Government CARS program

People seem to be using this program widely (ran out of first $1B, approved for another $2B).

Any thoughts on the 'Cash for Clunkers' in the US? Good/Bad?

I heard a economist the other day on talk radio say this is basically voodoo economics. What will happen is that people will by now but you disrupt the natural buying cycle of autos. People can only by so many cars. Couple that with people buying things they can't afford and we are back in the same position that put us where we got started in this cycle. I personally think the government needs to stay out of business and let the economy seek its own level without manipulating everything it touches. Look at the terrific job they have done with social security, Medicaid, Medicare, welfare, military spending, highways, education now they want to control banking, wall street, autos and health care. Sorry for the rant but enough is enough. Giving money to en debt people is not about saving the auto industry, its all about control of the masses.

OK, rant off now.

Just my 2 cents, bet your sorry you asked now.

I do have a problem with the stipulation that the clunkers must be crushed, not parts sold from them. I agree that allowing more people to spend money they may not have is silly.

majakdragon said:

I do have a problem with the stipulation that the clunkers must be crushed, not parts sold from them. I agree that allowing more people to spend money they may not have is silly.

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I just thought that the engines had to be destroyed and that they could sell the other parts?

I think it makes sense for your government to use stimulus money to help Americans buy things that will put other Americans to work. Cars are a good example because a strong auto industry means a high demand for steel, petroleum (to make plastics), glass, electronics and rubber. And, that's not even mentioning the spin-off industries like insurance, tourism and the hundreds of thousands of people making a living fixing cars and filling tanks at the service stations around the country.

In a similar way, it's precisely the fact that house building requires material input from so many different sources that kept the US economy booming right up to the financial collapse in the late summer of 2007, and why a SURPLUS of houses on the market at that time threatened to result in a long and drawn out recession. Building houses keeps many people working, not just carpenters. And, just like cars, home ownership keeps people spending money too. It's not until you own your own home that you need your own appliances; your own lawn mower and snow blower, and your own DIY books.

Those economics profs that said that a spike in auto sales would result in a lower demand for new cars in future don't know what they're talking about. A new car will typically last 15 to 20 years, and if only 5 percent of drivers bought new American cars over the next few years as a result of this program, that'd keep the big 3 busy for years trying to meet that demand. And, it's reasonable to expect that the driver population of the US will grow by MORE than 5 percent over the next 15 to 20 years, thereby resulting in a net INCREASE in the demand for consumer goods, (like cars) rather than any decrease. That is, the predictable decrease in future car sales over the next 20 years will be more than offset by the increasing driver population over the next 20 years. More drivers means you need more cars; MUCH more than a few years worth of increased production.

I'd very much like to see a similar stimulus program to help people buy ELECTRIC cars. Once American auto manufacturers start producing electric cars and Americans start buying them, America will no longer be dependant on Saudi oil. America will be dependant on Canadian hydro electricity! Here in Manitoba, we got more hydroelectric potential than you can shake a scimitar at. The only reason we're not building more hydroelectric dams in Manitoba is that there just isn't any demand for more hydroelectricity outside of the peak daytime and supper time hours. Once every driver in the US starts charging their lithium car batteries as soon as they get home from work, there will be a steady demand for electricity 24 hours a day, and that means Manitoba will be able to sell more electricity to the US.

If the US government would put 2 BILLION a week into auto incentives people would probably continue to buy American made cars. We simply cannot afford to continue to bail out businesses like this. At some point in time someone will have to pay for all this stimulus money being spent. With all the stimulus money that has been spent tax revenue is down over 50% from businesses and 28% form individuals. Seems to me we need to spend another TRILLION or 20. Maybe that will help......

I would love for electric or renewable energy cars to be more widely produced, our dependence on foreign oil is our Achilles heel. I'd really like to run an extension cord to your neck of the woods and not have to feed the Sheiks and South American Dictators. Canadians are a lot more friendly, don't want to blow us up and hey you have Hockey!

Part of the cause of our economic problem is we have based our economy on housing starts, since we have moved most other manufacturing jobs overseas. The housing bubbles pops and everything goes to heck, a result of several factors.

It's been estimated that 15% of the autos that have been turned in have been rejected from the Clunker Program leaving the dealer to eat the 4500.00 bucks. Govt needs to stay out of running anything and everything that it was never intended to be involved in. Cut taxes, let people keep more of their money and they will spend it and invest it. Nothing I thought of. It was a concept put into effect by Kennedy(D) and Reagan(R).

Nestor, we'll probably have to agree to disagree on a few points. I am interested to hear your thoughts on Govt sponsored health care though.

oldog/newtrick said:

Nestor, we'll probably have to agree to disagree on a few points. I am interested to hear your thoughts on Govt sponsored health care though.

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You guys probably should go with a government run health care system cuz that's what we got in Canada, and I don't see any major problems with it.

The way it works is this: Everybody over 18 gets a health card with a number on it. If you get sick or something happens to you, you go to the hospital and the nurse takes down all your symptoms and puts them into a computer. She also "triage's" you to determine how urgently you need attention. If you're young and healthy and you're coming to see a doctor because of a slight cough, well you can pretty well expect to be put last in the priority ladder and wait pretty much all day to get seen by someone. On the other hand, if you're lucky enought to get driven to the hospital in a nice new ambulance with flashing lights, you go straight to the front of the line and get to be the first one the nice doctor sees. And, for everything in between, you get triage'd somewhere in between. And, the next time you go to the hospital, they can punch in the number from your health care card and find out your medical history, because apparantly that's important in treating you now. From that perspective, it's simple as mud, and that's prolly the key to saving some money.

The system seems to work OK here, and so it'll prolly work there.

PS: I live in Canada, but it would be a stretch to call me a Canadian. I'm what you would probably call a space alien,... but I live in Canada. In my view, that's not quite the same thing as being "Canadian". Canadians make better beer, better hockey and better abductees. They have something called the Aurora Borealis (the Northern Lights) in Canada, so it's no big deal for Canadians to see lights in the sky, and they don't get all twisted out of shape over it. And, that makes my job a little easier.

Yeah, go with the government run health care program. It can be annoying waiting all day to see a doctor, but it's a lot better than facing a hefty medical bill if you have to have an operation or something and don't have insurance to pay for it.

Also, they have a law here in Canada that limits the cost of prescription drugs, and THAT was the reason that prescription drugs imported into the US from Canada were cheaper, not because they were any less safe.

The health care angle interests me, in an academic way. I am not sure if I would want it here, but I would be interested to see how it would actually work.

One thing about the US is that the political parties are so polarized on certain issues (but essentially the same on most), you never really hear much about the proposals. All you hear is the quarreling and Chicken Little predictions from the party that opposes whatever issue is at hand.

They are all just there to protect their own interests anyway. The number one goal of any politician is to get reelected. The way to get reelected is to raise money from lobbyists. We need more serious political parties.

One thing about the US is that the political parties are so polarized on certain issues (but essentially the same on most), you never really hear much about the proposals. All you hear is the quarreling and Chicken Little predictions from the party that opposes whatever issue is at hand.

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It's the same or worse over here. They have shows on the CBC (the government owned Canadian Broadcasting Company) called "Question Period" and "This Week in Parliament", and it's nothing but a bunch of people yelling at each other. From what I've seen of your government, at least your Senators and Congressmen/women appear to act their age. Currently, I'm being "represented" by someone who acts like an irate three year old.

It'd be comical if it wasn't pathetic, and if that monkey wasn't drawing a six figure salary that comes out of the taxes I pay.

I was talking to a friend of mine today who is a commercial painter and he said that he thought the clunker program was a pretty good deal. Really starting to get people buying some cars. When i told him it was his tax dollars paying for these rebates and asked him if anyone who got this free money even bothered to stop and say thanks his opinion changed. Dang that never occurred to me that I'm paying for someone else's car.

Whenever I watch a live or taped telecast of our Governments on TV I'm always stunned at no matter how much I think we have evolved as a society what smucks we elect to represent us. Oh well I guess we get what we deserve.

No, it's probably not right to say that the "Cash for Clunker's" program is funded by income tax dollars. It's funded by your government, and your government gets it's money from a whole whack of different sources, probably one of the biggest hunks of which is your income tax dollars. Still, there's income taxes from business, royalties from others extracting raw materials from federal lands, including oil, minerals, and lumber, profits from businesses owned by your federal government like the US Postal Service, capital gains taxes on the sale of stocks and real estate, import duties on goods brought in to the US, excise taxes on goods produced and sold in the US like alcohol, tobacco and gasoline, every kind of fee and appropriation imaginable from the day passes to your national parks to money confiscated from criminals and drug dealers. Basically, the money comes out of "general revenue", a big hunk of which, I suspect, is your income taxes.

What I WOULD like to see is the "Cash for Clunkers" program paid for by NOT giving out billions in foreign aide money to every country around the world like the US does every year. In a lot of those cases, it's the top brass in the country that pocket that foreign aide and buy personal jets or villas on the French Riviera or the loyalty of their country's army with it. Or, like in the case of North Korea, you guys are paying billions to provide them with energy so they don't develop their nuclear power industry... which is all the more incentive for them to start up their nuclear reactors again as soon as the flow of money into their country stops. An impartial observer would call it blackmail. If North Korea starts stockpiling nuclear weapons, it'll be South Korea, China and Japan that will have the most to fear, not the US.

I expect economists are watching this "Cash for Clunkers" program very closely to see how much of a stimulus it creates, given it's cost. If it does well, then I expect this kind of grass roots economic stimulus is going to be much more common in future. It makes much more sense to hand out 2, 4 or 8 billion dollars to Americans to encourage them to buy products made by other Americans than to throw hundreds of billions of dollars at each of the major banks and just tell them to "lend it out" to get the money flowing again. The banks just put the money in their safes, and then gave it back again so they could keep giving obscenely wealthy bonuses to their top managers.

Nestor, you speak with great wisdom, but remember one thing, the government does not have one single penny unless tax paying people give it to them. Its not their money its ours. They merely misappropriate it.

And I'm glad that in at least this case, the "hand out" came to ordinary citizens. I think when you give out money to the top, it tends to sit there. If you're going to give out money, start lower on the food chain where it will have to get spent. Money seems to trickle up, not down.