Cash for Clunkers Funds
Earlier today there were reports that the Cash for Clunkers program was being suspended due to initial funding of $1 billion running out. In only one week! Wow. There’s obviously a huge demand for this program, which was intended to last up until November 1. I have to admit, I’m surprised it was so popular, and surprised cash has run out.
In a surprising move, the Obama White House chimed in with word that they are going to try and keep the program afloat with more funding. I assume this means Congress will get to work on this as soon as possible, and the Cash for Clunkers program won’t be going broke.
According to the Cash for Clunkers CARS.gov website, the program still has plenty of funds. Talk about your slow to update graphically-displayed stats FAIL.
Basics of the Cash for Clunkers Program
The Cash for Clunkers was introduced in late June as a program that would not only get more low-emission vehicles on the road (the thought being this would help the environment), but it would also help consumers (all of us waiting around to buy a new car) as well as the struggling auto industry. Three-for-one, baby!
The program works roughly by giving dealers a $3,500 or $4,500 credit that they can turn around and give to consumers who do the following: trade in a high-emission vehicle, aka “clunker”, and use the credit to buy a lower emission new vehicle. See more specifics at Cash for Clunker bill or see my Cash for Clunker Q&A.
Doubts About the Program Actually Helping Consumers
It’s obvious by the demand for the funds that the program was being used. But are the funds being put to good use? Do the people who currently own vehicles worth less than $3,500 need to go out and purchase or lease a new car? When I blogged about this program on the Quicken Online blog, I walked through the different questions to help you decide if Cash for Clunkers was for you. They were (along with my macro-economic commentary):
- Do you have a clunker? See the rules at my post on the Cash for Clunker bill.
- Is your clunker worth less than $3,500? Hopefully no one is participating in this program that could have received more for their clunker than the allotted $3,500.
- Can you negotiate? My suspicion, and the word on the street, is that dealers are pulling or de-emphasizing their own incentives and rebates. So, does the average consumer know this? Even if they’re getting a sweet deal by trading in a worthless clunker, are the dealers taking it all on the other side of the transaction by not offering normal new car deals?
- Can you afford a new car? Lastly, should the US Government be in the business of encouraging more debt? Isn’t that partly why we’re in our current recession? How many of these consumers are laying down cash for their new ride? Likely not many. And the folks rolling around in a $3,500 vehicle before the program likely should not be financing a new ride. Just my take.
It would seem to me that a small number of people actually fit the bill (pun!). So how can it be that the funds have run dry so quickly? My theory is that many who shouldn’t be involved with this are. And thus, the program is hurting most of the consumers who are involved.
What are your thoughts? Should the program be funded with more tax-payer dollars? Was it even a good idea to begin with?