Cash For Clunkers: Federal Rebate Revs Up Buyers

UNTflyer · August 21, 2009

This is a freaking windfall. It is giving the auto industry new life. Your GM investment is about to yield you crazy dividends.

For who? The dealers aren't getting their money.

And these people want to run health care? No thanks!

FirefightnRick · August 21, 2009

Mushrooms are very groovy...I like them on my pizza.......
Anyway any time there is a sale of any kind the ripple effect of the dollar goes wild in a Recession. The dollar is weak but the more infused the stronger it gets. The wave has to hit overseas and boune back to us.
Ok when we stimulate the economy then we all win. It makes sense to me....Where do you not get it. Anyway the last one was supposed to account for another 5000 on revenues.
Oh and the finance companies win as well.

Must be some good mushrooms if your picking up what your laying down because we have NEVER taxed ourselves out of a depression/recession. And as much as I would love for your Utopia that will somehow stimulate the economy to be permanant, I'm not going to hold my breath that it will. And the CARS program was to help consumers recycle and save in the way of fuel. Per my link above, that's not entirely what is happening. Therefore, when this economy doesn't react, and unemployment continues to rise, this program will have become known as a complete failure.

Rick

UNTFan23 · August 21, 2009

Mushrooms are very groovy...I like them on my pizza.
Anyway, the point has been backed up in this thread to no end! Here it is in the short version.
By the way I could rip any one of you Fox regurgitates if we could have a person to person debate. Typing really sucks.
Anyway, you and I (taxpayer) lay out $4500 for this short term program which will end. That is important to note that this will end.
$4500 from us.
A person buys a new vehicle with this incentive in mind. Spends $20,000 for a new chevy impala...or fusion whatever....
Tax on the sale--$1500
Tax on the salesman that sells it....$150.--Income tax
car preps, accounting gals, so on...$100
Tax from the company that sold the car --chevy-- $250 or more.
Jobs saved no...created...tax received ----this is where we differ------$1000 per person to make that car. Which is what this is really all about. Stimulating the economy.
Why do you think they burned through the $ so fast. Dealerships could offer to anyone off the street. Bring in a car and we will give you at least $3500. This is a freaking windfall. It is giving the auto industry new life. Your GM investment is about to yield you crazy dividends.
There for a while in the Auto Industry we had 0% for anything. And guess what the new car market was still in the toilet. The Union was draining that company. We broke up the union, and now will reap the benefits. We will sell our shares on the open market for alot.
Sorry I digressed into the fact that we own a car company that is about to triple in value. I say we keep our %40 and buy off the rest. Or we can sell, which we will, I say when USA offers you shares instead of money on your next tax return I would take it. This is the word on Wall Street. Shhhh this tip if just for GoMeanGreeners...
Anyway any time there is a sale of any kind the ripple effect of the dollar goes wild in a Recession. The dollar is weak but the more infused the stronger it gets. The wave has to hit overseas and boune back to us.
Ok when we stimulate the economy then we all win. It makes sense to me....Where do you not get it. Anyway the last one was supposed to account for another 5000 on revenues.
Oh and the finance companies win as well.

This is all artificial though. If it weren't for this program, how many consumers would go out and buy a car? Once the program ends, will the level of sales currently being experienced be maintained? I doubt it.

The finance companies will win if and only if people don't default on their loans.

yyz28 · August 24, 2009

The dealers haven't been paid, but you can rest assured the government will get theirs.

The "TAX" on the sale is going to go to.... SURVEY SAYS.... THE LOCAL AND STATE GOVERNMENTS, correct. The federal government gets no sales tax from the sale of the car, so your first $1,500 has now gone out the window.

The cars being sold were already made, so nobody is working to build this inventory. In fact, all of the major car companies are trying to shrink their inventories and have cut production. This program is helping to empty the lots, but the inventory won't be replaced one for one. No jobs saved as a result.

The "successful, Period." program is now being ended because it can't be managed. Sam Pack's group of dealers, as one example, is currently in the hole to the tune of 4.5 Million dollars, and the governement hasn't paid any of the rebates yet. The program is a FAILURE, which is why it is being cancelled. It isn't being properly managed, and it surely isn't funded by the tax revenue it generates. Typing or in person, your debate skills are lacking as you don't have the facts.

If the best you can do is throw down is "Fox regurgitates", then I'm not worried about your debate abilities in person.

UNT90 · August 25, 2009

the best thing you can do is whip Bush back out

Made me giggle.

eeally · August 25, 2009

The dealers haven't been paid, but you can rest assured the government will get theirs.
The "TAX" on the sale is going to go to.... SURVEY SAYS.... THE LOCAL AND STATE GOVERNMENTS, correct. The federal government gets no sales tax from the sale of the car, so your first $1,500 has now gone out the window.
OK no stimulus there...
The cars being sold were already made, so nobody is working to build this inventory. In fact, all of the major car companies are trying to shrink their inventories and have cut production. This program is helping to empty the lots, but the inventory won't be replaced one for one. No jobs saved as a result.
Funny how GM is re-opening 2 factories and Ohio just landed a new Toyota opening for parts or something..
The "successful, Period." program is now being ended because it can't be managed. Sam Pack's group of dealers, as one example, is currently in the hole to the tune of 4.5 Million dollars, and the governement hasn't paid any of the rebates yet. The program is a FAILURE, which is why it is being cancelled. It isn't being properly managed, and it surely isn't funded by the tax revenue it generates. Typing or in person, your debate skills are lacking as you don't have the facts.
If Sam Pack can't manage its business then OK..what is your arguement here. The rebates will be paid. As far as managed then take that up with whoever manages it. Not the program. President Obama does not actually process paperwork and cut checks. Even though some perceive him as GOD.
If the best you can do is throw down is "Fox regurgitates", then I'm not worried about your debate abilities in person.

Ok....Fox throws up all over itself with anything this administration puts out. I am glad you are not worried! Sounds like you are a very relaxed and low strung kinda guy. The "Right" needs more of you chilled out types.

The program has ended because it was a short term kick in the butt for the auto-industry...nothing more nothing less...

Sorry about the quote out of brackets....but my answers are in there....

Edited August 25, 2009 by eeally

August 26, 2009

The dealers haven't been paid, but you can rest assured the government will get theirs.
The "TAX" on the sale is going to go to.... SURVEY SAYS.... THE LOCAL AND STATE GOVERNMENTS, correct. The federal government gets no sales tax from the sale of the car, so your first $1,500 has now gone out the window.
The cars being sold were already made, so nobody is working to build this inventory. In fact, all of the major car companies are trying to shrink their inventories and have cut production. This program is helping to empty the lots, but the inventory won't be replaced one for one. No jobs saved as a result.
The "successful, Period." program is now being ended because it can't be managed. Sam Pack's group of dealers, as one example, is currently in the hole to the tune of 4.5 Million dollars, and the governement hasn't paid any of the rebates yet. The program is a FAILURE, which is why it is being cancelled. It isn't being properly managed, and it surely isn't funded by the tax revenue it generates. Typing or in person, your debate skills are lacking as you don't have the facts.
If the best you can do is throw down is "Fox regurgitates", then I'm not worried about your debate abilities in person.

Actually, it isn't true. The consumer already paid taxes on that $4500 trade in.

They are 'valuing' it differently. They value isn't in what another consumer is willing to pay for it, it is in how much the govt wants it off the streets.

yyz28 · August 26, 2009

OK no stimulus there

Tax dollars into local, state and federal coffers are not a stimulus. They do not stimulate the economy in any way shape or form. I love your retort, however. It's funny. I blew away your entire point, and then you deflect with yet a further misunderstanding of the actual issue.

Funny how GM is re-opening 2 factories and Ohio just landed a new Toyota opening for parts or something..

Can't find anything about Toyota, but the GM plant (and it's only one, not two) that was idled for the summer was planned to be reopened before this program hit. ...and it didn't open ANY earlier than slated before the shut down.

http://www.npr.org/templates/story/story.p...oryId=112073669

If Sam Pack can't manage its business then OK..what is your arguement here. The rebates will be paid. As far as managed then take that up with whoever manages it. Not the program. President Obama does not actually process paperwork and cut checks. Even though some perceive him as GOD.

This is NOT a case of mismanagement on the part of Sam Packs or any of the dealers. This was a nationwide issue and contiues to be, though finally some of the checks are coming in. THe dealers were filling out the paperwork properly and submitting it as required by the program. The GOVERNMENT was not reimbursing in a timely manner, causing many dealers to have to finance millions in the interum, costing them a good deal of interest - these increase costs will cut greatly into any benefit the delears saw as a result of the program. It is the Government Bureaucracy (not Obama himself) that can't handle the program. it is the same type of Government Bureaucracy that is being proposed run healthcare.

Ok....Fox throws up all over itself with anything this administration puts out. I am glad you are not worried! Sounds like you are a very relaxed and low strung kinda guy. The "Right" needs more of you chilled out types.

The programs on Fox represented as news are perfectly fair and present the facts. The programs on Fox that are represented as opinion programs (like, the entire primetime lineup) is, quite true, distinctively right wing. ...just like the opinion programs on MSNBC, CNBC, NBC, ABC, CNN, CBS and PBS are distinctively left wing. One network vs. seven, yet ya'll still can't stand it. ...I watch 'em all, by the way, I like to see all sides of the story, but I've noticed that the actual NEWS stories and programs on Fox differ little from those on other networks. ...what this has to do with this program and thread, I'm not quite sure.

...and LOTS of folks throw up all over themselves with everything this administration puts out, and for good reason.

The program has ended because it was a short term kick in the butt for the auto-industry...nothing more nothing less...

The program was ended because it was mismanaged and wasn't meeting the goals set forth in the program. It was also not allowed to run its course, due to the issues with the program. It was an abject failure, from top to bottom, by almost any measure. It cost more than it generated. It wasn't managed by the bureaucracy worth a flip. The impact on emissions based on what was traded and bought is virtually non-existant. It didn't help the people it was aimed at, who couldn't get car loans anyways. It was a failure, from beginning to end. It was a shift of tax dollars, nothing more, nothing less.

SilverEagle · August 26, 2009

Must be some good mushrooms if your picking up what your laying down because we have NEVER taxed ourselves out of a depression/recession. And as much as I would love for your Utopia that will somehow stimulate the economy to be permanant, I'm not going to hold my breath that it will. And the CARS program was to help consumers recycle and save in the way of fuel. Per my link above, that's not entirely what is happening. Therefore, when this economy doesn't react, and unemployment continues to rise, this program will have become known as a complete failure.
Rick

Yeah, we got out of the GREAT DEPRESSION in our usual way.......by going to war. We got out of another great depression (in the 1890's) by contriving a war with Spain.

UNT90 · August 26, 2009

This program was a bone thrown to the Auto workers unions that supported the Pres. in his election bid, nothing more, nothing less. Shows the intelligence of union leadership (assuming they give a darn about their workers).

yyz28 · August 26, 2009

Actually, it isn't true. The consumer already paid taxes on that $4500 trade in.
They are 'valuing' it differently. They value isn't in what another consumer is willing to pay for it, it is in how much the govt wants it off the streets.

Which part isn't true, JD? Taxes paid on the trade in when it was originally purchased went to the State and Local governments as well in terms of the sales tax. No new federal income has been created by this program.

...the value WOULD be in getting these old cars off the street had the program seen old beat up pick-up trucks used as daily drivers turned in for honda civics and toyota prius' to be new daily drivers, but this isn't the case. The statistics of the program have shown that a large number of cars being traded in are rarely driven 3rd cars that will be replaced by often driven daily drivers. The net impact will be minimal if any in terms of fuel consumption or "greenhouse" emissions.

August 26, 2009

Which part isn't true, JD? Taxes paid on the trade in when it was originally purchased went to the State and Local governments as well in terms of the sales tax. No new federal income has been created by this program.
...the value WOULD be in getting these old cars off the street had the program seen old beat up pick-up trucks used as daily drivers turned in for honda civics and toyota prius' to be new daily drivers, but this isn't the case. The statistics of the program have shown that a large number of cars being traded in are rarely driven 3rd cars that will be replaced by often driven daily drivers. The net impact will be minimal if any in terms of fuel consumption or "greenhouse" emissions.

It isn't true that 'no new federal income' was generated.

Cash for Clunkers generated nearly 700,000 new car sales and ended under its $3 billion budget, the Transportation Department said Wednesday.

Per: http://www.msnbc.msn.com/id/32567404/ns/business-autos/

There is a lot of taxed income generated by 700k ADDITIONAL car sales.

Not to mention factories opening back up and bringing worker back on to bring inventory back up, since they did such a good job clearing it out.

42,000 new jobs generated by the program in the second half of the year -- all federally taxed income, of course.

yyz28 · August 27, 2009

It isn't true that 'no new federal income' was generated.
Per: http://www.msnbc.msn.com/id/32567404/ns/business-autos/
There is a lot of taxed income generated by 700k ADDITIONAL car sales.
Not to mention factories opening back up and bringing worker back on to bring inventory back up, since they did such a good job clearing it out.
42,000 new jobs generated by the program in the second half of the year -- all federally taxed income, of course.

No federal taxes are paid on the sale of a new car. This is a fact. ...now, if the company selling the car eventually shows a profit, they may have to pay corporate income tax on it. How many dealers and car manufacturers are in the black in this country? ...virtually none. You have to be in the black to owe ANY federal income tax as a business.

...and the article you posted only bolsters my point - Here are a few of my favorite excerpts -

Many dealers are still waiting to be repaid for the Cash for Clunkers incentives they gave car buyers and were allowed to submit paperwork seeking reimbursement until late Tuesday.

This backs up my earlier claim that a good deal of the benefit dealers have seen are being eaten up while the finance the difference not paid yet by the government and are now paying daily interest on money they should already have.

Despite the summertime frenzy at dealerships, analysts said the growth in auto sales may be short-lived. Sales in July rose to 11.2 million when converted to an annual rate, the first month in 2009 in which sales had risen above the 10 million level. A drop in consumer confidence late last year sent sales plunging to depths not seen since the early 1980s, prompting lawmakers to create the program.

So, the program hasn't actually changed anything - it was a little jump in activity, but no economic law has been changed here. The economy isn't doing better, nor is the industry after this program.

Jeremy Anwyl, CEO of the auto Web site Edmunds.com, said dealers and automakers clearly gained from the big boost in sales. But while the incentives helped consumers, average prices for vehicles went up as buyers less concerned about prices rushed to take advantage of the rebates. Inventory shortages from the popular program could keep prices high and drive down new vehicle sales. “We have created a sales bubble and now that bubble has burst,” Anwyl said.

Oh, goody. So, action impacting private industry by the government has now raised the price of the new car I need to buy my family, and since I didn't qualify for cash for clunkers, I now have to pay MORE for the car I need to buy for my family, in ADDITION to having funded the program from my tax dollars. Oh, yeah... This is MUUUUUUUUUUUUUUCH better.

“Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life and consumers bought fuel-efficient cars that will save them money and improve the environment,” said Transportation Secretary Ray LaHood.

Well, the showroom spike is temporary, as shown above, and the recalled workers and added shifts were planned by GM (Ford never shut down any plants they are reopening, Chrysler isn't reopening any of theirs) as they came out of the planned summer shutdown that was setup BEFORE Cash for Clunkers or the Government takeover of GM. The factories that had been idle coming back to life have ABSOLUETLY ZERO to do with Cash For Clukers, which makes the following statement from the Obama administration an all out lie:

The White House Council of Economic Advisers said the program will boost economic growth in the third quarter by 0.3 to 0.4 percentage points because of the increased auto sales in July and August. An estimated 42,000 jobs will be created or saved during the second half of the year, the White House said.

JD, YOU said 42,000 new jobs were generated. This article says "created or saved" ("saved jobs" is my new favorite unmesurable metric, by the way...) not generated. There is a big diffrence. ...and based on the fact that the GM plants were reopening anyways, the statement you based your opinion on is a bold faced lie. You were lied to on this one, my friend.

The Transportation Department said Wednesday that 2,000 people are processing dealer applications. The program was expected to cost $50 million to administer, but Transportation officials said the administrative costs would exceed that amount. They expressed confidence the extra costs would not push the program’s total expenditures beyond $3 billion.

...and the kicker, in my opinion. Yup... the program is going to cost more to run than estimated. NO!! A GOVERNMENT Bureaucracy cost more to run than estimated?!?!?!? HOLY CRAP MARTHA, THERE'S SOMETHIN' NEW!!! This is the biggest no crap statement of the entire article. ...EVERY government program costs more to administer than estimated. ...Just like the costs of this healthcare debacle we're being fed are a load of crap, so too was the cost of Cash for Clunkers.

Well, never fear, fellow americans. They stopped the program at 2.88 Billion dollars. So the Federal Government has 220 MILLION of your tax dollars left over to pay a few employees to write a few checks to some dealers. WHEW! I'm glad we stopped before we got to the 3 Billion budgeted... or was it 1 Billion budgeted? Who can keep track?

Sorry guys, this one was a flop. It's OK to admit something the guy you voted for has EPIC FAIL written all over it. No Child left Behind - Fail. Medicare Prescription Drug Program - Fail. See... I CAN DO IT!!! You try. C'mon, it won't hurt.

eeally · August 28, 2009

No federal taxes are paid on the sale of a new car. This is a fact. ...now, if the company selling the car eventually shows a profit, they may have to pay corporate income tax on it. How many dealers and car manufacturers are in the black in this country? ...virtually none. You have to be in the black to owe ANY federal income tax as a business.
...and the article you posted only bolsters my point - Here are a few of my favorite excerpts -
This backs up my earlier claim that a good deal of the benefit dealers have seen are being eaten up while the finance the difference not paid yet by the government and are now paying daily interest on money they should already have.
So, the program hasn't actually changed anything - it was a little jump in activity, but no economic law has been changed here. The economy isn't doing better, nor is the industry after this program.
Oh, goody. So, action impacting private industry by the government has now raised the price of the new car I need to buy my family, and since I didn't qualify for cash for clunkers, I now have to pay MORE for the car I need to buy for my family, in ADDITION to having funded the program from my tax dollars. Oh, yeah... This is MUUUUUUUUUUUUUUCH better.
Well, the showroom spike is temporary, as shown above, and the recalled workers and added shifts were planned by GM (Ford never shut down any plants they are reopening, Chrysler isn't reopening any of theirs) as they came out of the planned summer shutdown that was setup BEFORE Cash for Clunkers or the Government takeover of GM. The factories that had been idle coming back to life have ABSOLUETLY ZERO to do with Cash For Clukers, which makes the following statement from the Obama administration an all out lie:
JD, YOU said 42,000 new jobs were generated. This article says "created or saved" ("saved jobs" is my new favorite unmesurable metric, by the way...) not generated. There is a big diffrence. ...and based on the fact that the GM plants were reopening anyways, the statement you based your opinion on is a bold faced lie. You were lied to on this one, my friend.
...and the kicker, in my opinion. Yup... the program is going to cost more to run than estimated. NO!! A GOVERNMENT Bureaucracy cost more to run than estimated?!?!?!? HOLY CRAP MARTHA, THERE'S SOMETHIN' NEW!!! This is the biggest no crap statement of the entire article. ...EVERY government program costs more to administer than estimated. ...Just like the costs of this healthcare debacle we're being fed are a load of crap, so too was the cost of Cash for Clunkers.
Well, never fear, fellow americans. They stopped the program at 2.88 Billion dollars. So the Federal Government has 220 MILLION of your tax dollars left over to pay a few employees to write a few checks to some dealers. WHEW! I'm glad we stopped before we got to the 3 Billion budgeted... or was it 1 Billion budgeted? Who can keep track?
Sorry guys, this one was a flop. It's OK to admit something the guy you voted for has EPIC FAIL written all over it. No Child left Behind - Fail. Medicare Prescription Drug Program - Fail. See... I CAN DO IT!!! You try. C'mon, it won't hurt.

This post is a flop! Cash for Clunkers is a huge success on every level. Did we mention the scrap metal business is taking off again.

August 28, 2009

You too my small post and ran with it.. ignoring what I said.

700k vehicles were sold. Who sold them? Oh, people sold them. Did those people do it for free? No, they made commission. So, they pay federal taxes on their income? ... Yep, that is what I said. 700k additional cars sold does pay back the government some money.

You are right about the "created or saved" statement. I read it as created. I do think you can measure saved jobs though. My company said last Feb that they would shed 4500 positions by the end of Q4. If there was some fire sale and generated business, and they didn't can those 4500.. I would say they were saved. Just my take. Certainly, as with all stats, they are bended and twisted for both sides.

August 28, 2009

Also, I don't give a damn about the companies not receiving payback YET. Chill out, you will get paid. Overall the dealers made out like bandits. They advertised the $4500 as a discount and didn't waver on the MSRP price, so effectively the customer paid more, but got the 4500 off and ended up lower then MSRP, exactly where they likely could have ended up without the program.

I don't think it was a bust. I think it was a success, but you don't like the government offering to drive business. Instead you like blanket rebates to spur on consumers... I get it.

BeanCounterGrad'03 · August 28, 2009

Also, I don't give a damn about the companies not receiving payback YET. Chill out, you will get paid. Overall the dealers made out like bandits. They advertised the $4500 as a discount and didn't waver on the MSRP price, so effectively the customer paid more, but got the 4500 off and ended up lower then MSRP, exactly where they likely could have ended up without the program.

In business, invoices typically have 30 day terms to pay them. We may have reached that period for the first sales, but if UncSam starts sending out the checks in the next couple weeks, it would still be pretty reasonable. Hell, it takes 4 to 8 weeks to get purchase rebates back from most companies. WHERE'S MY REBATE ON THE CONTACTS I BOUGHT YESTERDAY!!!!!! THIS IS AN OUTRAGE!!!

I don't think it was a bust. I think it was a success, but you don't like the government offering to drive business. Instead you like blanket rebates to spur on consumers... I get it.

They say to-may-toe, we say to-mah-toe.

Edited August 28, 2009 by BeanCounterGrad'03

DeepGreen · August 28, 2009

The program was a bust. The new car buyer who turned in their gas guzzling clunker for the $4,500 cash will now have to pay taxes on it. You see, it will be taxed as ordinary income.

Gosh that Obama government is generous.

August 28, 2009

The program was a bust. The new car buyer who turned in their gas guzzling clunker for the $4,500 cash will now have to pay taxes on it. You see, it will be taxed as ordinary income.
Gosh that Obama government is generous.

That is not true, it is completely and totally false.

See: http://www.cars.gov/faq#category-01

Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.
Do I have to pay State or local sales tax on the amount of the CARS program credit?
MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question.

As far as paying sales tax on it, yes, that is true for *any* trade-in in that state. In OK for example, I just bought a pickup and traded in my car. When I went to register the damn thing I paid $400 taxes than I *thought* I wouldn't pay. I asked many people at the agency about it and they said that OK taxes the trade-in value, period. I posed, "but I already paid sales tax on the car.." They said they get that all the time, it is just the state law. It isn't anything new for the cars.gov program, it is the how the state already does it. I think it is BS, but that is in the state's hands, not the cars.gov program.

DeepGreen · August 28, 2009

That is not true, it is completely and totally false.
See: http://www.cars.gov/faq#category-01
As far as paying sales tax on it, yes, that is true for *any* trade-in in that state. In OK for example, I just bought a pickup and traded in my car. When I went to register the damn thing I paid $400 taxes than I *thought* I wouldn't pay. I asked many people at the agency about it and they said that OK taxes the trade-in value, period. I posed, "but I already paid sales tax on the car.." They said they get that all the time, it is just the state law. It isn't anything new for the cars.gov program, it is the how the state already does it. I think it is BS, but that is in the state's hands, not the cars.gov program.

You are correct JohnDenver. My bad. I meant it was taxable to the dealer.

Q: Is the value of the voucher tax-free to the consumer?

A: Yes. The CARS Act expressly provides that the credit is not income for the consumer. However, the credit will be considered as income for the dealer.

yyz28 · September 14, 2009

You too my small post and ran with it.. ignoring what I said.
700k vehicles were sold. Who sold them? Oh, people sold them. Did those people do it for free? No, they made commission. So, they pay federal taxes on their income? ... Yep, that is what I said. 700k additional cars sold does pay back the government some money.
You are right about the "created or saved" statement. I read it as created. I do think you can measure saved jobs though. My company said last Feb that they would shed 4500 positions by the end of Q4. If there was some fire sale and generated business, and they didn't can those 4500.. I would say they were saved. Just my take. Certainly, as with all stats, they are bended and twisted for both sides.

Ok... let's play that game...

Let's say the average car sold was 30K. Proably wasn't that much, but let's go with it, and then lets say the average comission on the sale is 5%. I KNOW the car business and it ISN'T that high, but let's go with it so I can be as fair to you on this one as possible.

700,000 cars, times 30,000 is 21 billion in sales. Now, let's assume the average comission is 5%, which works out to $1,050,000,000 in comission. Now, let's say that these fine folks are in the 25% tax bracket. Again, probably not, but I'm trying to make this as heavily to your argument as possible... BEST possible return to the treasury in income taxes as a result of this program is $262,500,000 or a quarter of a billion dollars on a program with a $3,000,000,000 price tag. Now, consider that the program cost about $220,000,000 to run based on the most recent estimates, and this $3 BILLION dollar program made the treasury $42 Million Dollars. To put it another way, the govnerment earned $42 dollars for every $3000 spent. That isn't a good investment in anyone's book, not even the most LAME investor.

...now, consider the following -

A clunker vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline. A more fuel efficient vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year. So, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year. They claim 700,000 vehicles - so that's 224 million gallons / year. That equates to a bit over 5 million barrels of oil. 5 million barrels of oil is about ¼ of one day's US consumption. And, 5 million barrels of oil costs about $350 million dollars at $75/bbl. So, we all contributed to spending $3 billion to save $350 million. How good a deal was that ???

What other measurable would you and eeally like us to look at to determine how well this progam worked? It was a bust, guys. Plain and simple.

...they'll probably do a great job with health care though!! :rolleyes:

forevereagle · September 14, 2009

Ok... let's play that game...
Let's say the average car sold was 30K. Proably wasn't that much, but let's go with it, and then lets say the average comission on the sale is 5%. I KNOW the car business and it ISN'T that high, but let's go with it so I can be as fair to you on this one as possible.
700,000 cars, times 30,000 is 21 billion in sales. Now, let's assume the average comission is 5%, which works out to $1,050,000,000 in comission. Now, let's say that these fine folks are in the 25% tax bracket. Again, probably not, but I'm trying to make this as heavily to your argument as possible... BEST possible return to the treasury in income taxes as a result of this program is $262,500,000 or a quarter of a billion dollars on a program with a $3,000,000,000 price tag. Now, consider that the program cost about $220,000,000 to run based on the most recent estimates, and this $3 BILLION dollar program made the treasury $42 Million Dollars. To put it another way, the govnerment earned $42 dollars for every $3000 spent. That isn't a good investment in anyone's book, not even the most LAME investor.
...now, consider the following -
A clunker vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline. A more fuel efficient vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year. So, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year. They claim 700,000 vehicles - so that's 224 million gallons / year. That equates to a bit over 5 million barrels of oil. 5 million barrels of oil is about ¼ of one day's US consumption. And, 5 million barrels of oil costs about $350 million dollars at $75/bbl. So, we all contributed to spending $3 billion to save $350 million. How good a deal was that ???

What other measurable would you and eeally like us to look at to determine how well this progam worked? It was a bust, guys. Plain and simple.
...they'll probably do a great job with health care though!!

Over simplified. What about the people who built the cars? They may have been laid off, but got to keep their jobs because of the program. And the people who are processing the cars that were bought? The car maintenance workers who will be working at the dealerships and servicing these vehicles? The insurance revenues that were increased because it is more expensive to insure a new vehicle? And then the parts that are built to support all these new vehicles and sold when they need maintenance? What about the accessories for these new cars that are bought to customize the new vehicle? Nah, it is just about the cars themselves. That's all the benefit that we get from this program.

yyz28 · September 14, 2009

Over simplified. What about the people who built the cars? They may have been laid off, but got to keep their jobs because of the program. And the people who are processing the cars that were bought? The car maintenance workers who will be working at the dealerships and servicing these vehicles? The insurance revenues that were increased because it is more expensive to insure a new vehicle? And then the parts that are built to support all these new vehicles and sold when they need maintenance? What about the accessories for these new cars that are bought to customize the new vehicle? Nah, it is just about the cars themselves. That's all the benefit that we get from this program.

Much of this has been covered in this thread. There were no factories kept open or any layoffs avoided as a result of this program. GM had many factories on idle, and they recently reopened as planned BEFORE this program. This program DID clear some inventory, but GM, Ford or Chrysler isn't cranked up to replensih the inventory at the rate it came off the lots. No jobs saved or created as a result of this.

You took cars off the road the service facilities outside the dealers would have been paid to work on and now have dealer employees are going to get paid to work on these new cars. You haven't created any new work or economic activity here, you've simply shifte the work from one technician to another. There isn't a net increase of cars on the road, there is the same number as a result of this program, and the ones that are on the road now are a net LOSS to the service industry as the new cars are more reliable and won't need as much service. Same goes for parts - this is a net loss to companies like Autozone and Pep Boys.

Accessories? Where do you see more automotive accessories on cars - in the neighborhoods where people have the credit to take advantage of these rebates, or in the neighborhoods where the cars being driven are 3rd and 4th hand and feature 2 generation old Ford and Chevy trucks with Buick style portholes down the hoodline? By and large (and this is a business I happen to be involved in) performance, visual and audio accessories tend to be found most often in older vehicles, and not on brand new ones. ...at very best, the swap of the cars as a result of this program will be a net push. The accessory industry may not lose, but they are not gaining as a result either.

...you may have a point on insurance, though the last time I bought a new car for my wife, our insurance went down even though it is newer and cost more to insure, it was safter, having tons of extra airbags and crap. ...so I'm not sure there is a gain there either.

...Certainly nothing has been gained that is worth the 3 Billion spent.

eeally · September 14, 2009

Much of this has been covered in this thread. There were no factories kept open or any layoffs avoided as a result of this program. GM had many factories on idle, and they recently reopened as planned BEFORE this program. This program DID clear some inventory, but GM, Ford or Chrysler isn't cranked up to replensih the inventory at the rate it came off the lots. No jobs saved or created as a result of this.
You took cars off the road the service facilities outside the dealers would have been paid to work on and now have dealer employees are going to get paid to work on these new cars. You haven't created any new work or economic activity here, you've simply shifte the work from one technician to another. There isn't a net increase of cars on the road, there is the same number as a result of this program, and the ones that are on the road now are a net LOSS to the service industry as the new cars are more reliable and won't need as much service. Same goes for parts - this is a net loss to companies like Autozone and Pep Boys.
Accessories? Where do you see more automotive accessories on cars - in the neighborhoods where people have the credit to take advantage of these rebates, or in the neighborhoods where the cars being driven are 3rd and 4th hand and feature 2 generation old Ford and Chevy trucks with Buick style portholes down the hoodline? By and large (and this is a business I happen to be involved in) performance, visual and audio accessories tend to be found most often in older vehicles, and not on brand new ones. ...at very best, the swap of the cars as a result of this program will be a net push. The accessory industry may not lose, but they are not gaining as a result either.
...you may have a point on insurance, though the last time I bought a new car for my wife, our insurance went down even though it is newer and cost more to insure, it was safter, having tons of extra airbags and crap. ...so I'm not sure there is a gain there either.
...Certainly nothing has been gained that is worth the 3 Billion spent.

What about this do you not get? The 3 Billion has already been repaid and by that try about 10x over! This was a huge success and the treasury has already reaped benefits from all the outshoot taxes generated from the program. The economy works when money is being spent and changes hands. Oh by the way no one mentioned all the economic activity that lenders received. 700,000 cars x $25000 per car...there is a lender making commision in there. And guess what the program is over and guess what is worked now move on with your life and admit that some programs do exceed expectations. It was no big deal. 3 billion. The War on terror cost about 1 trillion. And guess what the War on Terror does stimulate the economy as well until it lasts too long.

UNTFan23 · September 15, 2009

What about this do you not get? The 3 Billion has already been repaid and by that try about 10x over! This was a huge success and the treasury has already reaped benefits from all the outshoot taxes generated from the program. The economy works when money is being spent and changes hands. Oh by the way no one mentioned all the economic activity that lenders received. 700,000 cars x $25000 per car...there is a lender making commision in there. And guess what the program is over and guess what is worked now move on with your life and admit that some programs do exceed expectations. It was no big deal. 3 billion. The War on terror cost about 1 trillion. And guess what the War on Terror does stimulate the economy as well until it lasts too long.

In the mean time, car dealers are now sweating bullets as to whether they'll make their forecasted sales for the remainder of the year. One problem right now is the supply of new cars has been severely depleted as manufacturers have been slow to replenish dealers.

I think September and October sales numbers will be very interesting to see. I suspect we'll see similar sales numbers prior to C4C program started.