I don't mean to seem like I'm picking on everything Barack Obama does. Hey, I kinda sorta even like the guy, and I certainly don't think he's evil incarnate. I think the idea of saving social security by picking up the payroll tax at $250k of income is brilliant (now, if only he'll do it); and given the cards he's been dealt, he's been okay so far in handling the recession (not great, but okay).
That having been said, WTF is he thinking with this cash for clunkers business? For non-Americans out there, it's a program by which you can trade in a fuel inefficient car and get a $4,500 credit towards a more fuel efficient new vehicle. The old cars are then destroyed and the guy drives home in his brand new Camry or Accord or (gasp!) a Fusion or Focus.
Like the sheep that they are, the media is touting the program as a big success because so many people are taking advantage of it. DUH... it's a HANDOUT! Of course people are going to take advantage of it. Headlines blare: Car sales are up!!!!" as though this is some brilliant plan. Gee, if we gave everyone $10k, I suppose that would make incomes go up too.
Okay, so what's the effect of this program?
1) It does not generate demand. It compresses demand and moves it from the coming year or two to now. All it does is makes people who would need cars in the next year or two buy it now instead. Purchases go up now so fast that dealers don't have the inventory and it will depress demand in the next two years as the car manufacturers heal and start to get back to their normal car production numbers.
2) It kills used car dealers! I read about this in the paper today but it's so obvious anyone can see it. The same people who used to sell their $2,500 to the dealer (who would then sell it for $3,200) are giving it away instead to get a $4,500 rebate. In effect, the inventory for cheap used cars has dried up. If you generally buy cheap used cars and need a new one, plan to use the bus for the next while.
3) It encourages irresponsible spending. People who drive these "clunkers" probably do so because that's what they can AFFORD TO DRIVE. Now, you're telling them, "hey, look! buy that brand new car." In 2 years when they can't afford to make their monthly payments, where is the government going to be??
4) It's yet another government expenditure with no offsetting tax or cost cut. Yet another unbalanced handout. How many of these do we need before enough it enough??
Can anyone in their right mind (on second thought, I'll even settle for someone in his wrong mind) offer any sort of coherent defense for this program? I'd love to read one. I haven't seen one yet.
Originally posted by sh76It does not generate demand. It compresses demand and moves it from the coming year or two to now. All it does is makes people who would need cars in the next year or two buy it now instead
I don't mean to seem like I'm picking on everything Barack Obama does. Hey, I kinda sorta even like the guy, and I certainly don't think he's evil incarnate. I think the idea of saving social security by picking up the payroll tax at $250k of income is brilliant (now, if only he'll do it); and given the cards he's been dealt, he's been okay so far in handling t ...[text shortened]... defense for this program? I'd love to read one. I haven't seen one yet.
which is the whole point behind "fiscal stimulus plans" - the main reason for this program
It kills used car dealers! I read about this in the paper today but it's so obvious anyone can see it.
if you can increase the demand for new cars, it helps to keep the auto industry afloat until the economy improves.
It encourages irresponsible spending
the great dilemma -- in order to get out of the current economic crisis, we need to encourage people to spend more and save less. BUT over the longer haul, in order to get out of the debt crises, we will have to encourage people to do the opposite.
It's yet another government expenditure with no offsetting tax or cost cut. Yet another unbalanced handout. How many of these do we need before enough it enough??
Again - that's the whole idea behind economic stimulus -- the economic stimulus plan actually needed a lot more plans like this one. It's only a very temporary measure (I hope!) that isn't adding to the long-term debt situation.
Originally posted by sh76You forgot one there. A lot of people will be forced to pay to have someone else own a nicer car than they do. Both my vehicles are worth about 4500 put together. They are in good shape and I am not going to go into debt to buy a new one. Why do I have to partially pay for someone elses? Of course if the govt sends me a check for $4500 I will shut right up.🙂
I don't mean to seem like I'm picking on everything Barack Obama does. Hey, I kinda sorta even like the guy, and I certainly don't think he's evil incarnate. I think the idea of saving social security by picking up the payroll tax at $250k of income is brilliant (now, if only he'll do it); and given the cards he's been dealt, he's been okay so far in handling t ...[text shortened]... defense for this program? I'd love to read one. I haven't seen one yet.
Originally posted by sh76Not to change the topic or anything, but what good things do you think Obama has done for the economy?
I don't mean to seem like I'm picking on everything Barack Obama does. Hey, I kinda sorta even like the guy, and I certainly don't think he's evil incarnate. I think the idea of saving social security by picking up the payroll tax at $250k of income is brilliant (now, if only he'll do it); and given the cards he's been dealt, he's been okay so far in handling t ...[text shortened]... defense for this program? I'd love to read one. I haven't seen one yet.
Originally posted by joe beyserAmen!! Getting a few grad form the government is not worth a new care payment.
You forgot one there. A lot of people will be forced to pay to have someone else own a nicer car than they do. Both my vehicles are worth about 4500 put together. They are in good shape and I am not going to go into debt to buy a new one. Why do I have to partially pay for someone elses? Of course if the govt sends me a check for $4500 I will shut right up.🙂
Originally posted by sh76It cost 1 billion dollars and was supposed to last months. They were out of money in less than a week, and just pumped another 2 billion into it. Really, the companies that are reaping the most out of this are Hyundai and kia. 2 korean companies!
I don't mean to seem like I'm picking on everything Barack Obama does. Hey, I kinda sorta even like the guy, and I certainly don't think he's evil incarnate. I think the idea of saving social security by picking up the payroll tax at $250k of income is brilliant (now, if only he'll do it); and given the cards he's been dealt, he's been okay so far in handling t defense for this program? I'd love to read one. I haven't seen one yet.
The cars they turn in(many perfectly fine)are destroyed!
In general I would say too much value is assigned to the economic impact of carmakers. If they create jobs that's great, but if it takes taxpayer's money to keep them alive that costs jobs as well. When the aircraft manufacturer Fokker went bankrupt in 1996, the government didn't save them and many jobs were lost.
During the Purple governments of 1994-2002, the Dutch economy grew 32% and unemployment reached record lows.
Originally posted by MelanerpesPlease read the broken window fallacy by Henry Hazlitt.
[b]It does not generate demand. It compresses demand and moves it from the coming year or two to now. All it does is makes people who would need cars in the next year or two buy it now instead
which is the whole point behind "fiscal stimulus plans" - the main reason for this program
It kills used car dealers! I read about this in the paper to ...[text shortened]... nly a very temporary measure (I hope!) that isn't adding to the long-term debt situation.
Your gummint at work, criminal vandalism.
Originally posted by sh76I think the general consensus is that something is needed to "kick start" consumer spending. Neither of us are economists and even these so-called experts often disagree about cause and effect when it comes to issues involving the economy.
I don't mean to seem like I'm picking on everything Barack Obama does. Hey, I kinda sorta even like the guy, and I certainly don't think he's evil incarnate. I think the idea of saving social security by picking up the payroll tax at $250k of income is brilliant (now, if only he'll do it); and given the cards he's been dealt, he's been okay so far in handling t ...[text shortened]... defense for this program? I'd love to read one. I haven't seen one yet.
As with most products when you buy a car you're not buying just a car. You're buying all the raw materials that are within the car, i.e. metals, plastics, rubber, leather, etc. You're buying all of the components, seats, integrated circuits, wiring, nuts & bolts, etc.
The economy will turn around when people start spending. The Fed recently announced very positive signs in the housing market, which is happening much quicker than most anticipated. IMO much of this has to do with the First Time Homebuyer tax credit, of which I'm soon to be a recipient. I recently purchased my first home, and that $8000 credit was a big factor in my decision making.
Originally posted by USArmyParatrooperI know of a sure fire way of increasing consumer spending. Just raise their taxes. Brilliant!!
[b]I think the general consensus is that something is needed to "kick start" consumer spending. Neither of us are economists and even these so-called experts often disagree about cause and effect when it comes to issues involving the economy.
