The Cash for Clunkers program apparently has been so successful that it is running out of money. The Senate is being asked to come up with more money for the plan which basically gives car buyers $3500 or $4500 when they purchase a new, more fuel efficient car. Sounds easy? Not so fast. There are rules. Many dealerships have rules posted. I opted for USA Today rules:

You can read a PDF of the whole thing here, but the National Highway Traffic Safety Administration basically says:

The eligible clunker has to be driveable and can’t be more than 25 years old. In the case of “very large” pickups and vans (8,500 to 10,000 pounds of gross vehicle weight), they must have been made since 2001.

The program runs through Nov. 1.


Dealers have to register and approval may take two to four days, which could hold up the start of the program for many.

You must have owned your clunker for at least a year, and be able to prove it. You must be able to show it was insured for the previous year, although it looks like there may be a little wiggle room since some states don’t require all drivers to carry insurance.

Clunkers must get less than 18 miles a gallon combined fuel economy, as rated by the Environmental Protection Agency. The new car you’re buying must get at least 22 mpg, a new SUV or small truck must be rated at least 18 mpg and there’s no minimum when you’re buying an extra-large work truck or van.

If a clunker car is traded in for a new car that achieves 4 to 9 miles per gallon better fuel economy, the credit is $3,500. If it gets 10 mpg more, the credit is $4,500. If you’re trading in an SUV or pickup and want to buy another similar vehicle, you get $3,500 if it there’s only a 1 mpg improvement. If there’s a 2 or more mpg improvement, you get $4,500.

The government wants to go to elaborate lengths to make sure the clunker is destroyed, not resold. Parts can be stripped, but the engine block must be rendered inoperable. (And the rules lay out various ghastly means to accomplish that. Don’t look. It will only break your heart.)

Is this a great deal or what? Depends on who you ask. Some people are singing its praises that the program is good for the environment, stimulates jobs in the auto industry and in the various stages of the auto graveyard business. Others feel that perfectly good cars are going to waste and that this is another huge waste of taxpayer money. So, where do our contributors weigh in on this one? Make haste and go get a new car or waste…of tax payer money?


Breaking News Alert
The New York Times
Thursday, August 6, 2009 — 8:20 PM ET

Senate Passes Extension of ‘Cash for Clunkers’ Program

The Senate passed a $2 billion extension of the car rebate
program after the House voted for it on Friday, before its
summer recess.

39 Thoughts to “Cash for Clunkers–Yeas or Nays?”

  1. Mando

    Nay for a variety of reasons but mainly because it’s more of the Obama Administration spending my money. Those middle-class tax hikes are just around the corner.

  2. Moon-howler

    My concern is that if I turn in my 18 mpg for a 20 mpg, how much is that really helping the environment? I think I would be better off not having a car payment, even if I am saving $3500 or $4500.

    I also wonder about taking a 2003 car and squashing it. Meanwhile someone else drives a 15 yer old car. There is something about that plan that I find inefficient and wasteful.

  3. IVAN

    It puts money into the consumer’s hands. It clears inventory off dealers lots. It creates demand for new models and therefore the need to manufacture additional units. More manufacturing, more jobs. More consumer purchases, more sales tax revenue for localities. This is a win-win situation. However, it might not be for everyone.

  4. GainesvilleResident

    Somewhere I read in the end it is costing the gov’t $20K per car, by the time you take into account the cost of processing the paperwork, destroying the old cars, etc. If this is true than it sounds a bit wasteful. However, I can no long find where I read that, so that $20K number may be high. I hope it is, and that the true cost to the gov’t is a lot less than $20K.

    As to tax hikes, Tim Geitner over the weekend said that a tax hike is a definite possibility to deal with the increased deficit caused by all these stimulus programs. That’s not a surprise, but Obama backed himself into a corner when he made his campaign promise not to raise taxes on those who make less than $250K a year.

  5. Mando

    It’s an artificial increase in demand. It comes at a cost. It cannot be kept up forever. If it does increase jobs, those jobs will no longer be needed once the tax payer is no longer subsidizing them.

    The only silver lining is the possible boost in consumer confidence but eventually it will be time to pay the piper.

    The free market is a tricky thing to tinker with.

  6. Moon-howler

    But Mando, you do have to admit that the economy did need tweaking?

    Ivan, thanks for bringing up those positives.

    GR, I heard the same thing but can’t recall where. I think that is a bit high.

    I guess anything that gives the auto industry and all it affects a shot in the arm, then it is not all bad. Frankly, I see good and bad. I tend to do that a lot though. Nothing is all one way or the other, as a rule.

  7. GainesvilleResident

    I would hope it really doesn’t cost $20K per car, that’s ridiculous. Then again, with the gov’t being what it is, they might be figuring in some really high cost just for processing the applications, or something. Also, I assume the cost of rendering the car not able to be resold is somewhat expensive. But I agree, $20K sounds awfully high – I can’t imagine the costs per car to add up to that. Hopefully that’s just a wrong number – I can see it being more than $4500/car – but not THAT much more.

  8. Mando

    We have gone FAR beyond tweaking. Keep in mind, if the fed is voicing strong concerns about all this “stimulus” you know we are headed down a very rough road. Fed Chairmen must weigh their words VERY carefully.

    Also, Cash for Clunkers is nothing more then a catchy name for more auto industry subsidization. They’ve just packaged it differently in light of all backlash for the bailouts.

    Also, someone driving some old beater POS worth less then $4500 is probably not in a very good position to be taking on a new car loan.

    All the positives entail making some pretty bad decisions akin to someone going on a shopping spree with their credit card and when they go bust, we’re stuck with the bill.

    I guarantee if one of the rules was you could only finance 50% to be eligible for this turd of a deal, we’d barely have any takers.

  9. GainesvilleResident

    One interesting thing I just read in the news: Cash for Clunkers so far appears to have benefited Ford more than Chrsyler or GM! Now, the interesting part is both GM and Chrysler are now partly owned by the federal gov’t, while Ford is not because they did not take any bailout money. The question is: does the gov’t continue to fund this program when it seems to be helping out a competitor more than it is helping out GM or Chrsyler? It’s an intereting dilemma the gov’t has gotten itself into, now that it has part ownership in GM and Chrylser!

  10. Mando

    This is the housing boom and bust, just on a much smaller scale. The ingredients are exactly the same, just in smaller quantities.

    We keep getting bent over then happily ask for more.

  11. Mando

    Another ramification is how this effects the used car lots. A prudent shopper will trade his/her car in for something he can afford (used car). The Fed Govt. is asking consumers to throw prudence to the wind and the used car lots are going to lose that business. This could do much damage to an already hurting segment of small business owners.

    We’re rewarding the inefficient and imprudent at the expense of the efficient and prudent. This is contrary to sound economic policy.

    Also, for those thinking this is saving the environment, how so? We’re producing more cars which I have to imagine has far worse impact then just recycling (and I don’t mean the raw materials – that also has negative impact) the ones we already have.

  12. Moon-howler

    How does everyone feel about the non American cars NOT being locked out of the deal?

  13. IVAN

    Reportedly, 50% of the cars purchased are Ford, GM or Chrysler, 25% are foreign cars made in America. Draw your own conclusions.

  14. GainesvilleResident

    Actually, an awful lot of “American cars” are made with a good percentage of foreign parts. Perhaps the only thing about American cars is that they are built in manufacturing plants here in America, with American workers. But of course, Toyota, Honda, etc. all have manufacturing plants located here in the US.

  15. Rick Bentley

    “We’re rewarding the inefficient and imprudent at the expense of the efficient and prudent. This is contrary to sound economic policy.”

    Exactly. This is government tyranny, to subsidize a thoroughly failed industry.

  16. Mando

    “How does everyone feel about the non American cars NOT being locked out of the deal?”

    GM and Chrysler are still going to come out losers eventually. Consumers still have free choice. We’re just giving them our and our kids money to make those choices.

    Most foreign cars are made here anyways. I’d much rather see a non-union manufacturer like Toyota or Nissan become the beneficiary then unionized GM or Chrysler. It’s time for the unions to go the way of the dinosaur. They’ve effectively killed the big three but the federal govt. keeps the IV drip going.

  17. Juturna

    So instead of giving them billions to bail out, why didn’t they give all of us $$$$ to spend……!!!????? Might have been cheaper? And definitely more popular.

  18. Moon-howler

    No lack of opinion around here. Great going guys.

    I can get more money (or so it appears) not going clunker. Actually who needs a new car payment.

    Welcome back Juturna. I hope you have been off vacationing in style.

  19. GainesvilleResident

    Actually, it appears Ford is making out the best of the American car companies on the cash for clunkers program. One of its cars seems to be the one most people are picking – the Ford Fusion – since it is cheap and has good fuel economy.

    It is an interest position the gov’t is in – since it is now a part owner of GM and Chrysler – yet its most popular stimulus program seems to be helping the competition more than it is helping GM or Chrysler!

    As far as the clunker program – it’s probably best for someone who had one of these cars and was about to trade it in, but was going to get far less than $4500 for it. For those people, it is a bit of a nice windfall if their clunker is worth far less than $4500. Obviously if your old car is worth more than $4500, the cash for clunker program isn’t going to benefit you.

    I agree with Mando about the union run car companies. One of the reasons GM and Chrysler got bailed out was due to the unions. And the unions were somewhat responsible for the poor shape those companies were in, with all the concessions they had to make to them – there was no way they could compete with non-union companies. Now, we’re just continuing things – as again a lot of concessions were made to the unions for the bailout of GM and Chrysler. If not for the huge loss of jobs that would have resulted, it might have been best to let GM and Chrysler go bankrupt on their own. Unfortunately at the time the economy couldn’t have sustained that huge loss of jobs – we would have been in very bad shape if that had happened, there definitely would not yet be any kind of recovery.

    In the long run though – GM and Chrysler really have a long way to go to being profitable companies, and the jury is still out on whether they will be able to achieve that. All this might have done is postponed their ultimate fate a few years down the road.

  20. anona

    Having never owned a brand new car because I didn’t want the payment, I wonder how this will affect lower income groups. Aren’t the cars being destroyed the very same cars a lower income person might buy to get back and forth to work? Isn’t that engine that has to be destroyed the same engine that might be taken apart and parted out to fix older model cars. And who does that type of automotive repair? Certainly not wealthy people. We know the middle and lower classes are having economic troubles, so why is taking out a car loan a good idea? Yes it will save a few jobs, but only temporarily and the ill effects seem to me to outweigh the positive effects.

  21. Mando

    @ anona

    You’re right on all points.

    Dealers are already increasing orders and inventories which, once the govt. turns off the tax payer tap, will sit idle.

    Watch for the large uptick in repos in the not-so-distant future. Are we going to fund bailouts for people that aren’t paying their car loans? Like I said, the housing boom and bust, just on a smaller scale.

  22. Mando

    The federal govt. has been hounding the banking industry to get a little looser with lending again.

    History repeats itself.

  23. Emma

    “So instead of giving them billions to bail out, why didn’t they give all of us $$$$ to spend……!!!?????”

    Amen. Juturna, if every American were given a $1000-$2000 time-limited debit card, that would have been far more stimulative to the economy than the stimulus package, the clunkers deal, and every other way the government is trying to prop up failing industries. Let the people spend their money in the ways that they see fit, buying the goods and services that they want and need, and support the industries that deserve support and can deliver the products people want. Have the card expire after a month or two if the money isn’t spent, and let the money stay in the Treasury.

    The problem is that the government does not trust the taxpayer, and apparently knows better what we should be spending our cash on than we ever could.

  24. Moon-howler

    Maybe my clunker will be worth more. Fewer clunkers to choose from because so many went the way of the cash for clunker cars. Anona, that was one of the intial concerns: The younger clunkers getting crushed and people having to drive around even older models of cars.

  25. Gainesville Resident

    Indeed, we aren’t learning from our mistakes. Maybe we’ll have an “auto loan bust” just like the housing loan bust.

    I did read a week or two ago the gov’t is pushing Freddie Mac and Fannie Mae to loosen their lending standards. So, it seems like we’re just going to repeat our mistakes all over again. Let’s stimulate the economy now by giving out more loans, and it will be hopefully someone else’s problem to clean up the mess that results later on when some of these loans go belly up because people can’t make the monthly payments. I wonder if these loans have teaser rates that go up after the first year or something.

  26. ShellyB

    The Republican party talking points against Cars For Clunkers have just been released: “This program contains a government mandate for your driving habits forcing you to run over senior citizens. Millions of seniors will be flattened by fuel efficient cars. Seniors who participate in the program will be forced to mow down other seniors! It’s a death for seniors program.”

  27. Slowpoke Rodriguez

    ShellyB, your “talking points” are sheer genius. You should try running them past some local newspapers. Assured success. Maybe even a Pulitzer! ……Dope.

    Anyway, cash for clunkers is kind of a wash. I’d say I’m fundamentally against the idea, but since 7 of the top 10 cars benefiting are Japanese or Korean, I’m tempted to say “cool”. Any time the administration screws American business interests, seems normal to me.

  28. Emma

    “Cash for Clunkers Program: We Can Help”


    “We’re from the government, and we’re here to help.”

  29. Slowpoke Rodriguez

    How about combining cash for clunkers and health care reform? The elderly can be scrapped, just like the old cars!

  30. Emma

    or recycled for parts.

  31. hello

    Ah, typical ShellyB, “The Republican party talking points”… I’m still waiting for how race may be playing a role in cash for clunkers…

    Only in D.C. can we seriously consider spending another $2,000,000,000.00 that we don’t have and not talk about the fact that we don’t even have this money in the first place. What happened to the pay as you go Obama wanted. Where are they going to come up with this additional $2 billion?

  32. NoVA Scout

    I took ShellyB’s comment to be a parody on some of the extraordinary nonsense that has been sent around (without apparent embarrassment, oddly enough) re health care, not a substantive comment on the car program.

  33. Mando

    I heard a audio clip on WNPR yesterday of a shop manager killing a perfectly good engine. This whole deal is just asinine.

    I’m proud to be an American, but I hate the fact that my country is populated by so many asstards and is being run by the king of asstards and his asstard court.

  34. Mando

    Then I heard a piece this morning that now the EPA is denouncing this whole deal as being more harmful to the environment.

    Can someone please stop the madness!

    The cynic in me can’t wait for a year or so down the road when the fallout finally hits. Can’t wait for the spin.

  35. Moon-howler

    I don’t think there is an answer for your plight, Mando. A lot of people felt that way about George Bush also. Asstard….hmmmm…I hadn’t heard that one. I think I will have to snag it.

    There are alway a large amount of people in the murky middle who just don’t tune is too closely to the political situation.

  36. Elena

    Just wondering, who pays for tax cuts? I hope people realize that tax cuts are an expenditure also. Investing in a one time program is a lot less expensive that tax cuts, meant to stimulate the economy in a recession, that never seem to get repealed though. How about that top 1% that have reaped the most rewards from Bush’s tax cut.

    Remember how Clinton balanced his budget. Tax cuts to the middle class and tax hike to the upper income 5%. The republican cried “the sky will fall, the sky will fall”……..yet it did not fall, as a country we were on our way to fiscal health and wellness.

  37. Only $1billon out of $4billon is set aside for the project and now the program, along with car dealers, suffer a lot. And there are so much trouble for the car dealers to be refunded, this cash flow problem may slow them down in implementing the program.
    Any further discussion is welcomed

  38. Barbara

    It worked for my 21 year old daughter who otherwise would not have been able to afford a vehicle at the current inflated standard MSRP prices. I bought her a 1998 Jeep 5 years ago for $4000, with 114M+ mileage. That vehicle’s current bluebook in excellent condition was $1200. Thanks to cash for clunkers she was able to buy a new, safe, fuel efficient car in her own name using her clunker and received $4500 trade-in, more than what I paid for it 5 years ago and 70M+ miles later. I think it’s an excellent program, however I do wish some of the driveable clunkers could be donated, to non profit agencies that could benefit from them.

  39. Jason

    Nay Huge Nay. First of all They are using money printed out of thin air to fund this and all the other crap the stupid government is doing that will make things worse. which will cause massive inflation which it will raise the price of everything because our money will be worth a lot less. Inflation is in effect like a tax.
    Many of us dont want our money we pay in taxes to help fund other peoples new car purchase which they will probally lose anyway due to a really bad economy, losing thier house in the next wave of house forclosures or losing thier jobs when the commercial real estate market busts which is going to happen. The fact that they are destroying cars that are still operational crushing them is going to hurt poor people because it will cause higher demand for used cars with lower supply which will cause the price of used cars and parts to go up making them harder to buy.
    The goverment props and gives money to one business it does at the expense of other businesses. The people who buy these cars will be burdened with a car payment that otherwise wouldnt if not for C for C so they will have less money for other things which will hurt other businesses. People with new cars tend to drive more which puts more cars on the road which increaes the likelyhood more more traffic congestion meaning more idling at stoplights and freeway. People with new crs are less likely to ride public transportation like buses, less incintave to carpool with someone to go to work and less likely to take Metrolink or other train. When the goverment gets involved in business it leads to malinvestment because there is no real market indicators to guide people on how they should invest thier money.

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