Cash for Clunkers hurts everyone
The Cash for Clunkers program was a bad idea. Far from helping the economy, we can expect it to cause a wide array of longterm problems:
- Those who bought will be hurt. Can you say "repo"? People who wouldn't otherwise have bought a car are now strapped with a payment they really didn't need and probably can't afford. Oops.
- Those who didn't buy will be hurt. Because all of the "clunkers" were destroyed, used cars will be in short supply and prices will rise. This will hurt those of us who need or choose to drive used cars.
- Dealers who participated will be hurt. First they had to front the cost of the program to customers. Now some are having trouble getting reimbursed, while they continue to float an enormous amount of money.
- Dealers who didn't participate were hurt. I'm guessing this would be smaller dealers who couldn't float the rebates for their customers, so they were unable to compete. This had to severely impact their business.
- American car manufacturers will be hurt. Who thinks sales will plummet now that the program is over? More to the point, who thinks they won't?
- Junkyards and used parts suppliers may be hurt, too. With so many new cars on the road and so many used cars gone, there will likely be less demand for used parts in the near future. There will also be less old cars being parted out to provide used parts for the cars still on the road.
- Charities will be hurt. Many cars that would have been donated were traded in and destroyed instead.
- The environment will be hurt. Save the environment. Drive a clunker. Do you really think that you're saving the environment by ditching the old car to buy a brand new one? Do you have any idea how much gas you'll have to save to offset the energy and resources it took to manufacture your brand new car? Hey, the more you drive the more you save, right?
- All of us will be hurt. Where exactly did we expect the government to get the billions of dollars to fund the program? Eventually it all comes out of our own pockets - whether by higher taxes or inflation. The government cannot give anyone anything that the government doesn't first take from somebody else.
So who benefited from the program? Most of the cars purchased were imports. So much for stimulating the economy. Maybe we should have been more specific about which economy. Let's just call it "Cash for Asia."
Can you add to the list of injuries? Do you disagree with any?
Did you buy a car during the C4C program? If so, do you have any regrets?