Sunday, August 9, 2009

Cash For Clunkers: More Stinky Statism!

An Informed American Appalled by the Stench of Statism!

Like most of Obama's policies, Cash For Clunkers appears to be attractive, but the more you analyze it, the more senseless it becomes. Here are but a few reasons:

1. To start off with, this will add billions to our already out of control national debt.

2. It is a perfect example of the many (the vast majority of tax payers who will not participate in the program) subsidizing the few who decide to partake in it. Why should a conscientious family member of mine who chooses to utilize public transportation, out of environmental and financial concerns be forced to subsidize the purchases of others.

And because few poor and working class individuals can afford new, environmentally friendly cars even with a subsidy, we can presume that the primary recipients of these public funds will be middle and upper class individuals.

3. Some scientists believe that this program offers a net loss to the environment. Switching to a new hybrid may lower emissions, but the production of new vehicles entails a heavy environmental impact. William Chameides, a professor of the environment and dean of the Nicholas School of Earth & Ocean Sciences at Duke University estimates that the “carbon cost” of a new vehicle range from 3.5 tons to 12.4 tons of CO2 expended per vehicle," averaged at 6.7 tons per vehicle.

According to Daniel Sperling, a professor of engineering and environmental science at the University California, Davis, and the founding director of the school’s Institute of Transportation Studies. "A cash-for-clunkers plan is “very hard to justify in terms of oil-use reduction or greenhouse-gas reduction."

The most environmentally and financially sound policy would be to "recycle" an environmentally friendly car or in other words purchase a used hybrid at a significant discount.

4. Like most state subsidies, it encourages unsound financial behavior. The subsidy of $4,500 is significantly less than the discount entailed in purchasing an environmentally friendly used car. New cars typically depreciate 20 to 30 percent in just the first year, according to the auto Web site By year three, their value is down an average of 45 percent. Edmunds says the average sale price of a brand new car is $27,800, whereas the average price of a used car is $13,900. Thus a smart consumer can save nearly $14,000 of their own money without wasting a dime of the public's money.

5. By discouraging the purcahse of a cost-effective used car, this subsidy is encouraging more consumers to needlessly amass more debt.

6. “Cash for Clunkers" would prematurely destroy vehicles and their valuable parts and components, denying more affordable used vehicles to millions of low and middle income families who cannot afford to purchase a new car even with a $4,500 voucher.

“For families that cannot afford the price of a new vehicle even with a government voucher, the Cash for Clunkers program would limit their access to affordable transportation (that used cars provide), a must for most working Americans,” said Aaron Lowe, vice president of government affairs for the Automotive Aftermarket Industry Association. "Further, since the parts on those vehicles that are scrapped could be sold as used or reconditioned, the program will cause an increase in repair prices for consumers."

7. Like most government subsidies, it benefits politically connected industries (like auto makers) while harming other industries. If Obama's primary concern was the environment, rather than aiding connected corporations, he would extend this subsidy to the purchase of environmentally friendly used cars.

The automotive aftermarket, a $250 billion industry that employs about 4.6 million people, could be among the biggest losers in the clunkers program, said Kathleen Schmatz, head of the Automotive Aftermarket Industry Association: "It's everybody from the Fortune 500 parts manufacturer all the way through the supply chain to the independent repair shop."

"This package will hurt mechanical repairs without question. You are taking older vehicles that are still fine to use and removing them," said Robert Redding Jr., the Automotive Service Association's Washington representative. "If you're taking hundreds of thousands of vehicles that you normally service off the road with no consideration, it hurts people."

8. Last but not least, the costs of government subsidies greatly exceeds initial estimates. The "modest cost" of $1 billion has already ballooned into $3 billion.

When we add up all the information, economically and environmentally cash for clunkers is another example of stinky, stinky statism!

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