Clunkers: On Once Again
On again, off again, the CfC (Cash for Clunkers, or CARS, as the government calls it) program will be renewed, predicts Senate Majority Leader Harry Reid. This after a pep-talk lunch for the Democratic Caucus hosted by the President. A subsequent statement from Sen. Jim DeMint (R, S.C.) allowed that he, one of the bill’s noisiest critics, wouldn’t block it.
It looks as though they will vote very soon (by the end of the week), because public pressure to renew the program is intense. Everybody wants to find good news here. Ford reported
a 1.6% increase in sales from last July, saying several models such as the Ford Fusion sedan had benefitted from the program. Subaru of America said its sales rose 34%.
Ford also said it had run an analysis of cash-for-clunkers trades, estimating that the typical trade-in had fuel economy that was 9 m.p.g. less than the new vehicle sold by the program. At that level, Ford estimated consumers who bought new vehicles would each save about $1,000 a year in fuel costs.
Notice that the word “estimate” is used twice here. Dealers, or most of them, had stopped accepting clunkers on trades
because they were not confident that there was any money left from the original $1 billion. Dealers have mostly been advancing the amount of the rebate, $3,500 to $4,500, to their customers and waiting for repayment from Washington.
The dealers believe that about 250,000 cars have been sold on that basis, but data entry has lagged sales. [Transportation Secretary] LaHood said on Tuesday morning that 157,000 transactions had been entered in the computer system, with a rebate value of $664 million.
That, of course, is not too shabby as a stimulus program, albeit a very expensive one per trade. But many people—Senators and ordinary folk—complain bitterly that this is just another unjustified handout to the auto industry. Other Senators, namely Feinstein and Collins, have dropped their opposition to the mileage requirements.
For what it’s worth, yours truly thinks it’s a gross handout (yes, another one), and it should have had more rigorous mileage requirements to get the really bad cars off the road. Well, I’ve said all this before, but now there’s a stampede to get CfC renewed because—as with any handout—people always want more.
Politically, there was no way the Senate could turn this one down. Do you agree?