is verboten.

        Yet more government illogic and inefficiency.....

        That's the same kind of

        • Re: (Score:3, Informative)

          by MightyYar (622222)

          Just as an FYI, 17 to 19 mpg improvement is actually pretty good - almost 12%. And at 17 mpg, that's a lot of gas compared to a 12% improvement between, say, a 25 mpg sedan and a 28 mpg replacement.

          But yeah, the program has a lot of flaws. I'm not a big fan of it anyway.

          • Re: (Score:3, Interesting)

            >>>12%

            We have very different definitions of good. When I shop I follow a policy of never buying anything unless it's at least 50% off, and often I get 60-70% off the price. That's why if I trade-in my ancient 80s pollutemobile, I would get a fifty mpg car. That's over 90% improvement, but I'm not eligible due to a stupid law.

            The improvement I would make, in addition to the maximum of 17mpg tradein, I would mandate a minimum of 27mpg on the new vehicle - nearly 60% improvement. You could still b

            • by FlyingSquidStudios (1031284) on Sunday August 02, 2009 @09:22AM (#28916279) Homepage

              When I shop I follow a policy of never buying anything unless it's at least 50% off

              Remind me to never eat meat at your house.

              • Re: (Score:3, Funny)

                by Sponge Bath (413667)

                Heh, I saw a listing in the free section of Austin craigslist for 30lbs of nutria meat. The listing said you needed to hurry as it was contained in a cooler. It did not specify if this was whole carcass or already cleaned. Sounds like a deal for Commodore64_love.

            • Re: (Score:3, Interesting)

              by MightyYar (622222)

              When I shop I follow a policy of never buying anything unless it's at least 50% off

              That's great for your capital costs, but you are confusing recurring and capital costs. You are talking about spending tens of thousands of dollars in capital costs to save a couple hundred per year. If you are looking to save money, don't look towards diesels or hybrids.

              The improvement I would make, in addition to the maximum of 17mpg tradein, I would mandate a minimum of 27mpg on the new vehicle - nearly 60% improvement.

              That's reasonable... at least no less arbitrary than the current numbers :)

              The net effect on making air more breathable will be unmeasurable.

              That's not true. 12% is measurable. And that is the worst case - most new cars being purchased under the plan are sedans, not SUVs.

              I'm not a big fan of the plan for

            • by Richy_T (111409) on Sunday August 02, 2009 @11:22AM (#28917211) Homepage

              The new vehicle has to be at least 4mpg more efficient for the 3500 rebate and 20mpg more efficient for the 4500 rebate.

              (Not that I agree with the program in the first place)

            • Re: (Score:3, Informative)

              by Dare nMc (468959)

              I would mandate a minimum of 27mpg on the new vehicle

              The minimum requirement for the $4500 is 22 mpg for a car + 10 MPG improvement over old car. Granted the SUV requirement of 15+2 is not as large, but it makes as big of difference.
              IE if you go from 10MPG to 15 MPG (50% change) over 100k miles you save 3400 gallons. if you go from 25 to 50 MPG (100% change) you save only 2000 gallons over the same miles.
              Which is a big reason why the hybrid/electric cars don't (currently) make much economic sense, when a 310HP V6 camaro vs a prius only saves about 200 gal

            • Re: (Score:3, Insightful)

              by bkgood (986474)

              but I'm not eligible due to a stupid law.

              This pretty well sums up the entire program. It looks like more of an Obama government PR stunt, being able to claim "hey, we paid $4,500 of your new ride!". Of course it will have little real benefit in the long term, just as Bush's stimulus check to every house didn't make an ounce of difference. And hell, I voted for the man (although buyer's remorse has long ago kicked in).

              And honestly, the fact you can even buy an SUV or light truck with this money is insane. A 2 mpg increase is nearly statistically in

        • Agreed. The system makes no sense. There are people for whom an old car is not especially polluting, because they only drive it an average of 5 miles per week. Possibly it is a second vehicle that they keep at a country house. Perhaps they are usually outside the United States.

          Giving away taxpayer money causes inflation. The inflation is not only in the dollar generally, but also in the price of new cars. Those who focus on the free taxpayer money they are getting may not realize that the dealer has raised prices.

          To me, the "Cash for Clunkers" program seems like government corruption. General Motors failed because of consistent bad management [wallstats.com], in which most of its cars were rated poorly by Consumer Reports.

          Now taxpayer money is being used to support bad management, and the taxpayer money goes to support people who have enough money that buying a new car is a goal, instead of finding a job, or getting through university.

          The U.S. government has no money. In the entire history of the world, it is the entity most deeply in debt [brillig.com].

          I've discovered that U.S. citizens do not want to believe that their government is corrupt. When they are presented with evidence of corruption, most avoid awareness.
          • More info: (Score:3, Interesting)

            More information that gives a view of U.S. car manufacturing, and the U.S. government in general:

            G.M.'s Road From Prosperity to Crisis [nytimes.com]

            The U.S. government bought 60% of G.M. [cbsnews.com], a company with $172.81 billion in debt and $82.29 billion in assets.

            Death and Taxes poster [deviantart.com].
            • Republican bitching about GM is a total fraud.I keep hearing so-called conservatives moan about GM and the how the government shouldn't have bailed them out. They talk up the free market as if they believe in it and the truth is, they don't. The very same conservative movement that rips the northern based GM has absolutely no problem lining up to the government dole when it comes to protectionism for American food products and subsidies for American farmers. Jeff Sessions, Republican, publicly ripped GM

          • by djlowe (41723) * on Sunday August 02, 2009 @01:40PM (#28918283)

            The U.S. government has no money. In the entire history of the world, it is the entity most deeply in debt.

            The problem with statements such as this is that they betray a fundamental lack of understanding of what "money" is. So, let's start at the beginning, in the hope that we can clearly understand what the true problem is.

            We start from first principles. Let's assume for a moment that you are a farmer and I am a hunter. I want some of the bread that you make from the grain that you grow and you, in turn, want some of the meat that I have. We agree to a mutually-acceptable exchange: In return for your bread, I will give you meat, at an agreed-upon ratio.

            This works for we two, and we're both happy with the arrangement, deeming it fair and equitable.

            The problem, of course, is that such a system doesn't scale well. As the population increases, and other goods and services enter into the equation, simple barter becomes awkward and cumbersome. If I have the pelts from the animals that I kill, but no meat to spare, and you don't want them, lacking the skill, means or desire to turn them into clothing, for example, I cannot use them to obtain bread from you as they are not of value to you for such an exchange.

            So enters into the equation the idea of using a common medium of exchange, which we'll call "money". In the beginning, it's something of universal value - coins, perhaps, made from metals that are sufficiently difficult to obtain in their own right so as to forestall just anyone from doing so, and thereby insuring that they will retain their value as such for awhile. Everyone agrees (for the most part), that this is a superior solution to barter, all things being equal (which they seldom are, but, we're just spinning a tale here, so it doesn't matter if our view of this fictional world is through rose-tinted glasses).

            Now, instead of seeking to exchange my pelts for your bread, I've coins to do so: I sold my pelts to a tailor in exchange for them and so can obtain the bread that I want from you at a mutually-agreed upon rate.

            You, in turn, take those coins and use them to purchase what the tailor has fashioned from them, a warm coat and some boots, perhaps.

            Fast forward a bit: Time passes, the population grows more and more, and supply of goods and services outstrips the availability of money with which to exchange such. Trade suffers, people can't buy what they want, nor sell what they have, nor provide services: Money is scarce (By lack of the source materials, or perhaps by hoarding and manipulation - greed raises its ugly head).

            Someone realizes that one way to correct this, is to change from using relatively rare metals for coins, to something that is easily created, script money - or, paper that, while having no inherent value unto itself, can nonetheless be used in place of them, so long as everyone agrees to it.

            So, by the power of law, everyone does, and things get better, prosperity ensues. Until, of course, a few people get greedy. They realize that the key to riches isn't in the goods and services, but rather in the medium of exchange for such. Since everyone has agreed to use money to exchange them, and since there's next to no cost to create it now, why, all they have to do is get complete control over it.

            That's where the Federal Reserve in the US, and other such institutions around the world enter into the equation, and also where ideas such as "fractional reserve banking" come into play: It's all about control over money now, because money is power.

            And over time, money became not a simple medium for the exchange of goods/property and services, but something of value in its own right, while having no equivalent cost. That's also where things such as stock exchanges come from - just another fiction that everyone agrees to, which are useful, but another venue that the greedy can manipulate.

            So, over time, there's a reversal - the economy is no longer fundamentally

            • Wow, what an insightful post.

              If you haven't already seen it, take a look at Money as Debt [google.com], which expands on what the parent said in a 45 minute video. Good (and scary) stuff.

            • by roscivs (923777) on Sunday August 02, 2009 @05:37PM (#28920163) Homepage

              Comments, criticism (including flamebait and trolls), etc., are welcomed. I am not a "professional economist", just a nerd that's been thinking and reading, and I know that I've grossly simplified many things, but think that I've captured their essence. I've no problem with others proving me wrong, so long as they actually do so.

              I think the part you're missing is the reason for the move from gold (or silver) backed currency to fiat currency. The reason wasn't because the "supply of goods and services outstripped the availability of money"; the reason was the boom-and-bust cycle. The idea was that by manipulating the money supply, the Federal Reserve would be able to soften and smooth the boom-and-bust cycle, making the "busts" much less severe. (It's no coincidence that the Federal Reserve was created shortly after the Panic of 1907, and subsequent reforms have happened after every "bust" since then [like the Great Depression].)

              Now, there is no small debate about whether this manipulation of the money supply has actually done anything at all to quell the boom-and-bust cycle. Some have suggested that these boom-and-busts are inevitable, and by delaying when they happen through manipulation of the money supply, it simply makes the inevitable bust that much worse. (Personally I think it is possible to smooth out the bumps, but that requires minimizing the economic good times as well, which I think historically hasn't been a very popular Federal policy.)

              Of course, there are also others who assert that the purported reason for fiat currency is a lie, and that the real reason behind fiat currency is to "print money" on demand, inflating the currency and enabling the government to pocket the difference--but when you look at the amount of revenue gained by "printing money" compared to the usual methods governments have of raising revenue (plain old-fashioned taxes), it seems unlikely that this is anything but a fringe benefit of fiat currency. In any case, I don't think there's any debate about at least the purported reason for the Federal Reserve and fiat money.

            • Re: (Score:3, Insightful)

              by syousef (465911)

              The problem with money (and share stock) is that:
              1) It does not distinquish between intangible resources (such as data) and resources hard physical limits

              This is both a strength and a weakness. Being able to assign worth to intangibles is good because it encourages people to produce them. Being unable to reflect the physical world (resources) and equating the two is bad.

              2) It takes time for supply and demand (plus regulation) to push prices up to accurately reflect the disappearance/scarcity of an important

        • by danwesnor (896499) on Sunday August 02, 2009 @10:45AM (#28916903)

          That's the same kind of illogic that allowed businesses to buy SUVs and then write them off their taxes (during the Bush years).

          1987 Plymouth == so dirty it's banned from sale within the U.S. (except as an older used car)

          I'd say you missed a lot. First of all, ever since I can remember, and right up until this second, businesses are allowed to write off any car they buy as an expense. So congratulations on having fully swallowed the anti-Bush Kool-Ade.

          Second, the reason that you can't buy a 1987 Plymouth as a new car is because they kinda stopped making them in, oh, I'd say about 1987. There as never a ban on selling them new. If there was, you'd hardly be able to get a use one now, would you. And also, the 1987 Plymouth Colt got 21/26 MPG, ever so slight worse than the 1987 Honda Accord (21/27).

          I expected the Democratic Congress to pass a bill that encouraged more high-MPG carss

          Democrats get elected by convincing everybody they're different from the Republicans. Less corrupt, anti big-business, yada yada yada. But it only takes a few months for people to realize that all they've done is elect the same guys, but with higher taxes.

        • by DigiShaman (671371) on Sunday August 02, 2009 @03:40PM (#28919175) Homepage

          That's the same kind of illogic that allowed businesses to buy SUVs and then write them off their taxes (during the Bush years). I expected such things from the SUV-loving Republicans, but not from the Green Democrats.

          I just don't get it. I really don't.

          At least here in Houston, I see more Obama bumper stickers on SUVs, BMW, and Mercedes then anything else on the road. In other words, it's the wealthy urban socialites that vote Democrat. So tell me, where the hell does this SUV-loving Republican mantra come from? As a voting Republican, I've never purchased a new car in my life. In fact, my current car is a used 99 Mazda Miata that gets 25MPG city and 30MPG HWY. So would you forgive me if I drive a gas guzzling SUV and voted Democrat?

    • by blitzcat (69699)

      I wasn't planning to get a car for several more years, but CFC made buying a car early worth it. I had an 05 Scion tC and a (clunker) 94 Dodge Dakota. Cash for clunkers put a new Mini Cooper S in my reach with almost no car payment. So I spent a month selling the Scion, and was due to turn in my clunker Friday morning when the money ran out and the dealer got shy of doing the deal. It left me in a bad spot because I didn't want to buy a car without CFC's at all, but I was now driving a mostly unmaintained u

    • Everyone Did (Score:4, Insightful)

      by Inominate (412637) on Sunday August 02, 2009 @09:40AM (#28916421)

      Nobody is buying a car "just because" of this. The truth is that this recession has been driven by two things. The primary factor is that people panicked. EVERYONE freaked out, THE SKY IS FALLING. The second factor is simply a side effect of the first one, banks backed off on giving credit, even to people who were low-risk.

      The cash for clunkers program is enough to get both groups to calm down and face reality. People have a lot of money, they just aren't spending it. Banks have money, they just aren't giving credit to low-risk people.

      A lot of fuckups made everyone gun shy towards dealing with the safe bets that drive our economy. Cash for clunkers put just enough money into the groups that are panicked to calm them down.

      • Re:Everyone Did (Score:5, Interesting)

        by optimus2861 (760680) on Sunday August 02, 2009 @11:15AM (#28917159)

        The truth is that this recession has been driven by two things. The primary factor is that people panicked. EVERYONE freaked out, THE SKY IS FALLING. The second factor is simply a side effect of the first one, banks backed off on giving credit, even to people who were low-risk.

        No, this is not what's driving the recession. What's driving the recession is that the amount of debt in the economy, especially the American economy, has reached critical mass. You really need to start reading some blogs like The Market Ticker [denninger.net], Mish's Global Economic Trend Analysis [blogspot.com], and Zerohedge [zerohedge.com] to get a true picture of what's going in the economy.

        As for this particular "cash for clunkers" program, all it's doing is pulling forward demand for new vehicles. It will cause a short-term rise in demand now, but once the program expires or runs out of cash again, that demand will vanish and there will be nothing to replace it. Sales will have to return to their previous level or even go lower, as the people who buy new cars under this program certainly won't need to do so again for a few years.

        At the macro level, all the debt in the system has produced a similar effect. All the demand, all the growth we've seen for years now, has been fuelled by debt. The debt just can't grow any more; everyone's maxxed out and now trying to pay it down. There's so much debt out there that clearing it out is going to be a long, painful process, and during that process we'll be lucky to stave off an outright market crash, let alone actually return to a growing economy.

    • by toddestan (632714) on Sunday August 02, 2009 @10:10AM (#28916641)

      The people who really need this program as the poor driving old clunkers, but they can't afford the new car or secure the financing for the new car (even after the discount). So the effect is that the most of the people taking advantage of this are the middle class, who are trading in older, but perfectly servicable vehicles, as part of the program. The "clunkers" name is a lie - many of these vehicles are problem-free, and feature functional modern safety and emissions systems. Many of these are families doing a "swap" - most families have a large family vehicle and smaller 2nd car, so trade in the old family vehicle for a new smaller car to get the voucher, then turn around and trade in the old smaller car for a new fuel-inefficient family vehicle.

      Many people don't know what happens to the old vehicles either. The program requires that they be disabled on the dealers' lot, or face a fine. The prefered way of doing this is to drain the oil and pour a sand solution into the engine and run it to it seizes. Youtube is full of videos now of this procedure being done to these "clunkers":
      http://www.youtube.com/watch?v=qjBilHH5z2A [youtube.com] (late model Jeep Grand Cherokee getting destroyed)
      http://www.youtube.com/watch?v=c-ZP6aG2xl0 [youtube.com] (Rather nice looking Oldsmobile Aurora gets trashed)
      http://www.youtube.com/watch?v=eOEqJIGnXRw [youtube.com] (Late model Chevy Blazer/GMC Jimmy getting destroyed)
      http://www.youtube.com/watch?v=4OhW9u9R49w [youtube.com] (Nice looking Dodge utility van, apparently they just drained the oil on this one)

      If you love cars, please don't click on these links:
      http://www.youtube.com/watch?v=j3qXvDDhUpE [youtube.com] (BMW 7-series getting destroyed)
      http://www.youtube.com/watch?v=waj2KrKYTZo [youtube.com] (late model Volvo S80 with the turbo option and Satellite Nav(?) getting destroyed)

      So not only do these cars have to be scrapped, to add insult to injury, when the scrap yards get them the most valuable part of the car (the engine) has been permanently ruined. So as far as I'm concerned, this program is nothing more than a disgusting waste of a lot of perfectly good vehicles in some kind of bizarre bailout for the auto industry by using taxpayer dollars to buy new cars for people who don't need them, and removing perfectly good vehicles from the used car market. There is nothing green about it at all when you consider the environmental costs of replacing these non-clunkers with new vehicles and recycling the carcass.

      (as a note, I'm particulary pissed about that Volvo... it's a nicer car than mine, not that my car is a bad car - but I can't trade it in for a voucher even if I wanted to because it gets 22MPG and now I get to watch nicer cars than mine get destroyed with my taxpayer dollars. As far as I'm concerned, the program running out of money is a good thing)

      • Somebody please... (Score:5, Insightful)

        by crmarvin42 (652893) on Sunday August 02, 2009 @11:52AM (#28917469)
        Mod this guy informative if nothing else.

        If these cars were going toward recycling it would be one thing, but destroying many of the perfectly good parts just to prevent it being sold as a used car later on is incredibly wasteful.
        • Re: (Score:3, Insightful)

          by PixelScuba (686633)
          Reselling them defeats one of the major purposes of the program, removing inefficient vehicles from the road. All of those cars were getting no more than 18mpg, and the new cars are getting at least 22... but I would suspect much more since many people wanted that full $4500. Besides... at the end of the day, they're just a machine, no different than throwing out a (much larger and complicated) microwave.

          The junkyard gets the car and has to give the dealership $50... beyond that, they have to crush the c
          • Re: (Score:3, Insightful)

            by crmarvin42 (652893)
            Except that the energy that goes into manufacturing parts for a microwave is negligible compared to the energy required to manufacture auto parts like the engine block, transmission or any other large and/or complex part.

            I don't know anything about the junkyards not selling parts anymore. I've purchased parts for my 20 year old pickup truck from junkyards several times in the last 5 years.
    • Re: (Score:3, Insightful)

      Oh come on! Who wouldn't want to make their car landfill prematurely and stunt renewable energy development at the same time?

  • by tetrahedrassface (675645) on Sunday August 02, 2009 @08:15AM (#28915779) Journal
    Seems like a lot of folks are using the program to purchase more efficient cars. Funny how the initial billion in funding jump started new car sales, and stimulated the economy in such a large way. If the initial 4 billion was supplied that was initially asked for we wouldn't be having this discussion. I think both sides of the political aisle see that this program is giving tremendous stimulus bang for the buck. I hate to see a lot of tired, old, and rusty cars going to the crusher but the fuel savings nationally should be measurable. Something like 250,000 new, more efficient cars have already moved, and hopefully this will get factory workers back on the line, working, and paying taxes, while preserving some semblance of U.S industrial capability.

    Cheers

    • Re: (Score:3, Insightful)

      by pwizard2 (920421)

      To me, this program seems like a bad deal in general.

      To begin with, many clunkers still run well and are paid off. My car is 10 years old (1998 Ford Contour) and I have no intention of getting a new one unless something happens to it. It's not the best looking car around (it has its share of dents) or the most powerful, but it works, is well-maintained, and gets me where I need to go. To me, it's not worth it to give up a car that is paid-off, runs well just to go into debt to buy a new car in a time wher

      • by TheRaven64 (641858) on Sunday August 02, 2009 @08:58AM (#28916071) Journal

        You can argue about fuel efficiency

        And you need to. How much fuel is required to build a new car, and to scrap an old one? What milage improvement do you need to get out of your new car for this to be a net improvement? It's not immediately clear to me that this program is factoring this into account. Unless you know how many miles a person drives per year, it's difficult to make this calculation. You also have to factor in future fuel efficiency improvements. If a car bought next year is more fuel efficient, but takes the same amount of fuel to manufacture, as one bought this year then waiting until next year to upgrade may result in less fuel being consumed in total.

    • by Bill Dimm (463823) on Sunday August 02, 2009 @08:58AM (#28916073) Homepage

      the fuel savings nationally should be measurable

      That's only true if the cars being turned in were being driven a lot. If retired people are trading in old cars that were only being driven once a week to go to the grocery store, this isn't helping the environment at all. In fact, it is hurting the environment because of the resources that went into manufacturing a new car that was unnecessary. That is why I have always advocated a substantial gas tax -- it creates an incentive to get a fuel-efficient car where the incentive is proportional to the environmental damage (and national security threat of relying on oil from the Middle East) that is actually being done. Further, the people doing damage are the ones that pay a penalty for it. The Cash for Clunkers program is not well aligned with improving the environment, and it rewards people for damaging the environment (i.e. those that bought inefficient cars) at the expense of those that were more responsible, since they will be paying more in taxes in order to pay for the clunkers being traded in.

      • Re: (Score:3, Insightful)

        by Vellmont (569020)

        The plan is primarily designed to stimulate the auto-industry, not save on fuel. The plan has two effects. A new car is purchased, and an old car is crushed. By taking an old car off the market it creates a shortage in the used car market for cars. This will likely raise the price of used cars, and make buying new cars more attractive.

        The fuel economy part is really just a way to sell it and get it passed. It might not have a huge impact on lowering oil consumption as people might just drive more becau

    • by rrossman2 (844318) on Sunday August 02, 2009 @08:59AM (#28916077)
      Yeah, and the big issue is the dealerships/new owners may get screwed. There are a ton of cars yet the dealerships have to process via the CARS system. I guess it can take up to 3 hours per car to actually file the thing. The government ran out of money, and the dealerships still have many, many cars sold under the CARS program they are going to need to get CARS money for.

      Problem is, the government is working at it's finest again. I'm not really for either party, so don't read this as me blaming one side or the other, it's just how it's been reported. The House has passed the extra $2 million, but it still has to hit the Senate. From reports, there's a few Republican Senators who are going to block the bill, or at least try to stall it long enough.

      Why are they going to do this?? I don't have a clue. I understand they may not like the CARS issue, and maybe think it's a waste of money. But that raises a few points. One, it's helped save a lot of small car dealerships, at least for a time now. Two, the money that's been flowing around surely hasn't hurt the economy. Three, if the Senate shoots down the extra money, what's going to happen to the dealerships and new car owners who find out that even though their trade in + new purchase met the requirement of the program, the program ran out of money faster than anyone could believe so now the $3500 or $4500 per car is a no go? The dealership is basically stuck fronting the $3500 or $4500 until the government can get them the money as is. Without the extra influx of money to the CARS program, a *LOT* of dealerships may find themselves holding a *LOT* of $3500 or $4500 "discounts" that will take a struggling business market already and completely trash it.

      Even if the dealerships went after the customer for the extra $3500 or $4500, a lot of them may not be able to afford the extra costs, or may have to sell the car off right away. While this may help the "new" used market segment, the customer is back to purchasing a cheaper, possibly less fuel efficient car to get around.

      All in all, a confusing and maybe not completely thought out program, but with an even more poorly thought out Government Party "I'm not going to support it because it's another parties idea" possible blocking of money.
      • Re: (Score:3, Informative)

        by Vellmont (569020)

        That's just a LOT of worry and speculation about something that we don't even know about yet. I haven't heard anything about dealerships not getting the cash for their voucher. I haven't even heard that this is a real possibility. Can you provide a reference that this is either happening, or a real possibility? Otherwise it sounds like you're just making this up.

    • by Chemisor (97276) on Sunday August 02, 2009 @09:01AM (#28916089)

      What a great way to fix a recession caused by people who got into too much debt buying houses they could not afford! Let's make them get rid of their cars and buy new ones for more debt! Credit is the fuel on which the economy runs, you know. If these people stop spending, then by golly, we need to give them more money so that they can KEEP spending DAMMIT!

  • Backend sucks (Score:4, Informative)

    by Anonymous Coward on Sunday August 02, 2009 @08:15AM (#28915781)

    I work for many car dealerships and know there's an IT admin somewhere in the fed govt that's having a really bad month.
    The backend sites (fueleconomy.gov and esc.gov) are damn near useless - they mandate dealers scan in all the paperwork and upload as pdf, but it's basically been one big DDoS - all the dealers in the country trying to submit the deals right here at the end of the month. Been this way for days.

  • Wow (Score:5, Insightful)

    by miracle69 (34841) on Sunday August 02, 2009 @08:17AM (#28915787)

    When you give people their own money back, they spend it.

    Who'da thunk it?

    Why, I think they could learn from this and practice some more evidence based policy by giving everyone their own money back, and then they could stimulate more than just Government Motors.

    • Re: (Score:3, Insightful)

      by MightyYar (622222)

      I think the concern in this recession is that rich folks would simply buy "safe" investments like treasuries with any tax cuts, which wouldn't stimulate anything.

      • Re:Wow (Score:4, Insightful)

        by Brian Stretch (5304) * on Sunday August 02, 2009 @08:45AM (#28915985) Homepage

        I think the concern in this recession is that rich folks would simply buy "safe" investments like treasuries with any tax cuts, which wouldn't stimulate anything.

        Top bracket taxpayers are overwhelmingly small business owners paying their business taxes on their personal tax returns. Cutting taxes means more money to reinvest in small businesses that produce most new jobs in America and providing less discouragement for workaholic small business owners to keep working when they really don't have to. Yes, it's unfortunate that limousine liberals get the tax cuts too but they still help on balance (the cuts, not the liberals).

        Since small business owners are overwhelmingly Republican and the UAW bankrolls the Democratic Party the "Cash for Clunkers" program made more political sense than tax cuts. Tax cuts also mean less government control over the economy and that would be double plus ungood.

  • by spiffydudex (1458363) on Sunday August 02, 2009 @08:18AM (#28915799)
    I'm still not in favor of this "stimulus". Not only is it for a group of people that have older cars. But it rewards those who were too irresponsible to buy "fuel efficient" cars to begin with. Honestly, 5 years ago you could have gone out and bought a Hummer, and now you can trade it in, and get a discount on your next purchase.

    Then what I don't understand is that all of the car that are traded in, go straight to the car crusher. What about all of the families that are in need of a decent affordable car, but cannot afford to buy a brand new one? Why not give a tax credit to everyone who buys/owns a new vehicle that meets a certain MPG?

    It just seems like this bill rewards those who are rich and were environmentally irresponsible over the last 10 years.
    • by RobotRunAmok (595286) on Sunday August 02, 2009 @08:33AM (#28915905)

      Why not give a tax credit to everyone who buys/owns a new vehicle that meets a certain MPG?

      Because that only helps the urban young, poor, trendoid and childless, who are already in the democrats' pocket. This plan reaches out to those with families, middle class, and the sportsmen in rural and semi-rural America.

      Wait... you didn't think this was about helping the environment, did you?

    • by Culture20 (968837) on Sunday August 02, 2009 @08:45AM (#28916001)

      Then what I don't understand is that all of the car that are traded in, go straight to the car crusher.

      To stimulate the streetsweeping and glassmaking markets, you have to go around breaking a lot of glass... [wikipedia.org]
      We're destroying perfectly usable vehicles (usually trucks or SUVs). This is destruction of wealth, not stimulus.

      • Re: (Score:3, Insightful)

        by ookabooka (731013)
        Yes, it is, but it is a little more complex than that. . .what if those windows you had were really inefficient? You didn't destroy windows and replace them to keep glassmakers busy. You removed old energy inefficient windows, and replaced them with brand new efficient windows that were stockpiled. The US benefits because it is essentially an investment to reduce energy usage, oil dependence, yada yada. We wreck old houses to build new skyscrapers all the time, this is just on a much smaller scale.
      • Re: (Score:3, Interesting)

        by Vellmont (569020)

        Baloney. The cars being traded in aren't long for this world anyway. The glass in a window essentially lasts forever. The broken window fallacy simply doesn't apply here. There's several other problems with this fallacy, outlined below.

        Funny you should mention windows though. There's another stimulus plan for tax credits on energy efficient windows. I happen to have 6 windows that are all rotten and in need of replacement. I likely would have bought the cheapest window I could get that'd last, but wi

    • Re: (Score:3, Insightful)

      by TubeSteak (669689)

      Not only is it for a group of people that have older cars. But it rewards those who were too irresponsible to buy "fuel efficient" cars to begin with.
      ...
      It just seems like this bill rewards those who are rich and were environmentally irresponsible over the last 10 years.

      It only seems like that if you completely ignore the very first thing you said: people that have older cars
      Congress understood that there would be unintended benefits to people they did not want to give it to.

      The program is designed to get fuel inefficient cars off the road.
      Not to reward the rich and environmentally irresponsible,
      not to subsidize cars for lower income Americans,
      only to get fuel inefficient cars off the road.

      If you want a real laugh, the gov't did not mandate higher MPG requirements because

    • by UserChrisCanter4 (464072) * on Sunday August 02, 2009 @09:40AM (#28916417)

      Then what I don't understand is that all of the car that are traded in, go straight to the car crusher.

      The entire car isn't crushed; the only requirement is that the drive train be destroyed. The recommended method from the feds is to drain the engine of oil, fill it with some sand, and turn it on. The rest of the car is sent off to the parts yard.

  • by commodore64_love (1445365) on Sunday August 02, 2009 @08:19AM (#28915809) Journal

    They estimated that $1 billion would be enough. They figured that would last for six months time.

    It barely lasted 2 weeks.

    This is why central economic planning doesn't work, and why shortages ran rampant throughout the Soviet Union and eastern communist countries. Simply put - Government politicians are no good at running an economy. They don't have the necessary skills.

    • Re: (Score:3, Insightful)

      P.S.

      And their mistake didn't just affect the government and a few carbuyers, but it's also affected the trillion-dollar car industry from Toyota to GM to Honda to Ford..... all of whom have developed and scheduled television advertising to run through November..... and suddenly all those spots are worthless.

      That's called government inefficiency.

      I just can't wait until that level of incompetence affects the health industry. Oh that's right - it already has via Medicare, Medicaid, and the govt-supplied healt

      • by HertzaHaeon (1164143) on Sunday August 02, 2009 @09:21AM (#28916265) Homepage

        I'd like to see you back up the claim that people are regularly denied healthcare because they're too old in Europe. You make it sound like we put them out to the wolves, if we can find them a cheap enough bus ride out to the forest.

        But even if we accept that you're right for the sake of argument, if you're going to deny someone healthcare, it's better to do it because the treatment would help very little, cost a lot and the resources could be better used on someone else, than to deny it because how treatment affects your corporate bottom line and shareholder profit margins.

        Also, I'm having trouble envisioning an insurance company who would cut off health care for a young person for some bullshit reason, that would still magnanimously spend millions on adding a few months to an old person's life. But maybe I'm wrong and insurance companies suddenly like to spend a lot of cash on someone who has very few payments left to make. In that case, I'd have to apologize, but I'll hold off on writing my apology just yet.

  • Already Stale News (Score:3, Interesting)

    by enrevanche (953125) * on Sunday August 02, 2009 @08:39AM (#28915947)
  • by plasmacutter (901737) on Sunday August 02, 2009 @08:39AM (#28915953)

    This was on NPR national coverage earlier this week.

    Within 24 hours of the news getting out that the program was out of money congress rushed a pre-recess bill to the floor to make sure 2 billion they had in reserve for this program was authorized for disbursement.

    Hate to put a damper on all the anti-government diatribes, but congress realized this form of stimulus has worked, and have been swift to see it continues.

    • Re: (Score:3, Insightful)

      by khallow (566160)
      Two billion is a drop in the bucket and may have already been spent by the time government realized the program was out of money. My view is that they'd need to fund it at somewhere around 20-100 billion to keep the program funded through it's final date. Depends how much gaming of the system goes on.

      Hate to put a damper on all the anti-government diatribes, but congress realized this form of stimulus has worked, and have been swift to see it continues.

      By saying "worked", what do you mean? It certainly has generated business for government owned businesses, GM and Chrysler. It has generated economic activity which might satisfy the less discerning Keynesians

  • by Fezzick (913356) on Sunday August 02, 2009 @08:50AM (#28916023)
    If the economy and the fall of the major auto makers haven't put dealerships out of business, this program surely will. Many dealerships have already delivered multiple $4500 rebates to their customers, and have yet to be reimbursed. It looks doubtful that they ever will. Many of the deals have yet to be accounted for by the NHTSA system due to glitches and server load. So... not only is this idea horrible from a national fiscal policy point of view, but now the very businesses that this is intended to help out, which are already struggling, are being forced to give large interest free loans to the federal government that very well may never be repaid.
  • by wowbagger (69688) on Sunday August 02, 2009 @09:00AM (#28916081) Homepage Journal

    So this "stimulus" money:

    1. Drives the government further into debt, at a time when the "value" of a government bond is approaching junk bond status.
    2. Causes people to go further into debt, at a time when consumer debt is at an insanely high level, and there is still the possibility of more people losing their jobs.
    3. Gives (borrowed) money to the car manufacturers, many of whom are NOT US entities (follow the money).
    4. Removes money from programs (like renewable energy) that WILL create wealth in the US.

    Yes, this sounds like a brilliant idea to me.

    And on the subject of "improving efficiency of the fleet" - look at the relatively low mileage targets the program has: they consider 26MPG highway to be an improvement? If they REALLY wanted to improve the fleet mileage, they would have insisted upon any car being purchase having at least 40MPG highway.

    Sorry, this is just the "bread" part (with the ongoing MJ crap being the "circuses" part).

    • Re: (Score:3, Insightful)

      by matthaak (707485)
      Don't forget another effect of the stimulus: making used cars more expensive. This comes about because anyone who would have sold their beater, or any dealer that would have re-sold it, for less than $4500 in the used car market, is now having it destroyed instead. This will make it real fun for any low-income or teenage drivers who happen to be in the market for a sub-$4500 used car in the near future.
  • Wrong category (Score:5, Informative)

    by AcidPenguin9873 (911493) on Sunday August 02, 2009 @09:13AM (#28916201)
    I see absolutely nothing in this story that in any way relates to Technology. This belongs in the Politics section, editors. Please stop cluttering my Slashdot frontpage with anti-government flamebait.
  • Fuck that (Score:3, Interesting)

    by SetupWeasel (54062) on Sunday August 02, 2009 @10:14AM (#28916685) Homepage

    I thought this recession was caused by our country's excessive commercialism. How is encouraging the same behavior going to help? $4500 is not going to help a poor family buy a new car, so this amounts to handouts to people who would have been approved for their car loans without it. Why can't I get a free $4500 to put toward my student loans since we are just throwing money around? I don't even own a car. I use public transportation for all my travel. I'm greener than a fucking shamrock. Stop giving my money to people more affluent than I am.

  • by donberryman (591775) on Sunday August 02, 2009 @05:11PM (#28919945) Homepage
    A tax credit for large vehicles was created in the mid-1980s to help farmers and small business owners purchase trucks and other large vehicles needed for hauling. But anyone who is self-employed could apply for the credit and any vehicle weighing more than 6,000 pounds, including large SUVs and Hummers, which get 8 to 13 miles per gallon, could qualify. Originally the amount was $17,500. But soon the amount grew. As the tax credit limit has increased, so did the number of claims.

    6 or 7 years ago congress passed a tax bill, as proposed in President Bush's economic stimulus plan, that offered a $100,000 tax credit for business owners who purchase large vehicles.

    Not all these vehicles purchase with with huge tax payers subsidy, can now be replaced with help from tax payers.

    Both programs were bad ideas. The growth of the SUV market was largely due to these hand-outs. It also perverted the market and may be partially to blame for our auto industry failure.

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