Cash for Clunkers
By John D. Turner
10 Aug 2009

Back in 1976, a Soviet fighter pilot by the name of Viktor Belenko flew his MIG 25 fighter from his base in Siberia to Japan, defecting to U.S. forces there. In 1980, he coauthored a book called “MiG Pilot” which detailed his life in the former Soviet Union, his decision to leave, and the aftermath of that decision.

It’s a very interesting read, even today. One of the things Mr. Belenko talked about was how the Soviet Union portrayed the United States to its people as a decadent, spoiled rotten society falling apart at the seams. A place where there were no human rights and the people were all poor and starving; no intelligent person would ever even consider going there.

In the book was an account of a photograph that the Soviets were using for propaganda purposes; an advertisement by Oscar Mayer, showing a group of workers sitting on the skeletal structure of a skyscraper eating lunch. Obviously, since it was an Oscar Meyer ad, the lunch they were eating consisted of Oscar Mayer wieners.

The Soviet message to the people? See how poor they are in America? This is all the people there can afford to eat!

The message the people viewing the picture received? If they are so poor, where did all those large buildings (including the one they are building) come from? And if they are so poor, who is driving all those cars?

In the background of the picture was a large superhighway jam-packed with bumper to bumper traffic.

The moral of the story is that the message received is not always the message you intended to send. And moreover, frequently the people are smarter than you think they are (or wish they were).

So here we are in 2009 with the much-ballyhooed “cash for clunkers” program, put forth by the government as part of its “stimulus” program to help revive the economy. In fact, the “cash for clunkers” program is one of those government programs that purports to solve multiple problems in a single fix.

First off, it gets money into the hands of tax payers which is then infused directly into the economy. Second, it is a targeted infusion aimed directly at the sagging automobile industry, whose sales have plummeted during this economic downturn. Third, it is designed to get older, lower-mileage vehicles off the highways and replace them with brand new, higher mileage vehicles. This will result in less fuel being used, the need to import less oil from overseas, and less pollution, primarily CO2 being released into the atmosphere by the gas-guzzling behemoths being traded in. It’s a win-win all around.

Well, sort of. I see several problems with the program, but that’s just me, I guess. After all, what do you expect from a sour grapes conservative nay-sayer who just evidently can’t get over the fact that his guy lost the last election? I guess I am just supposed to shut my mouth and keep my opinions to myself.

Kind of like the liberals (oh excuse me, the “progressives”) did during the Bush years…

Too bad! I paid for this URL; it’s my computer, my bandwidth, and my time, so until the president appoints a webpage czar to shut me down, I guess I will just go ahead and write what I please, keeping it within the bounds of decency and civil discourse, of course.

Besides, I am pretty sure that the number of people who read my screeds is quite limited. There are far larger targets out there. I am certainly not in any danger of becoming another Hannity or Glenn Beck.

Incidentally, concerning the two well-known conservative talk-show hosts above, it is my belief that while the progressives would not mind seeing Hannity disappear, it is ultimately essential for them that Glenn Beck disappears from the airwaves. I don’t know how they will end up accomplishing this, but it is my opinion that they will try.

But back to the problems with “cash for clunkers”. Let’s take me for example. Currently, I own four vehicles; two Saturn’s, a Civic, and a Chevy Suburban. All four cars are paid off and carry only liability insurance. None of them are newer than 2000, and all of them have over 125,000 miles on them. One of the Saturn’s has over 254K miles, and the Suburban is around 230K. Both of those vehicles had their engines rebuilt several years back and both run real well, although the A/C in my ‘96 Saturn could use a tune-up.

Of these vehicles, one, the Suburban, qualifies for the program. Even assuming that I wanted to trade it, which I don’t as it is too useful to part with, what would it gain me to do so? I would go from having four paid off vehicles with minimal insurance costs, to having now once again a car payment, and higher insurance costs to boot as I would have to have comprehensive insurance on the new car to protect myself in case I was involved in an accident before I paid it off. In order to receive $4500 in “free” money, I would have to incur a debt of $300-$500 per month, depending on what I bought, for the next 5 years or so.

Now I understand that many dealers, anxious to sell cars, are matching the government largess. This would result in a savings of $9000, so my monthly costs could be less. And if I bought a motorized golf cart getting 40 mpg or so, I might be able to save enough in gas to offset the extra insurance cost, if I drove the thing all the time. Maybe.

However, I don’t drive the Suburban all the time. Only when I have to move more than five people or if I need to carry something big that won’t fit in the other cars, like a large sheet of plywood or something like that; neither of which the motorized golf cart could handle.

I suppose I could buy a truck. But that would seem to defeat the spirit of the program. Aren’t trucks supposed to be evil also?

Besides, why, in the middle of a recession, one where the unemployment rate is near 10% (and that’s just the people who are still looking and haven’t given up or taken part time employment), would I want to saddle myself with more long-term debt? Isn’t that one of the things that got us into this problem in the first place - too much debt?

If I lose my job, how am I going to make the car (or truck) payment? Seems to me that it’s better to have a paid-off vehicle rather than one subject to repossession.

You know, now that I think about it, I object to the name of the program as well. I know it’s catchy, but it implies that “clunkers” are old cars that get less than 18 mpg. My Suburban, while old, and getting not-so-great gas mileage, is definitely not a “clunker”, while my ‘94 Saturn, which gets much better mileage, fit’s the definition “clunker” much better. In fact, if the object were to get old cars off the road, and my ‘94 Saturn qualified, I just might trade it and my 2000 Civic for something new, say a Ford Focus or Honda Civic Hybrid.

That would get two older cars off the road. Between the potentially $9000 in money back from the Feds, and the trade-in value of my Civic, I might take the risk. Particularly since going from four cars to three might help make up for the increased insurance cost of a new car. And perhaps I could afford a four year loan instead of a five or even six year one.

But alas, my clunker isn’t, according to the government definition. Even though it’s old, and it truly stinks, it gets too good gas mileage to be a true “clunker.”

Then there is the true problem with this bill. As a tax-payer, I’m paying for it.

Did anyone ask me if I wanted to provide corporate welfare to car companies so that some folks who qualified could buy a car for less money? No.

Does the government have the money to provide $1 billion in corporate welfare to car companies so that some folks who qualify can buy a car for less money? No.

Is there any provision in the U.S. Constitution, you know, that quaint document that tells the government what it is supposed and allowed to do, that empowers congress to just arbitrarily hand out taxpayer money willy-nilly for what ever program it dreams up as “in the public interest?”

No, but why should that stop them? It certainly hasn’t in the past. It seems that whenever they collectively decide that something is a good idea, they do it, whether there is money there to do it or not, or whether they are actually empowered under the Constitution to do it or not.

I suppose that it’s marginally better than just handing the car companies the money like we have in the past. At least someone besides the auto manufacturers is getting some benefit from the program. I would say "Taxpayer" instead of "someone", however there is no guarantee that everyone buying is a net taxpayer, particularly after receiving that $4500 tax credit.

And then, back to the “message received not always being the message you intended to send”, or the people sometimes being smarter than you wish they were.

The “cash for clunkers program, kicked off in the beginning of August and was supposed to last until November. Instead, it ran out of money, $1 billion, after the first week.

Hmmm. Sounds like Congress had a bit of a problem calculating how much ultimately the program would cost, doesn’t it? Seems like demand was a bit higher that they thought it would be. Of course, when you are handing out something for “free”, in this case, cash, you can always expect plenty of people to queue up with their hands out.

So now people are asking, and rightly so in my opinion, “how can you expect us to believe that you can administer a complex program, like government health care, and that it will only cost the $1 trillion you project over the next 10 years, when you couldn’t project the cost of a much simpler program over a total of four months?”

Good question. It’s a question, like many others that the American people should be asking themselves and their Congresscritters this month about the proposed government run health care program while Congress is in recess.

In the meantime, it will be interesting to see if the extra $2 billion Congress just added to the cash for clunkers makes it into November as originally planned, or if additional funding will end up being necessary.