Cash for Clunkers Junked
The much touted Cash for Clunkers is itself getting ready to get junked. What should we think about proposed massive programs like health care reform if “smaller” (there are still billions involved!) programs like this cannot be effectively planned and carried out?
By the way, the $1 Billion set aside for covering turned in clunkers, at $4500 a pop, would provide for something like 222,222 vehicles, to say nothing for the cost of running the program itself. I’m sure the figures are not quite this high in 2009, but in 2006, Americans purchased 7,667,066 passenger vehicles. That is roughly 147,000 vehicles each week. Assuming that as many potential buyers as possible would attempt to take advantage of the deal, you can see that a program covering only 222,222 trade-ins would run out in just a few weeks. How come little ole’ me can figure that out just from Wikipedia and applying some common sense but our government cannot?
What would be a more realistic figure? Let’s assume that Americans would buy 6 million vehicles in 2009. Let’s also assume that just one-fourth of those sales would rely on the cash for clunkers program, that’s 1.5 million cars. Do a little math and you can see that that program would require $6.75 Billion. But still that’s quite an assumption!
How about this: what if government would stay out of market manipulation and stop applying direct pressure to the market?
See the article, “Cash for Clunkers Runs Out of Gas,” on the Wall Street Journal.
UPDATE: Congress has voted to add a couple more $billion to the program.
