So why is the "CARS" or Cash for Clunkers program coming to an end Monday?

That's more than two months early, and the program as of today had only gone through 1.9 billion of its 3 billion dollars in funding. Why? The statement on the cars.gov website doesn't say why.

What of the people GM called back from layoff? Everyone was so so pumped about that.

Strange to end a program that the DOT by its own admission had a "wildly successful run". If it's so successful, why announce its end with over a billion dollars and more than two months left to go?

that the government isn't processing the rebates in a reasonable amount of time. One dealership they spoke with had filed 300 claims, and of that had only received the cash for one single transaction, leaving them a million in the hole.

over this - would be a shame to pull the plug, especially if it's generating JOBS.

http://seattletimes.nwsource.com/html/opinion/2003675084_peirce23.html



Colleges and corporations and politicians say people have to pull themselves up by their own bootstraps, yet the same entities have no qualms giving free big rides to well-to-do companies. It doesn't get any more glaringly obvious than that.

Sorry that my post transcends cars, but these companies (even the big 3) even get government handouts long before whining they've lost jobs and customers...

And don't forget, GM has been offshoring since 2003, and now wonders why fewer people have money to spend (it's whittling down of wages and taking advantage of the prevailing cost of living. False profits. That's why. Anyone in an "Introduction to Economics" class should be able to figure all this out... then again, half of DU thinks college is a waste of money...)

About GM:
http://www.economicpopulist.org/content/gm-offshore-out...
http://www.articlealley.com/article_193949_31.html
http://www.manufacturing-today.com/content/view/806/81 /
http://www.informationweek.com/blog/main/archives/2005/...
http://www.usatoday.com/money/economy/employment/2004-0...

2009, 2007, 2005, 2005, 2003 respectively.

There is a backlog of claims because the program was so successful that they have had problem processing the paperwork in a timely manner. Once all the paperwork goes through, they are likely to be out of money again.

I can tell you that this has had ramifications far past what they are seeing and what is being and will be reported. The announcement of the program got me shopping for a new car when I would not have otherwise even been looking. In the end, I decided to buy a used car. I know many other people have probably done the same thing, so the stimulation of the economy is even greater than what will be reported from the statistics involved in the actual program.

It has been so successful that I wouldn't be surprised if the program is restarted again at some point in the future (maybe next year).

In two ways in this case. First they upped the dollars from $1B to $3B. Second the program sold cars at a much faster pace than projected and sold more cars than originally intended.

How is this success?

Give an example. You put the For Sale sign out for your house and get a full priced offer on the first day which you accept. Was that a success (maybe so or maybe not). After accepting the offer you get someone willing to pay more.

The offer was too generous ($3500/$4500). What would have been the impact of half that? Would you have reached your initial goal of cars sales with half the drain on the Treasury? I bet the offer would have been even more successful if it was $10K/$5K.

What is going to happen next year to car sales? Has future demand just been brought forward (these buyers are not available next year to buy cars)? You also have a problem with these kind of offers - the pyschological price point has been reduced for a new car (car dealers see it with incentives all the time).

Will this become an annual program for the U.S. government? Since we own GM now maybe that is not entirely bad. Interesting way to run a country though.

Also we have the small matter of $3B that our grandkids will have to repay.

If car sales are humming along next year, then we can rate this program a success. If we are still subsidizing the purchase of new cars next year or car sales are in the toilet, then the program was not a success.

at least ten miles per gallon better. That will save the US a tremendous amount of oil we have to purchase from overseas. As a National Security matter this has been quite successful. As an Energy problem this also has been quite successful, as an environmental problem this has been very successful. however you choose to only focus on the initial dollar amount. Well if it puts a hundred thousand people back to work, that means the dollars they are paid will be spread out through the communities and tax revenues will be raised along with less people losing their homes. In virtually every single area that is even remotely affected it has been an incredible success.

even from this perspective (improved mph).

I am questioning the measure of success. If we had gotten the same number of cars off the roads with less subsidized dollars (just over a longer period) of time, then the program would have been a success by your measure as well and cost the Treasury considerably less.

I don't think we will know if the program is successful until next year (as I said in my original post). As far as I am concerned I would rather subsidize the purchase of cars than directly bail out poorly run businesses (like Goldman Sachs through AIG).

bought a new car without the $3500-$4500 they got for their clunkers. It made a huge difference and keep them from buying another clunker when the current one died. I read the surveys from the customers, they are all pretty much the same, this was the only car, on it's last legs they would have never been able to afford a new car if they didn't get the boost from the program.

and these cars will be bank owned in a matter of months. I know two personally that would never have done this without the 'down payment' of the CARS subsidy...and they probably shouldn't have with it.

sP

I disagree. The credit reports and loans have been solid, and the verified incomes have been well in excess of what these cars will cost. With ZERO percent financing on virtually all of the delivered vehicles (4.8 on trucks) the burdens are further reduced. Having JUST got home after 13 hours of scanning and submitting, it is an amazing success, and the people getting their new cars are grateful AND happy to have gotten out of their junks. Many are just cheap and getting rid of a perfectly running vehicle went against their grain. But the opportunity to get more than $100 for their rides trumped everything else.

I never saw anyone on the right crying about that. Hypocrites.

I never said anything about Iraq (or the bank bailouts for that matter). For the record I was against both. The point I was making is that measuring success by how many people take advantage of an offer is a poor measure. The very fact that the offer ends so quickly (far faster than we can crush cars or even push checks out the door) tells me that the offer was too generous. Lets see what is going on next year. Are we going to have to subsidize next year at an even higher level to get cars out the door.

And swimming on the processing side. :(

Which is too bad really. Definitely one of the better stimulus approaches, and it didn't even need some long drawn out shitty process to create it.

.6 billion and the expectation of .5 billion in sales for the last weekend according to a Motor Trend report.

A government program that works sets a really bad precedent. Makes the working class all uppity and shit.

republicans never understood this!

In other words, most direct subsidies to consumers are based on need. Food stamps are a good example -- you need to be below a certain income to get them.

Cash for clunkers is a subsidy for people who already are well off enough to buy a new car.

It was a needed jolt for a desperate car industry, but on policy grounds, it's hard to justify over a longer term.

About $2B has been spent so far, but the estimates are that an additional $0.5B is needed for loans that have not been "approved" by the CARS folks in gov't yet. The assumption is that there will be a flurry of activity in the final days of the CARS program, so the other $0.5B is needed to cover any new loans this weekend.

In otherwords, the program can't go over $3B no matter what, so they're ending it now. It might leave a little money on the table, but there won't have to be an emergency funding debate.

30,000 * average of $4K each = $120 million per day.

They have PAID $1.9 billion with hundreds of millions in backlog (lets say $500M)

So $3B - $1.9B = $1.1B
$1.1B - $0.5B = $0.6B

$0.6B = $600M

$600M / $120M = 5 days worth of funding left.

The govt doesn't want/can't go over the limit authorized by Congress.

If there is any money left over after they pay everyone maybe they will have a "one day only" final day to close the books.

Likely by Monday the govt will have already overspent the $3B.

back down.

Finally they go the route of trickle up economics and found out it was wildly successful, so they end it. . . . GO FIGURE!

They ended it because it used up all of the money allocated for it, including the$2 billion added after it was proven to be a success.

how many of these cars, purchased with cash from the CARS program, will have defaulted loans and repossessions in the next couple of years. I know two people who took advantage of this program who would NOT have purchased cars without it but will most likely NOT be able to maintain a payment on them. They put NONE of their own money in...I hope they do ok...but I am skeptical.

sP

I drove through a car lot today checking out some of the "clunkers" they had lined up(it was a Toyota dealership, they had almost no new car inventory). Some looked like they still had plenty of life in them, a poor college student or unemployed person would probably of loved to have one of them for cheap transportation. Kind of a shame really, I've always enjoyed tinkering on cars and trucks anyway and doing my own maintenance so I like clunkers :)