"Clunkers" Rebate Plan Runs Out of Gas
After an unanticipated response from citizens interested in trading in their clunker politicians under the "cash for clunkers" program, the government reportedly exhausted the funds available, making it unclear whether additional deadwood can be removed from office.
Apparently, there is a large backlog of applications, according to Calista Creamer, spokesperson for the program. The White House would not immediately confirm that the program had been halted.
About a three hundred jaded politicians were traded in under the program, which offered payments of $3,500 to $4,500 for people who traded in old legislators for new ones that would focus on providing affordable, accessible health care for all; excellent public education; sustainable energy sources; progressive domestic and foreign policies; and so much more.
Apparently, there is a large backlog of applications, according to Calista Creamer, spokesperson for the program. The White House would not immediately confirm that the program had been halted.
About a three hundred jaded politicians were traded in under the program, which offered payments of $3,500 to $4,500 for people who traded in old legislators for new ones that would focus on providing affordable, accessible health care for all; excellent public education; sustainable energy sources; progressive domestic and foreign policies; and so much more.
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"Central planning" goes bust in less than 7 days.
And these are the people we want to run health care.
July 30, 2009 10:46 PM | Reply | Permalink
It did show a lack of planning. Apparently, the car dealers had been stockpiling the applications, but that's no excuse.
July 30, 2009 11:04 PM | Reply | Permalink
I disagree. The point was to have a successful program. And this clearly was a success. Why would it have been better if the 250K buyers were spread out over 4 months?
Only 2 republicans voted for it .... and now they are having to backpeddle. If the goal is to gather support to get the program refunded ... coming in with a bang was a good thing, no?
I don't get the beef.
July 30, 2009 11:48 PM | Reply | Permalink
I think selling 250K more fuel efficient cars is successful. I'm really not arguing about 'cash for clunkers' but joking about trading in used-up politicians.
July 31, 2009 12:04 AM | Reply | Permalink
Sort of misplaced ... that comment was really to Lalo.
But yes, the witty play on the meaning of "clunker" is noted and appreciated ;-)
July 31, 2009 12:53 AM | Reply | Permalink
Have you read the whole plan? Whether or not they successfully implemented this clunker is beside the point. Here are a few important details of the actual policy they have been promoting as "green" legislation. Pay special attention to the table midway down the page on minimum required gas mileage.
I can buy a "large light-duty" truck that gets as little as 15 MPG and if it does at least 2 MPG better than my current "clunker" I get a $4,500 rebate! Great deal for me and the car dealers and auto manufacturers, though I fail to see what the polar bears or the American people get out of the transaction.
The only way this idea could possibly deliver on its stated goals is if they mandated that someone buys particular types of car or one that gets a minimum amount of mileage, like a Focus Hybrid or a Prius or even a modern diesel. Since that sort of mandate is unlikely and probably unConstitutional to boot, the true motivation for this fairly expensive piece of corporate-friendly fraud, waste and abuse remains murky though far from unclear.
The fact that the cash can't be used to buy a used car, as long as it got a certain gas mileage, is all we need to know about who this bill was really for.
This is a boondoggle, pure and simple, that is unlikely to make a bit of difference for anyone but the auto manufacturers the few million people who will use the program. Just because it comes out of the Obama White House doesn't make it automatically progressive or effective or even smart.
This is program is a stinker by just about any objective measure.
July 31, 2009 10:51 AM | Reply | Permalink
Hi Jason,
I have not read the whole plan, but as I recall it's more about stimulating auto sales than emissions reductions. Reducing inventories at dealers, and encouraging purchasing of Ford and GM vehicles(F150 pickup anyone?). Clearly they'll only see some percentage of the sales, but it will be more than they would have otherwise.
2mpg actually adds up to a pretty big cumulative emissions decrease across the entire fleet purchased under the program.
Couple that with the number of vehicles to be replaced that are leaking oil, coolant, brake fluid, etc. and that's not an insignificant pollution reduction.
The newer vehicles will also have better braking and control systems, airbags, other safety features - so we'd also be looking at fewer traffic accidents and consequently fewer fatalities and injuries. (This may impact the Bereavement Services industry, but let's face it - they're going to get all of us eventually, so I think that's a wash.)
- reductions in CO2 and other emissions(small, but real)
- reductions in groundwater pollution as leaky vehicles are replaced(brake fluid is bad news and petroleum products are carcinogens)
- reductions in traffic accidents and the human and property damage caused by them
- reductions in dealer inventories contribute to solvency and possibly to fewer job losses in the automotive industry
I suspect I've missed some pros, and I'm sure I've skipped some cons, but I think the benefits listed above are pretty objective, and non-stinky.
Better, as my grandfather used to say, than a stick in the eye.
July 31, 2009 1:51 PM | Reply | Permalink
I am having the same discussion on two threads. In addition to the points I linked to, I think this program was poorly conceived and executed based on the need for little bit of feel good press as well as the need to inject 4 billion into the car dealerships.
I think the "green" benefits are so negligible that they shouldn't even have been included as one of the goals of the program. Had they sold it as a way to strengthen American car dealers while at the same time giving Americans a leg up on getting a new car, I would have been fine with that. Had they even kept the environment benefits to the ones you stated, but emphasized that buying a car that gets 15MPG isn't being green, I would have been OK. All those claims are the truth even I still disagree with the underlying premise.
As it is, the benefits aren't really in line with the rhetoric.
July 31, 2009 3:22 PM | Reply | Permalink
Ah yes, a plan the gov't came up with was more popular than they thought. And that's bad news how?
If anyone wants to tie this to health care then the health care industry have reason to be afraid that the public option will be more successful than the CBO predicted.
July 31, 2009 12:03 AM | Reply | Permalink
It looks like the original legislation authorized $4B to be spent on this. Perhaps the next phase will allow the remainder to be spent.
http://www.govtrack.us/congress/bill.xpd?bill=h111-2640
July 31, 2009 12:31 AM | Reply | Permalink
Har Har Har,
You're a clever one Lalo. Central planning, har har har!
ps(apologies to Rootie for borrowing his tag line)
July 31, 2009 2:06 AM | Reply | Permalink
I was looking at this and how our wonderful press covered the cash for clunkers program. In one case, those who and say and may think they have our best interest in mind phrased it like the program wasn't working; and in another case it sounded like the program was too successful.
July 30, 2009 10:56 PM | Reply | Permalink
I wasn't sure whether new car financing had loosened up. Apparently it has.
July 30, 2009 11:08 PM | Reply | Permalink
I didn't follow the clunkers program well enough to judge whether it might or might not have been a good idea; it may have been a clunker of an idea. I do believe, however, that it was unfairly impugned by some pundits based on misconceptions about the arithmetic of gas mileage; for example, many quibbled about the value of paying to achieve a 2 mpg mileage increase.
A 2 mpg increase is not interpretable until one knows the starting point. To illustrate the basic principle, I'll use hypothetical examples involving larger increases. Compare scenario A with scenario B in the following illustration.
A: a car averaging 5 mpg is traded for one averaging 10 mpg.
B: a car averaging 50 mpg is traded for one averaging 100 mpg.
Which involves more savings?
A: the first car uses 20 gallons to go 100 miles, while the second uses only 10. The savings - 10 gallons.
B: the first car uses 2 gallons to go 100 miles, while the second uses only 1. The savings - 1 gallon.
In other words, a 5 mpg increase in scenario A saves 10 times as much gas as a 50 mpg increase ins scenario B.
Regardless of the overall merits of the clunkers program, its emphasis on the low mileage cars was based on sound logic.
July 30, 2009 11:26 PM | Reply | Permalink
I think getting people into high MPG cars is laudable. The dealers seem delighted with the 250K cars sold. Even if the program ran out of gas earlier than expected, it seems like a success to me. Thanks for doing the math, Fred.
July 30, 2009 11:32 PM | Reply | Permalink
Fred - Any improvement is welcome, but I'm not sure I understand your math/logic. The standards could have been a little more ambitious. Going from 11mpg to 13mpg doesn't seem like much to me. Going from 20mpg to 22mpg is an even smaller improvement percentage wise. Also, amazingly, there was no requirement that the new cars be made in the USA.
I'm glad the program worked, but I would much rather trade in some legislators. Of course, many of them get fantastic mileage just running on crap.
July 31, 2009 8:58 AM | Reply | Permalink
If you do the math, TJ, you'll see a meaningful difference for vehicles that, let's say, might otherwise have been driven 20,000-30,000 more miles before trade-in. Percentage increases are irrelevant; what counts is the savings in gallons per mile. That's why in my illustration, a 100% percentage increase was valuable in one case, and almost meaningless in another.
July 31, 2009 11:05 AM | Reply | Permalink
Again, I'm confused. Over 10,000 miles, the car in example A. would use 1,000 gal and the car in example B. would use 100 gal.
Also, I would guess that most people shopped for a car they liked and hoped it would qualify for the mpg requirement. As opposed to shopping for a car that significantly increased mpg and hoping they liked it.
In any case, it's a nudge in the right direction and if it's renewed maybe it will also be refined.
July 31, 2009 1:35 PM | Reply | Permalink
A billion dollar nudge here and a billion dollar nudge there and pretty soon we're talking about real nudges.
July 31, 2009 1:46 PM | Reply | Permalink
One problem is that some people traded 18 mpg SUVs for 22 mpg SUVs, and still got $3,500. Trading from 18 mpg to 28 mpg only got you an additional $1,000. A more graduated incentive might have spurred people to look at more fuel efficient vehicles.
For buyers of category 2 trucks (meaning nothing more than a "large van or large pickup"), only an increase of 2 mpg was required to get the $4,500 credit. One could have traded in a 13 mpg beast for a 15 mpg beast:
http://www.cars.gov/files/TheRule.pdf
July 31, 2009 9:11 AM | Reply | Permalink
The difference in fuel savings between 18 to 22 and 18 to 28 is quite small - hence the relatively small extra incentive. See my comments above regarding the arithmetic. Also, as I mentioned above, a 2 mpg increase could represent substantial savings if it started at 13 mpg, but much less savings if it started at 20 mpg. Even the same percentage increase would save much less from a higher starting point - e.g., going from 13 to 15 saves much more than going from 26 to 30.
July 31, 2009 11:10 AM | Reply | Permalink
What the arithmetic tries to justify is that C4C is providing cash incentives for the type of modest increases in fuel efficiency that probably would have occurred with a new purchase anyway, had people been willing to buy.
This is just a cash incentive, to lure the careful purchaser onto the lot, the one who was nursing an old sedan or pickup along for a few more years.
July 31, 2009 11:56 AM | Reply | Permalink
The arithmetic doesn't support that, Donal. For example, a driver whose vehicle would be driven another 30,000 miles over the next two years at 13 mpg would save a bit more than 300 gallons by upgrading to a 15 mpg vehicle - i.e. about 3 gallons per week. That would contribute a non-trivial saving in the quantity of CO2 released to the atmosphere as well as reducing our dependence on foreign oil. However, at current gas prices, the dollar savings of less than $1000 would not be as attractive as the C4C offer. I would wish to see all the raw data in terms of total vehicles affected, average mpg differences (rather than minimal differences required for eligibility), total greenhouse gas and other emissions reductions, and total dollar cost, to be in a position to judge whether C4C is a good idea. On the surface, I suspect it is, but that will depend on the actual numbers.
July 31, 2009 12:07 PM | Reply | Permalink
You are leaving out the environmental costs of building the new vehicle, which may be justified this one time, since so many of them are already sitting around.
IMO, a lot of people are more terrified at the thought of taking on a new debt obligation right now than keeping old Betsy running, paying a bit more for gas and cutting back on trips. Three or four big ones seems to be enough to lure some of them into the showroom.
If they still drive less, fine, but if they go back to their old ways, we're just funding another iteration of Jevon's paradox.
July 31, 2009 3:21 PM | Reply | Permalink
Thanks for adding some common sense on this one. Don't sell me a lemon and call it lemonade. Just call it a lemon and let me decide if that is what I want to buy in the first place.
July 31, 2009 3:27 PM | Reply | Permalink
What happens to the clunkers, Jason, are they resold, junked, what?
July 31, 2009 4:08 PM | Reply | Permalink
Great question. I am not so sure that is even a consideration.
July 31, 2009 4:10 PM | Reply | Permalink
Well if they just get passed down the socio-economic ladder, wouldn't that erode intended gains.
July 31, 2009 4:14 PM | Reply | Permalink
That is certainly one unintended consequence that is a possibility of this legislation.
Doesn't take them off the road as much as puts them lower down in the food chain because they are only worthwhile to those that can afford them by paying cash at the dealer's used car lot. Now instead of taking public transportation, they have a cheap and polluting vehicle that they otherwise couldn't have afforded or obtained because it was in someone else's driveway.
I didn't even consider that one, but it is another great point. Are you sure you're a liberal? :O)
July 31, 2009 4:28 PM | Reply | Permalink
No, the clunkers will be junked. That's not my idea of recycling.
July 31, 2009 4:32 PM | Reply | Permalink
I guess it depends on how much is actually recycled. From what I understand, most junked cars are mostly recycled into component parts and sold back to manufacturers, though I could be oversimplifying the process. This is actually the only part of the program I agree with.
July 31, 2009 4:36 PM | Reply | Permalink
I think the junked cars will NOT be cannibalized for parts. These cars are driveable and they don't want them ending up on the street again. Had a car last year that got totaled (according to the insurance adjusters) and they crushed it into a small block almost immediately even though there were some good parts that could have been scavenged.
http://thomas.loc.gov/cgi-bin/query/z?c111:h2640:
"(6) consistent with subsection (c)(2), establish requirements and procedures for the disposal of eligible trade-in vehicles and provide such information as may be necessary to entities engaged in such disposal to ensure that such vehicles are disposed of in accordance with such requirements and procedures, including--
(A) requirements for the removal and appropriate disposition of refrigerants, antifreeze, lead products, mercury switches, and such other toxic or hazardous vehicle components prior to the crushing or shredding of an eligible trade-in vehicle, in accordance with rules established by the Secretary in consultation with the Administrator of the Environmental Protection Agency, and in accordance with other applicable Federal or State requirements; and
(B) a mechanism for dealers to certify to the Secretary that eligible trade-in vehicles are disposed of, or transferred to an entity that will ensure that the vehicle is disposed of, in accordance with such requirements and procedures and to submit the vehicle identification numbers of the vehicles disposed of and the new fuel efficient automobile purchased with each voucher;"
July 31, 2009 5:27 PM | Reply | Permalink
I was talking less about parts and more about wholesale recycling for base materials, though I think parts recycling isn't something that should be dissuaded.
July 31, 2009 7:20 PM | Reply | Permalink
That would be re-use, which is qualitatively different, if philosophically related.
American Steel Institute will be happy to inform you about steel recycling.
http://en.wikipedia.org/wiki/American_Iron_and_Steel_Institute
And bear in mind - lemons cure scurvy.
August 21, 2009 9:59 AM | Reply | Permalink
They shoot horses. The clunkers' engines will be locked up, either by adding silica to the gas, or by draining the oil and running the engine until it seizes.
Sounds mean, but the rest of the car can be recycled. My wife laughed when I said goodbye and thanks to my old car, but we do get attached to things.
July 31, 2009 5:27 PM | Reply | Permalink
ta
July 31, 2009 5:30 PM | Reply | Permalink
Oh, dear, your wife would have had an even greater laugh at me. Not only do I say goodbye and thanks to the old car. Last time I bought a new car they had left my old car where it could see me get into the new car and drive away, so of course I apologized to it as I went past.
July 31, 2009 6:44 PM | Reply | Permalink
What happens to the old ones? That was a concern to me as well. The question was answered on NPR today. There is some chemical poured into the engines preventing them from being used again, and the frame is then crushed. In other words, the "clunkers" are euthanized.
I think this was great! It is the first stimulus that was visible to anyone and available to the hoi palloi (us). It would have been better if the new car had to get 30 mpg, but those cars are so much more expensive that most people wouldn't have been lined up to pay the difference once they got their $4,000 rebate from the gov't.
This was a good idea. The fact that it was so successful it ran out of money -- NOT STEAM, which is a quite different connotation -- is not a problem; it is evidence of its success.
July 31, 2009 6:30 PM | Reply | Permalink
Cars that get 30+ MPG aren't more expensive, CVille, they are just not as sexy as SUVs that get only 15.
August 1, 2009 11:11 AM | Reply | Permalink
Yes they are more expensive. Have you gone car shopping lately? I have.
August 2, 2009 8:09 PM | Reply | Permalink
This is just not true. SUVs and light trucks cost way more than compacts or sub-compacts and that is the type of vehicles we are talking here. I think are just disagreeing to be disagreeable again.
August 3, 2009 6:46 AM | Reply | Permalink
I agree with you if you are comparing a Prius to a big SUV; the latter is more expensive. I was thinking of a Prius vs a small Honda. But do you think that SUV's and trucks get the kind of mileage that would qualify for this program? I don't know if their stats work out, although a friend of mine just bought a huge truck and swears that he gets 19 mpg.
Jason! I am NEVER disagreeable!
August 3, 2009 7:24 AM | Reply | Permalink
This comment up above explains the provisions of the program. That is my main beef.
I don't think everyone can plop down $25K for a decently equipped Prius, even if I do think many can and don't because of perceptions instead of reality. But the program could have required a minimum of the current CAFE standard of 27 MPG, with the trade-in vehicles being immaterial as long as they were over a certain age.
Lots of nice little cars under $15K that would have qualified.
August 3, 2009 9:13 AM | Reply | Permalink
I just heard on the news this morning that dealers will be allowed to put off destroying the clunker trade-ins until they get the rebate money from the Feds.
August 2, 2009 7:39 PM | Reply | Permalink
I don't have a problem with that. Why should they ruin their ability to sell a trade-in until they get compensated?
August 2, 2009 8:12 PM | Reply | Permalink
http://www.google.com/hostednews/ap/article/ALeqM5i_J2CDMBIZhobnHhGIYFCzqvR52wD99P6GDO1
July 31, 2009 12:32 AM | Reply | Permalink
Looks like the House is pumping $2 billion into the Clunkers program. So, it may continue.
July 31, 2009 1:40 PM | Reply | Permalink
Although my support for the program is only tentative, because I don't have access to all the data, I see one more potential advantage. It is likely that most "clunkers" are less safe than the average trade-in, and so removing them from the highways and replacing them with cars of recent vintage is likely to improve automobile safety.
July 31, 2009 5:22 PM | Reply | Permalink
I would have bought that as a motivation as well, but without raising the bar higher than 15 MPG it shouldn't be called a green initiative.
August 1, 2009 11:13 AM | Reply | Permalink
Back again - I thought to check my dashboard and wound up here.
There is no "likely" regarding whether new vehicles are safer than old ones. The data on ABS and airbags is conclusive - that alone makes them safer. That new cars are properly tuned and maintained and not running on bald tires makes quite a difference in safety too.
I want to remind folks - the change of 18mpg to 20 mpg(yeah, I know you said 22, but bear with me) is a significant improvement - what you are asking for is on the order of expecting a 100% annual return on investment - wildly optimistic. Maybe even "irrationally exuberant". :-)
Most such vehicles are used commercially. And they tend to have much higher annual mileage than commuter vehicles, so that 10% reduction in fuel usage for commensurate mileage is pretty good.
Say 40,000 miles(my uncle puts closer to 100k/yr) for a truck.
At 20 mpg, that's ~2000 gallons annually.
At 18mpg it would be 2222.2 gals - so we're seeing about 200 gallons less used annually - about $5000 at current prices. At 100,000 vehicles it would be 20 million gallons - and 500 million dollars more disposable income.
Many commercial vehicles don't get no 18 mpg.
8-10 is more like it. And some of them are trading up to 16-18 mpg!!!
Many of which now use low-sulfur diesel.
This is a wonky subject and there are a lot of moving parts - many benefits aren't mentioned in the language.
August 21, 2009 10:17 AM | Reply | Permalink
I would rather have seen 4 billion invested in alternative energy research or finding better ways to store renewable energy supplies than this boondoggle. If this had been an initiative of the Bush Administration, liberals would have hated it for the same reasons I do, which I find highly ironic.
August 23, 2009 6:34 PM | Reply | Permalink
Well cable says the WH is working on this because it is one billion our of ten trillion that is working.
I hope so. I said somewhere else just fine BOA a billion for their most recent sins and fill up the program's coffers again. HEY THEY ARE SELLIN CARS!!!!!
July 31, 2009 5:52 PM | Reply | Permalink
I just bought a new car. I didn't qualify for the clunker thing but I think it's working better than you'd think. It's creating enormous traffic and you don't sell cars without traffic. It's generating buzz. It's sending the message that it's OK to go buy a car, no need to hide in the bunker. People are saying that folks would buy the car anyway. Well, I didn't want to buy till next year and fear of a big maintenance bill was changing my mind but all this buzz may well have pushed me over the edge. And they do have a heck of lot of new cars they need to sell so I wouldn't be surprised if this keeps a few dealerships afloat as well.
July 31, 2009 9:31 PM | Reply | Permalink