Sunday, August 02, 2009

More from the party of No

The (my hyperlink thingy has quit working) reports that Republicans are dismayed by the profligacy of the cash for clunker program. How dare the Dems spend a billion bucks in a week and want to extend it for another week!

Spend, spend, spend those Dems do. And the balls of them – it isn’t being given to Wall Street, insurance companies or other corporations – plain ole damn people are getting the $4,500 per clunker! What the hell kind of stimulus is that?


SonjaB said...

I got mine....

Kvatch said...

Yeah! Especially when AIG only got 140X that amount!

The Curmudgeon said...

As usual, the Republicans are either making the argument poorly... or it's being poorly reported.

Cash for Clunkers is great for car manufacturers -- American, German, Japanese, and Korean alike (which in itself is a drawback: Why are we spending American tax dollars to help shore up Toyota?) -- but it's a real problem, down the road, for the working poor.

Those old clunkers are the cars that the working poor can afford. There is not yet a glut of used Priuses waiting to take their places. But the environmental piece of the Cash for Clunkers scheme is that these cars must be taken out circulation permanently -- completely disabled, then destroyed. That will drive the cost up of remaining clunkers -- good for used car dealers, a lot of whom may have recently sold Pontiacs or Chryslers -- but bad for the people who need them to get to work.

Public transport in this country gets people to city centers... but not necessarily (and, in my experience, not usually) to the far-flung industrial parks where our increasingly scarce manufacturing jobs may be found. You may find a bus that gets you to a shopping mall -- but the commute might take four hours by bus, but only 40 minutes by car. The shoppers drive. But the people who mop the floors? The Democrats, in their zeal, are going to wind up hurting core constituents disproportionately.

Don't get me wrong: Despite the overbreadth, the stimulus to the American car industry -- a mainstay of our economy, still -- is vitally needed. (I don't know how we could have legally excluded the foreign manufacturers, though I sure would have liked to.) And I'm a 'greenie' on most occasions. But there must be a stop to this program... soon.

Even if the money runs out in another week, I'd say $3 billion is enough. Always beware the law of unintended consequences.

Dave said...

I don't think the program will have the negative effect on the supply of clunkers you predict. Wikipedia says there were about 235 million cars, pickups and SUVs in the country in 2006. Using 12 million a year as the number of new car purchases gives us roughly 120 vehicles over 10 years old, what I'll designate as a clunker. $3 billion divided by $4,500 is 666,666 (!), which is only about .005% of the number of clunkers in the country - a statistical drop in the bucket.

Dave said...

That should be 120,000,000 cars over ten years old. I hate numbers.

The Curmudgeon said...

The Wikipedia number seems to be climbing. When I looked in just now, the claim was that there roughly 251 million vehicles registered in the U.S. in 2006. For a nation of 300 millions that seems to be an awful lot of cars -- and some of these 300 million persons are too young (or too old) to drive. I can't believe Jay Leno skews the curve that much.

But, OK, the same article says that 38.3% of these 251 million vehicles are over 10 years old. That comes out to 96,133,000 cars.

So, you're right that the numbers of old cars will not be exhausted by even a $3 billion program. But the question is not how many old cars there are, but how many are likely to change hands in the any given period of time? That, I submit, is the true 'supply' of clunkers.

Jose and Maria are not bringing in their clunker to trade because, even with a $4,500 trade-in, they're not going to be able to afford the cost of new wheels. They need their car for work. I suspect this is true for a lot of folks.

And therein lies the problem, I think: Some old cars are in the possession of stubborn, middle class folks who might be tempted into trading in the family jalopy by the unexpected $4,500 windfall -- especially if that was the car junior used and he has gone off to school, etc. But it's these people who would otherwise be providing the replacement rides for the Joses and Marias of the country as their clunkers break down. And now they won't.

So the supply of available older cars for the working poor may well be constricted, causing a spike in prices and an unintended hardship for the working poor and lower middle class.

I'm not saying for certain that it will happen. I hope it will not. But it seems to me that there is an argument to be made... and time will tell anyway.

Dave said...


You found the same article I used, I subtracted, trucks, other than pickups, and motorcycles to get my number.

You're right that the supply is less than the inventory of all clunkers. I can't think of a way to approximate it.

And, right or wrong, I'm a bit pleased to see some, even stupidly spent, stimulus money not spent on a bank or brokerage.