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Automotive News & Views Cash for Clunkers - Good or Bad Idea?
4110 messages, Last post on Nov 23, 2009 at 11:42 AM
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Replying to: kdhspyder (Jul 09, 2009 6:41 am) That's a joke. If we really had "it's business" the big 3 would have been gone years ago. Selective compassion? Those who complain about the immorality of waste, filling our landfills unnecessarily, and wasting energy needed to produce new cars are deemed to be "religious right". Then those wanting the government to pour tax dollars to shore up a failing industry claim it is the "moral" thing to do because it will save jobs and help others. "It's Business" = Bankruptcy for the Big 3 |
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Replying to: maryh3 (Jul 09, 2009 6:37 am) What you are missing is that the national debt will never be paid back - ever. It's not intended to be paid back - ever. We are borrowing from our own future. Yes that is true. But we are borrowing it with only the commitment to repay interest on the debt, it's called leverage. As long as the economy grows and our growth can cover the interest it's like it never happened. If you want to whine and cry about about a really serious subject affecting your children's future then consider this. Over the last 6 years Mr Bush's Personal War has cost us........ $5 Billion per week ( you can look it up ). None of this money was available. He borrowed every cent of it and put the burden on your kids. This program is at most $4 Billion total for the entire year. And it's coming back into our own pockets with the result that tax revenues increase both to the IRS and to the states in income taxes and sales tax revenues. Here's a picture. Let's say that the $4 Billion incentive does bump sales by 10% as it's planned to do. a) Either companies profits will be 10% higher - so tax revenues will be 10% higher - or this will serve to minimize losses that the IRS has to subsidize at the rate of 50%. Either way tax revenues increase to the US Treasury. If a million units are sold this year at an average price of $20000 with a typical profit of say $1000 per units then how much does the IRS get? The individual 50 States? Overall it probably will be about 50% or $500 per vehicle. That's $500 Million in additional taxes back into the Treasurys. b) Sales Taxes at the state levels will increase by 10%. How much is this? Well if 1 million units are involved at an average sales price of say $20000 with a typical state tax rate of 5%, then that results in.... 1,000,000 x $20,000 x 5% = $1 Billion in extra tax revenue to the states. c) But what about all the suppliers and ancillary business that also will benefit from the program... suppliers, truckers, railroads, dealers, aftermarket companies...and millions of workers at these companies. All of them get a 10% boost in wages and revenues. More taxes back into the government coffers all over the 50 states. Then on top of that the nation as a whole loses 1 million of the worst performing vehicles replacing them with 1 million better performing vehicles. If.... the average clunker being taken out of service now uses 15 mpg and the new replacement on average uses 25 mpg then at 15000 mi/yr on 1 million vehicles each new vehicle will save 400 gallons of fuel NOT used every year for at least the next 5-10 years. 400 gal x 1,000,000 units = 400 million gallons NOT used every year. 400 million gallons x $3 per gallon = $1.2 Billion NOT spent on fuel per year. Multiplied by 5 or 10 years and your looking at a fuel savings of at least $6 Billion to $12 Billion over the next 5-10 years. Hello... |
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Replying to: erniesdad (Jul 08, 2009 8:52 pm) As to your points, which are thought-provoking. I'm not sure that the "poor" can afford to drive anyway. Most truly "poor" people (by government income standards) probably don't drive, or if they did, it would have to be in death traps and without insurance. One simply can't run a safe, clean insured car while making $7 an hour. If you're talking about lower middle class people competing in the $4500 used car market, you may have a point there, although I have to tell you that from my experience, about 90% of all cars listed for sale under $4000 today are pretty much worn out pieces of junk that will just suck up more of the working man's money. Besides, we aren't talking about enough cars to really affect the used car market. As for the price of gas guzzlers falling---they are bound for extinction anyway. As for new economy car prices rising, I think there are places like Korea and India and China who are readily to step into the fray to provide the answer, if the D3 can't sober up and face the music here, and re-invent themselves. Really we are not at all apart on believing (I think) that regardless of any stimulus packages, any industry or agency that is being propped up so as to catch its breath, has got to stand on its own two feet sooner than later. |
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Replying to: andre1969 (Jul 09, 2009 6:22 am) |
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Replying to: kdhspyder (Jul 09, 2009 7:10 am) Isn't your idea that "as long as the economy keeps growing" exactly why we are in the mess we are in now? Buy a house now that you really can't afford, but manage to hang on to it for 5 years and it will have appreciated so much that you can sell it, pay off your mortgage and make to ton to boot. Sounds familiar. And we never learn. I refuse to make this into a Dem-Rep war, its about the C4C. The unnecessary using of resources is always costly in the long run. Whether that be gas or the materials needed to produce a car. If these cars still have valuable life on them I submit that it will consume more resources to build a new one than to keep on using the old one. If everyone doubled the number of miles they got out of their cars we would use up half the resources needed to produce a car. Lots of oil is used to produce cars in both raw materials and energy required. Just imagine -- driving past your local junk yard and seeing it double in size. Can't wait. Manufacturing produces pollution too. I'm not a greenie, but I know waste when I see it. |
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Replying to: maryh3 (Jul 09, 2009 7:43 am) He said "never", because if China called them in, their economy would collapse as well as ours. We call scratched our heads over that one, and said, quietly and in awe: "hey, wait a minute, that doesn't sound right". 
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Replying to: Mr_Shiftright (Jul 09, 2009 7:46 am) Glad to know that when I take US C4C money to buy Japanese (who also own lots of US debt) that I am being very Patriotic afterall and helping America. |
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Replying to: maryh3 (Jul 09, 2009 7:43 am) Our economy always will grow. This current situation will pass and our native and imported creativity will design new and better ways to make money from sources that none of us can ever consider. As long as we don't lose our creativity and willingness to take risk then we will grow much faster than the interest expense. C4C is a tiny tiny gift to the whole auto industry ( from steel and glass supplier to the cleanup crews at retail stores ) which will likely pay for itself in many ways over the next 5 years. I enumerated a few above. If I told you that we were going to spend $4 Billion today to save $6 Billion over 5 years would you be in favor of that? Sorry your last paragraph is just more morality being injected into a business discussion about cold hard filthy money. It's out of place. Your moral viewpoint that we should leave well enough alone and keep the clunkers just as they for the sake on not producing new products is a 'let's go back to living on the farm and tilling our own fields with horse and oxen'. In fact the reality is that these vehicles get recycled every day into steel beams, rebar, steel plate for construction, fasteners, and literally a million other uses. The expensive metals get resold and reused; ditto the glass, fabric and rubber. Sorry no points for morality here. It's only business.
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Replying to: kdhspyder (Jul 09, 2009 8:12 am) As far as morality goes it is others saying we should bail out the Big 3 as a morality issue. Since when is bailing out with government money a "good business decision". Letting them go bankrupt is the better business decision. It was you who first claimed "morality" because getting rid of bigger gas guzzlers in favor of more efficient was "better" in the long run. I simply countered your arguement. Going back to horse and buggy is a personal choice. The issue changes when the government gets involved. Those who want to trade in perfectly good cars for newer more efficient ones are welcome to. But they should pay for it. Those who chose not to will pay at the gas punp. Both pollute equally and use up resources equally too.
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