Clunker program = very targeted stimulus

08/24/2009

old olds

It’s hardly surprising that Cash for Clunkers has been a rousing success. According to online automotive information resource Edmunds.com the average cash value of the traded-in clunkers was $1,475 while the owners of those vehicles earned rebates for either $3,500 or $4,500, depending on the replacements vehicles they chose.

As The Coyote Blog points out, the government is paying some consumers $4,500 for assets with a market value of $1,475. “Well of course it’s a popular program with its participants — Obama is buying up dollar bills for $3,” he writes.

Coyote adds: “Left undetermined is whether consumers have been enticed into more expensive cars they cannot afford by this $3000 windfall. It seems like just yesterday when the Obama administration was slamming credit card companies for enticing people into debt with low teaser rates or slamming mortgage companies for enticing people into mortgages they could not afford.”

Further, it would appear the only part of the economy being stimulated by spending taxpayer dollars on Cash for Clunkers is that of auto dealers, according to Edmunds. com:

“Our analysts have determined that dealers are enjoying a 20 percent increase in gross profit per sale involving a clunker trade-in since the program launched.”

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