Take This for a Spin

The Cash for Clunkers program is over, it seems, and all that’s left is for Uncle Sam to pay the dealers. When this program first started I figured it sounded okay except I was helping pay for other peoples’ cars. As I have looked into the specific details of the plan I have learned it was really much ado about nothing. As for the CO2 emissions, the plan is expected to save about 365,000 tons of CO2 a year. Sounds like a lot doesn’t it until you realize that 29,028,000,000 tons of CO2 are emitted worldwide in a year. To give this some meaning China’s emissions have increased an average of 644,000,000 tons each year for the past four years.

Some would say that as 4 out of 5 of the most selling cars on the program are Japanese models, the program is helping the Japanese car industry. I know that some of these are built here in the US, the number one seller is a US model, and overall sales will benefit some American workers. Ultimately much of these profits will end up in Japan. Also the program rewarded only those already driving gas guzzlers.

The program was very limiting in that only those driving cars with a value under $4500 could benefit–unless you were stupid and traded in a car worth over $4500. I suspect that happened quite a bit. I’m not even going to get into the debt (loans) this program generated to people driving cars worth less than $4500.

Microeconomics Advisors forecasts the program will affect the timing of sales, not total sales. They indicate about half the sales would have occured anyway during the program time period and most of the others in subsequent months.

Bottom line is the auto industry was underwritten by the American taxpayer which benefits some, but at what cost?

And the real kicker will come next year at tax time when those 1099 or whatever forms from the car dealers arrive in the mail. For a single person with an adjusted income of around $30,000 the additional Federal tax will be about $942 or 21 % of the rebate. For those of us who didn’t participate that’s a good thing–oh wait, who does that money go back to ?


  1. Coming soon as part of healthcare “reform”

    Cash for Kidneys !