Or: Why Johnny Can’t Drive.
Washington Post’s Ezra Klein’s substitute writer Brad Plumer got the unenviable job of having to admit that the government’s infamous Cash-for-Clunkers stealth auto dealership bailout – in which people traded in still-useable cars in exchange for trade-in money for a new car – didn’t particularly stimulate the economy, didn’t improve US car manufacturer’s market share, and “increased average fuel economy in the United States by just 0.65 miles per gallon.” The trigger event for this admission was this Resources For the Future report that is fairly damning, in its somewhat dry and equation-laden way: of course, we on the Right were all yelling about this issue right from the start, but it’s still nice to see some math backing us up.
Still, Klein’s substitute doesn’t consider another economic factor: what happened as a result of taking used cars off of the market. You see, there’s a considerable demand for almost worn-out cars: poor people, young people, and/or urban minorities can maintain them well enough to be cost effective – if the price is low enough. And what happens, class, when demand remains the same but the supply decreases? Continue reading Cash for Clunkers’ failure: minorities, poor people hardest hit.
Let’s walk through the mercury problem (H/T: Instapundit).
- Automakers used mercury as a component for various auto systems until 2004.
- They stopped because mercury is toxic, and it gets into stuff that we eat (the actual level of risk is in fact not relevant for this discussion).
- People get very touchy about toxic elements being thrown out with the rest of the garbage, so there’s an industry designed around collecting the mercury at the end of a car’s life. The big (only?) one of these is ELV Solutions.
- Here’s a list of the car companies that work with ELV Solutions. Notice which car company isn’t on the list?
- That’s right: GM isn’t on the list. They exited the program at the beginning of August.
- Autoblog Green calls the reason why “convoluted,” but it’s not. There are now two GMs. Good GM is the one with good assets and a chance of actually making money; Bad GM is the one with all the garbage assets, bad debts, and onerous obligations.
- Good GM does not make cars using mercury, and technically never has (its predecessor Old GM did, not it), so it sees no particular reason why it should fund mercury recovery.
- Bad GM… doesn’t make anything, or indeed do much of anything except sit there and slowly decompose; but Bad GM is the one that ELV Solutions needs to talk to about funding mercury recovery.
- No, Bad GM doesn’t have any money. Money is a good asset, which is why Bad GM doesn’t have any of it.
- No, ELV Solutions is not able to break even on mercury reclamation. If you could do that, ELV Solutions wouldn’t exist: the car companies would have done the job themselves and directly.
- So now we come to the Cash-for-Clunkers program, which has suddenly put a large number of pre-2004 cars up for immediate destruction (and mercury reclamation). A lot of those cars were built by the Old GM.
- ELV Solutions is thus stuck for reclaiming the mercury of a major car company’s old vehicles, without getting funded by that car company.
- And, given that there’s no GM ‘flavor’ of mercury, or GM-only junkyards, ELV Solutions is really stuck for reclaiming the mercury a major car company’s old vehicles, without getting funded by that car company.
One last thing, and please note this carefully: none of this is a bug. The intent all along was to shunt money-hemorrhaging expenses like mercury reclamation to a zombie company that could go belly-up without also killing General Motors. So don’t expect the administration to do anything about this. Although I suspect that the hand of the government that was establishing the GM reorganization [did not know] what the hand that was putting together Cash-for-Clunkers was doing… which may mean that (depending on how this all turns out) a seafood diet may be contraindicated again for a couple of years.
Crossposted to RedState.
[Updated for clarity.]
Already by about 50 million, which is real money for anybody (except a Democratic legislator, of course). It’ll likely get worse:
The popular program is being blamed for hurting charities that rely on donations of cars to fund social programs.
Those charities say their donations have fallen up to 12-percent already since “Cash for Clunkers” was implemented.
They fear that as time goes on, their annual donations will drop 25-percent, which amounts to more than 100-million dollars.
See also Reuters. Below is a list of national charities thus affected (the link has a longer list of state/local ones) : Continue reading Cash-for-Clunkers hurting charities.
If you’re wondering how to reconcile the apparent paradox that the Cash-for-Clunkers program can be simultaneously popular…
The federal government’s new “Cash for Clunkers” program got off to a rousing start over the past two weeks, with some new-car dealers reporting dozens of deals completed in just the first few days.
Officially, the program began July 24 when the government released the final rules. The first flurry of activity kicked in over the first week — when the program came close to running out of money — and is continuing now only because of an infusion of $2 billion more, approved by Congress.
Fifty-four percent (54%) of Americans oppose any further funding for the federal “cash for clunkers” program which encourages the owners of older cars to trade them in for newer, more fuel-efficient ones.
A new Rasmussen Reports national telephone survey finds that just 33% of adults think Congress should authorize additional funding to keep the program going now that the original $950 million allocated for it has run out. Thirteen percent (13%) are not sure.
Continue reading Reconciling the paradox: how popular *is* Cash-for-Clunkers?
Look at the scary, scary mob.
When faced with a vigorous band of constituents who wished to loudly express their discomfort and annoyance with both Russ Carnahan’s specific and general voting records, the Congressman did the proper thing: he engaged with them. He listened. He explained why sometimes – to evoke Burke – you have to exercise your own judgement in representing your district, and not knee-jerk defer to constituent opinion. In short, he was a Representative.
Yes, I’m joking. What he actually did was lock the doors on them before the speech, and ran out the back like a scared little bunny rabbit. Or a Democratic legacy politician who doesn’t understand why the grubby little proles are so exercised over things, all of a sudden. Continue reading Brave, Brave Carnahan.
Which is to say, badly.
The problem is that participating car dealers are currently on the hook for the trade-ins that they made in good faith, but have yet to see any of the deals signed off on by the National Highway Traffic Safety Administration. There are problems with the online system, you see.
Of course there are. It’s a government program, remember?
[Minnesota Auto Dealers Association vice president Scott] Lambert said the government has created a program that’s “so big and cumbersome that it can’t find a way to accept anything. We’re sending in good, reliable deals.”
It’s nerve-racking for the dealers, he said, because they have given the customer $4,500 and now the dealers need to be reimbursed.
Continue reading Cash for clunkers program performing precisely as expected.