The Rabid Conservative

Think Right, Act Right, Be Right.

Transformative Change or More of the Same?

with one comment

I don’t normally take requests from my readers but I did get a request from one who wanted me to comment on the recent “Cash for Clunkers/Cash for Guzzler” program and so, here it is, in all of its glory – whatever that means.

Cash for clunkers/guzzlers, eh? So, I trade in my decently working car that may get about 21-24 MPG for a new car and, depending on the sticker MPG, I get a discount on buying up to about $5,000.

Sounds good on the surface, but let’s tear the lid off and see the problems.

1) It adds more government spending. Right now, it’s gotten to the point where its not about on what we spend our money but that we cut spending unilaterally because the outflow is far too high. But instead of the trade-in value for an older car coming from the corporate margin, the money is fronted by the taxpayers….again.

Germany has already instituted this program and what started out as a 1.5 billion euro program has expanded to be about 5 billion euros. Already, the House has thought about $4 billion for this little incentive program and that on top of the billions that the taxpayers have sunk into GM and Chrysler.

2) It grows government…again. And if the debacle about the subsidized digital TV boxes was any indication about how a government program was implemented to make changes in an industry, well, this should be another government exercise in futility.

(Right…the DTV cutover is today…and I don’t have a box. Gasp! Oh well, I guess I don’t get to listen to the liberal-biased mainstream media yammering Obamagic on my TV.  Darn. Cry me a river.)

3) It assumes that people will actually WANT to trade in their car. Right now, with the economic climate in sadder shape than a 1974 Ford pickup in a Michigan winter, well, people are going to be less inclined to trade in their jalopy for something new.  Do they want to take on a new car payment, the full coverage insurance that goes along with the financing, just to pinch a few pennies out at the pump?

On average, people drive about 20-30 miles a day, meaning that on an average duty cycle, people are filling up every two weeks, parhaps around 300 miles on a full tank. Take $2.50/gallon and times it by a 17 gallon tank = somewhere around $40 every two weeks for gas. That’s $80/month in fuel costs for this car, after doing the math is about 18 MPG.

Now what if we had a car that got 36 MPG? Well that would mean fuel costs are halved from our 18 MPG fuel in-efficient car, which means we would save $40 per month on fuel costs. Is the cost different in fuel efficiency going to justify the increase in car payment?

What about bigger insurance costs? I own my car, so I only need collision coverage, but what if I got full coverage? Twice the cost, particularly with my less than stellar driving record. Suddenly, the $40/month that I saved in gas gets forked over to the insurance company.

And then, I’m stuck with that $170-$250/month car payment for the next 36-48 months.

Doesn’t make economic sense to me or my calculator.

4) It offers no guarantee to the US auto manufacturers. Right now, the legislation in Congress doesn’t spell out if the new cars that we’re supposed to buy are to be Government Motors or if a Hyundai will also qualify. If it allows for the purchase of a foreign car, then we just removed thousands from our already dwindling economy. Real smart – maybe Japan and China will cut us in on the deal. No, I didn’t think so either.

5) It cuts into the aftermarket. For businesses that make their money on keeping older cars on the road worthy (a lot cheaper to spend $1000 for a new transmission than $20,000 on a whole new car), new cars are bane. New car manufacturers tend to build their cars to run to 100,000 miles without a major part replacement. But if we’re taking those cars off the road in one massive exodus, well, that will present a void to the repair market.

The problem here is it, once again, promotes disposable economy. How many things in society aren’t made to last? In the last week, I had to have a pair of khakis that were advertised to be “the last pair of khakis I’d have to buy” fixed because the stitching in the seat came apart. Just last night, I had to replace the bottom carrier of my vacuum cleaner because the brush spun out and melted a side piece. For cars, this is the aftermarket’s bread and butter but now we’re looking to replace, all at once, a bulk of the cars on the road with new cars with 100,000 mile warranties, which is 8-10 years under normal driving conditions. That’s gonna really hurt Big Joe’s Muffler Shop, not to mention cut into the parts market.

6) It cuts into the used car market. People driving used cars (like me – I’ve never owned a new car – I bought my current car for $3000) believe in getting a good deal on transportation, not having the latest and greatest drivetrain out there. By taking older cars off the road, the used market begins to wane causing a shortage and increases in prices for a used car. People that needed cheap wheels to get around will find those wheels not as cheap.

7) Environment impact is questionable if not laughable. Not to get into the sheer stupidity of the theories of “climate change” and “global warming”, going from an 18MPG car to a 24 MPG car isn’t going to have that much effect on carbon emission.  Despite all the screeching and rhetoric, only a very low percentage of carbon emissions relates to burning of fossil fuels. And with only about 20-25% of the overall carbon emission statistic being related to the United States, it would seem that number would fall below 1% of the overall emission, given the high numbers for oceanic activity and animal respiration. Still further is how much of the overall fossil fuel number relates to automotive exhaust? My guess is about .1%. One tenth of less than 1 percent of the overall world problem relating to carbon.

Now carbon dioxide only makes up less than 1% of the earth’s atmosphere or about 375ppm, based on today’s estimates. That’s 375 CO2 molecules per million molecules of atmosphere. But somewhere, the libs have this overly huge problem…

The point that the liberals do not get – over and over again – when it comes to the environment or making ends meet, most people, conservative or liberal, are going to do what is best for hemselves and make ends meet and forget the environment. I don’t have a problem with new and more fuel efficient cars, but I want them attractive, fast, powerful, cheap and efficient. If you can make me a car that fits all those things, I’ll burn bio-diesel or hydrogen.

Personally, I don’t think this idea is going to fly because it’s been tried in America. This is really no different than the free market ploy to give you “cash back for your trade”. But instead of the money coming from the car company, it comes from the taxpayers. Government Motors will just raise the price of the car slightly to take the edge off of any loss that might come as the result of subsidizing the “cash-back for the trade”. And you won’t get the corporate trade-in value for your car – even if it’s more than the subsidy.

Send this one to the scrapyard. We don’t want it. Perhaps put some of that money into job creation, not yet another government program without a sunset date.


Written by The Rabid Conservative

June 12, 2009 at 12:36 pm

Posted in Political

One Response

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  1. […] Clunkers program may be stalling out (as much as (p)MSNBC hated reporting this story).  As I previously wrote on TRC, one of the reasons that this program was such a bad idea was my number one reason – adds to the […]

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