Video: Uncle Sugar’s Cash for Clunkers sale

posted at 5:47 pm on August 11, 2009 by Ed Morrissey

If this lacks the charm of Cal Worthington and his dog Spot, it’s by design from the folks at Reason TV. Uncle Sugar wants to sell you a car you can’t afford by using taxpayer subsidies to hyperinflate the value of your used car. What could go wrong? No one’s complaining … especially the people who will eventually pay the bill for the subsidies:

Nor is this the only problem with C4C. Legal Insurrection has a good post in our Green Room detailing the findings of Edmunds.com, which researched the effects of market distortion by government intervention in the trade-in market.  In short, C4C has made cars more expensive by artificially driving up demand in the short term:

“Since the program launched, we’ve seen that shoppers are getting less of a discount off sticker price for new cars,” notes Senior Analyst Michelle Krebs in her report on Edmunds’ AutoObserver.com. “In some cases, they are choosing less expensive trim levels and option packages than had been typical in recent months, but paying more for them.”

And Edmunds.com notes that the program probably wasn’t necessary anyway, especially in August:

“In truth, this program launched at the worst possible time of the year,” opined Edmunds.com CEO Jeremy Anwyl. “The annual summer sell-down typically creates a rush of activity for the industry, and this year that rush came right after automakers cut production in response to the floundering economy. It’s a simple case of supply and demand, bolstered by a reduced level of negotiation on the part of excited clunker traders. Add to this the automakers’ unseasonable reduction in incentives and the message is clear: if you buy a car this summer, you should expect to pay higher prices.”

In essence, taxpayers subsidized higher prices, and in the end only encouraged people who may have bought a car anyway, either now or in the next few months.  On top of that, the C4C program eliminated low-cost vehicles from the resale market, which will make it more difficult for low-income earners to buy their own transportation.  It will also raise the prices of vehicles left in that market, first by setting an artificially high trade-in value at dealers, and second by making used cars more scarce.  Thanks to that scarcity, used car parts will cost more, too.

That’s not the only damage it will do, either:

Vehicles already were lined up for one of the weekly auto auctions benefiting Texans Can, a charity that helps at-risk teenagers and their families, when prospective donors started to call, saying they had changed their minds.

“They said they went ahead and traded it in for the ‘cash-for-clunkers’ program,” said Cheryl Rios, vice president of the Dallas-based charity that serves as many as 6,000 students. She estimates Texas Can already has lost $75,000 to the federal program.

While “cash-for-clunkers” has been a huge hit with car buyers looking to snap up rebates of up to $4,500 for trading in gas-guzzlers for new fuel-efficient cars, some charities that rely on vehicle donations for funding say they’re receiving fewer cars and trucks.

You’d think that people would have learned a lesson about the government distorting private markets for social engineering after the collapse of the housing bubble.  Apparently, voters need to teach the lesson to Congress a little more forcefully.

Update: Well, sugar. I forgot the link to Reason TV. It’s fixed now.


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No one’s complaining … especially the people who will eventually pay the bill for the subsidies

They are still in diapers.

WashJeff on August 11, 2009 at 5:56 PM

They are still in diapers. meiosis.

WashJeff on August 11, 2009 at 5:56 PM

:(

daesleeper on August 11, 2009 at 5:57 PM

Obama needs a quick victory. Don’t look at the long term.

a capella on August 11, 2009 at 5:57 PM

New Sales Lot Just Opened!!!!

Ladywolfnl on August 11, 2009 at 6:01 PM

Crushing used cars – hiking the prices of used cars – hurting the “less fortunate” consumers whom they supposedly are the champions of. The unintended consequences of the libs are monumental, yet these fools vote for them decade after decade. Suffer.

marklmail on August 11, 2009 at 6:01 PM

What was the government tax write-off for donating a used car to charity? There are multiple organizations in the Twin Cities that accept used cars, spiff them up and then sell them for charitable funds; how will this affect them?

Bishop on August 11, 2009 at 6:02 PM

How can I get a deal from Uncle Sugar?

johnnybgood on August 11, 2009 at 6:02 PM

so, as usual, this liberal pie in the sky hurts poor people. nice.

kirkill on August 11, 2009 at 6:04 PM

Nobody could have predicted this fiasco. Nobody. The plan seemed so perfect.

LimeyGeek on August 11, 2009 at 6:04 PM

And did anyone read this before it passed congress?

kirkill on August 11, 2009 at 6:05 PM

Connected? You be the judge.

That news follows GMAC Financial Services’ announcement Monday that it would begin offering new leasing programs for select GM vehicles in 45 states. Last week, GM announced a deal with U.S. Bank to lease in five other states…GMAC said it was returning to the leasing business because of improved funding flexibility, rising used car values and completed manufacturer restructuring efforts.

Weight of Glory on August 11, 2009 at 6:06 PM

How can I get a deal from Uncle Sugar?

johnnybgood on August 11, 2009 at 6:02 PM

1) Set-up a company that pretends to do Defense projects
2) Bundle $100,000 for John Murtha’s reelection campaign.
3) Profit

(Notice step 2 is not ????????)

WashJeff on August 11, 2009 at 6:06 PM

There is a Toyota dealership in the town I live in that is selling an unbelievable number of cars. The commission checks for the salespeople are hugely anticipated and the town is full of brand new cars.
This seems a little too good to be true. Is this dealership guaranteed the cash? I hope so, because the neighbors all have fancy new cars and the sales grunts are eagerly awaiting their 40K commission checks.
Sounds like a bubble waiting to pop.

ORconservative on August 11, 2009 at 6:11 PM

Throw in a Bulgarian AK-47 with 2,000 rounds with 6 mags and you GOT a DEAL!

Sapwolf on August 11, 2009 at 6:12 PM

When the people who traded in their clunker for a $400.00 a month car payment can no longer make their payment then what?

fourdeucer on August 11, 2009 at 6:13 PM

Yea! A “Cal Worthington and his dog Spot” reference! I was maybe four/fivish when those commercials were on in CA. I love to just say that phrase every now and then.

Moo.

TWG78 on August 11, 2009 at 6:13 PM

The federal government doesn’t ever learn.

In about three years thousands of people will default on car loans that they never had a chance to pay-off. It will be the housing market fiasco all over again.

I love “Voiceless Posterity.” That’s classic.

Ampleforth on August 11, 2009 at 6:13 PM

“In some cases, they are choosing less expensive trim levels and option packages than had been typical in recent months, but paying more for them.”

SUCKERS!

Monica on August 11, 2009 at 6:14 PM

I found out my parents got a Toyota for the Explorer they turned in. They actually had a Camry years ago that my nephew totaled. They now have another. They got an:

“Arigato Gosaimasu”

from Mr. Toyota

Sapwolf on August 11, 2009 at 6:14 PM

I’m waiting for Toyota to find out that only 50% of these sales are good because Lord Obama is only coming through with so many checks.
There’s an awful lot of cars flying off that lot.

ORconservative on August 11, 2009 at 6:15 PM

When the people who traded in their clunker for a $400.00 a month car payment can no longer make their payment then what?

fourdeucer on August 11, 2009 at 6:13 PM

Well, it was hardly their fault- no one told them they couldn’t afford it. They have to have a car, so we only have one option, get out your checkbooks Richie Riches!

Monica on August 11, 2009 at 6:16 PM

Throw in a Bulgarian AK-47 with 2,000 rounds with 6 mags and you GOT a DEAL!
Sapwolf on August 11, 2009 at 6:12 PM

Have you seen the cost of ammo and good mags lately? The deal should be that you buy the gun with accessories and you get a free car.

Bishop on August 11, 2009 at 6:18 PM

@ Bishop on August 11, 2009 at 6:02 PM

I just donated my ’89 Mazda earlier this year to Purple Heart. It is $500 unless the charity sends you a receipt for more.

TWG78 on August 11, 2009 at 6:19 PM

Throw in a Bulgarian AK-47 with 2,000 rounds with 6 mags and you GOT a DEAL!

Sapwolf on August 11, 2009 at 6:12 PM

You’re not too far off, Sapwolf!

Weight of Glory on August 11, 2009 at 6:21 PM

Apparently, voters need to teach the lesson to Congress a little more forcefully.

Apparently, Congress needs to teach the lesson to the American taxpayer a little more forcefully.

FIFY

ROCnPhilly on August 11, 2009 at 6:32 PM

I wish I still had my Yugo.

Hening on August 11, 2009 at 6:43 PM

This government like most is incredibly ignorant, stupid, and naive when it comes to business.

Thank Goodness we elected a community organizer.
/s

CWforFreedom on August 11, 2009 at 7:17 PM

No one’s complaining … especially the people who will eventually pay the bill for the subsidies

They are still in diapers.

WashJeff on August 11, 2009 at 5:56 PM

The great grand kids of Dad’s gleam in his eye will still be paying for it.

Jeff from WI on August 11, 2009 at 7:22 PM

Throw in an M107 Barrett 50 cal. sniper rifle and you’ve got a deal!!

http://www.youtube.com/watch?v=TWJp14tkBlU&feature=PlayList&p=6F92A5D8E79C3DA0&index=0

Jeff from WI on August 11, 2009 at 7:25 PM

Hurting charities is a deliberate action on the part of the administration. Besides hurting car charities, the administration is pushing for a cut in the tax deduction for charitable contributions.

Obama doesn’t want you to be able to rely on a charity. He wants you to rely on the government. Kill the charities and people will have no choice.

rokemronnie on August 11, 2009 at 7:28 PM

Yea! A “Cal Worthington and his dog Spot” reference! I was maybe four/fivish when those commercials were on in CA. I love to just say that phrase every now and then.

Moo.

TWG78 on August 11, 2009 at 6:13 PM

You know, it was only reciently that I learned that the line was “go see Cal”.
Throughout my entire child hood, I always heard “pussy cow”.
It never made any sense.

Count to 10 on August 11, 2009 at 7:33 PM

“It’s all part of the plan folks” It’s the statists way of forcing poor people to use public transportation.

chemman on August 11, 2009 at 7:35 PM

Jeff from WI on August 11, 2009 at 7:25 PM

Now your talking.

chemman on August 11, 2009 at 7:36 PM

Yep, bestest, brightest, most intelligent administration, evah!

Hey, it’s only money.

GarandFan on August 11, 2009 at 8:00 PM

ORconservative on August 11, 2009 at 6:11 PM

I’m with you. I’ve seen a number of new cars in my neighborhood, including of all things a HUMMER!!
I bought a new car, not with C4C and actually it is an ’07, not new, but after 13+ years in my old car, it was time and I was prepared financially to pay for it. I hope not too many of these cars bought under C4C go back to the dealership.
I do know someone who bought a car under the C4C program who was told if his truck didn’t qualify he would be responsible to pay the 4500 to the dealership. I wonder how many people who bought new expensive cars were told that?

Willie on August 11, 2009 at 8:49 PM

“Billions of Dollars to Be Burned Under New ‘Cash for Cash’ Program”: http://optoons.blogspot.com/2009/08/billions-of-dollars-to-be-burned-under.html

Mervis Winter on August 11, 2009 at 9:07 PM

Throw in an M107 Barrett 50 cal. sniper rifle and you’ve got a deal!!

http://www.youtube.com/watch?v=TWJp14tkBlU&feature=PlayList&p=6F92A5D8E79C3DA0&index=0

Jeff from WI on August 11, 2009 at 7:25 PM

That Barrett is sweet! A member at our range has one. When he touches one off you don’t really hear it as much as you feel it deep down in your chest. Amazing!
On a side note, I don’t think the guy narrating that video would like to try to fire a 7.62×51 NATO in an AK. But maybe he meant it is a .308 caliber. But it isn’t, it’s a .311 caliber. Oh well…

Hazzard on August 11, 2009 at 10:03 PM

No Kidding! I posted about this on the 2nd and again on the 3rd from personal experience. And anyone who couldn’t see this coming is an idiot – or a politician… hmmm that’s redundant.

Want to know what is happening now? Now the dealers are putting AMV stickers on the cars – that’s “Adjusted Market Value” – upwards of a thousand dollars Mark-up over sticker! It’s like we are living in car shortage land.

batterup on August 11, 2009 at 10:10 PM

I love the cheese.

Reaps on August 11, 2009 at 11:22 PM

Yep, another well thought out government program.
What could possibly go wrong?

SalHansen on August 12, 2009 at 1:52 PM

Soon we’ll see posters saying, “Honk if I’m making your car payments”.

SalHansen on August 12, 2009 at 1:55 PM

Soon we’ll see posters saying, “Honk if I’m making your car payments”.

SalHansen on August 12, 2009 at 1:55 PM

You could already have a sticker that says

“Honk if my kids are going to be paying for your clunker rebate”

flyfishingdad on August 12, 2009 at 4:36 PM