To Reseg and Mia, I think of Cash for Clunkers as a bitter pill. I know that we don't need another 3 billion of debt. However, recession is fueled by fright and panic. Suddenly we discover that we have to save our money se we stop spending. Businesses go under and layoff workers and people get more afraid... yada, yada, yada. You guys know what I'm talking about. I'm thinking that Cash for Clunkers helped loosen those purse strings. This was probably a good political move for Obama after so many PR disasters. Now the little guy has been offerred a "bailout". Don't take me wrong, I'm NOT on the Obama bus, but this program was just "middle of the road" for me. Did some good things, did some bad things.
As with any actual business action this program has both its plusses and minuses. Allow me to enumerate: Pluses: 1. It resulted in just under 700,000 autos being sold. 2. It resulted in significantly lower gas mileage for the cars that were sold versus the vehicles that were traded in. 3. It is the spark for increased production for autos in the US. Factories located in the US will produce more vehicles. More people will return to work. GM and Ford have announced increases in hiring or people returning to work 4. Dealers, who were moribund had dramatic activity. People employed in the sales end of the business were put to work. It probably saved jobs. Minuses: 1. It is more government debt in a sea of debt. 2. The program was not run efficiently. Dealers cash flow was restricted as the Feds have not gotten cash rebates to dealers on a quick enough basis. (I'm a real live business person. That would piss me off and hurt my business if it's liquidity situation was weak.) 3. A majority of auto's sold were built by foreign owned companies. (I have no idea how many of those sold were built in the US. Hopefully the vast majority. I believe most or all toyotas hondas and nissans were built in the US). If the majority of those sold were US manufactured....then that would be a plus...with the percentage representing the extent of the plus--the more US built the bigger the plus). All other comments are typically political hogwash. Nobody knows if auto sales following this incentive will go up or down. Current annual auto sales in the US are running around 10 million/year versus 16 million/year pre recession. Should the US give money to everyone as "incentive". That is a political comment, not one focused on hard economics. From a political perspective, I'd put the money where it might have real impact. In the midst of an enormous financial crisis with so many things being so dire this is a tiny program. To the extent that it creates jobs in the US that is an enormous plus.