Cash-for-Clunkers Gets More Cash

cash for clunkersToday The House quickly approved a bill to generate $2 billion more of funding for the very popular government program, "cash-for-clunkers", which is a recently passed program that can get consumers up to $4500 worth of credit towards a new car when turning in an old "clunker." Today, many government officials boasted at the plan's huge success and that indeed the quick depletion of the originally allocated funds shows just how good of a plan it was. I have a serious bone to pick with this plan and here's why:

More Market Fabrication. This is just yet another fabricated, government induced program to skew numbers and transactions during this economic downturn and, once again, by having you and I pay for it. Of course, as a result, car sales will surely see a jump in sales in the coming months as who wouldn't want to trade in that old broken down car for free money? In the end, it is not helping to stimulate the actual economy and help increase the money flow and supply to the consumer. Once again, it is just another way for the government to write a check to companies to bail them out, oh, and give you and I the bill. So, for those that are using this program and are thinking they're getting a "deal", we will see how much money you're saving when your tax rate gets raised an extra 15%, that is if you pay taxes.

Get up to 1500.00 TODAY !!

Encourages More Debt and Wasteful Spending. In tough economic times, it wise to use your funds wisely. Anyone who has purchased a car knows that the second you drive off with it, you've lost money in it. In most cases, cars are income eating assets. Sure, participants in this program will save a few thousand on a car, but will still have to cough up a few more to buy a new one. I am sure most of this gap is being put on credit cards, which in the end, will keep pushing those credit defaults up and up. At this time during this economic crisis, we should be promoting more worthwhile spending habits than upgrading your automobile.

As much as I don't agree with the program, it will go forward. As a result, I expect to see some inflated numbers in car sales reports, so going long on the autos may not be a bad choice at this point, at least for the short term. Unfortunately, as is the case for most of these programs, it is unsustainable and, in my opinion, will not get our economy back to a self sufficient state. In fact, it is only making matters worse, and deepening the debt.


  1. Anonymous Says:

    Hi FF
    I'm just surprised they didn't learn from Germany's 6 billion car clunker.
    It didn't do any good at all.
    Beside that people who buy now a new car would have bought during the next two month in any way.
    Many people who bought in Germany couldn't afford the car payments the first way and regret their buy.
    After the big run the car dealerships are empty for month because of no demand.
    This action killed the used car market even further and triggered more BK's
    The biggest disappointment came for the German car maker.
    People bought all the small cars from Toyota, Honda,and foreign manufacture.
    I'm surprised The US Government is not learning from this recent mistake.
    Honestly I'm not surprised...

  2. Finance Fanatic Says:

    Good point, Thanks for the comment


    Its cash for clunkers.