Monday, August 3, 2009

Am I missing something here?

I'm squinting my eyes trying to understand the government's "Cash for Clunkers" program, which implies that the government is giving money to consumers for trading-in their gas guzzling vehicles for more economic ones. But I wonder if it's doing anything besides helping sell cars.
What happens to the "clunkers" that are traded-in? Aren't they merely re-sold to someone else as a "pre-owned vehicle" and put back on the road? If they're being crushed and sold for scrap metal, somebody needs to tell me, because I don't think that's part of the program.
The government (our government) is spending $1 billion as of now to support the program, which they say has been wildly successful.
I guess that means that it's helping the auto makers reduce inventory, sell cars and drive up consumer debt in the form of a new auto loan. That's nice, since the government (our government) owns two of the auto makers, and has given out enough money to own another one.
It seems to me that there are still plenty of "clunkers" (the government's word for cars that use a lot of gasoline) on the road and the auto makers are still selling them - even the auto makers that the government owns.
We're supposed to believe that consumers are trading-in old, inefficient vehicles in exchange for something new and efficient, but I'm not sure that's the case. Until someone shows me that the old inefficient cars are off the road, I'll continue to think that this is a waste of money.
What's happening, I think, is that the government is spending a lot of money for something that isn't necessarily going to help anyone. It's the age-old government solution to a problem: Throw money at it.
Our money.

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