Friday, September 12, 2014


"Pay cash to destroy valuable assets? Only the government would think this was a good idea."

On July 1, 2009, the Obama administration put into action a bill the Democrat-controlled congress passed called The Car Allowance Rebate System (get it? CARS) or "Cash for Clunkers."  The concept behind this legislation was to get low-efficiency older cars off the road and thus fight climate change while stimulating the economy by increasing car sales.  The US government offered $4500 for any old car turned in, for the use of purchasing a new one.
At first, it seemed great.  A friend who works in car sales said they were selling like gangbusters, moving cars off the lot like crazy.  Then the problems started to set in.  The National Highway Traffic Safety Administration (NHTSA) required dealers to take the used cars in and pay a minimum amount for them, regardless of value or quality.  Then they could apply for the cost to be reimbursed to them from the NHTSA, who took the cars and destroyed them so they couldn't be repaired or used again.  A billion dollars was printed out by the federal reserve and used for this purpose.
Except it took weeks, even months to get the money back for the cars from the government.  Yes, it was their website and administration of the program that was causing the problems.  Sound familiar?  It was a bit of a foretaste of what the Obamacare debacle was going to be like. 
Some lots started to pull out of the program completely because it was too expensive for them to participate and the system too sluggish and poorly run, but the program was amazingly popular with car owners.  Congress soon passed another bill, this time 2 billion dollars worth, to extend the Cash for Clunkers program.  So the fifteen trillion dollar debt was increased by 3 billion for this program alone.
Meanwhile, the Obama administration was reluctant to release information on how well the program was going in terms of reducing pollution, stimulating the economy, and administering the money.  When the numbers were finally released, it turned out the big spike of car sales wasn't as big as initially believed.  In fact the extension was not working out well at all.
And a recent report noted that overall, the revenue for car lots has decreased due to the Cash for Clunkers program, not gone up.  How can this be?
Well for starters, after an initial increase for August, the sales dropped off.  And in fact now used car sales are significantly depressed.  The reason is because of the increased cost for used cars, now rarer and most of the cheap knockers have been destroyed, leaving used car prices at all time high.  In other words, if Joe Poor Guy wants to buy a car, he can afford it even less.
And people are clinging to their current automobiles even more than ever before.  The average age of cars on the road continues to rise as people keep their cars due to economy and the expense of replacing them.  So lots are selling even fewer cars.
Meanwhile the destruction of these old cars has also hurt charities that help the poor by stripping them of potential used cars to sell.  And that $4500 rebate for your junker?  The IRS taxed it.  So the poor were nailed even harder.  So the very people who need the most help and are in the worst trouble yet again are the hardest hit by a well-meaning leftist scheme.
As for the attempt to help the ecology?  Most of the cars purchased in the program were low-mileage vehicles.  To make matters worse, another benefit supposed to come about from the CARS program was increased sales of domestic vehicles (particularly GM), but only 2 were GM cars and most from foreign auto makers.
To sum up, the entire program was a humiliating disaster, like just about every single thing this administration has attempted.  But the voters, we're told, rewarded President Obama with another try.

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