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Cash for Clunkers Success!

September 22, 2009 - Michael Palmer
The Obama Administration is trumpeting the Cash For Clunkers program as a tremendous success. My answer to them: Oh, Really?

Initially the federal government proposed a one billion dollar program that was going to remain active until November. The idea was that the federal government was going to give individuals $4500 to buy a new automobile that was energy efficient. In other words, trade in that old clunker that only got about 15 miles to a gallon and buy a new energy efficient car.

A clunker that travels 12,000 miles a year at 15 mpg uses 800 gallons of gas a year.

A vehicle that travels 12,000 miles a year at 25 mpg uses 480 gallons a year.

So, the average Cash for Clunkers transaction will reduce US gasoline consumption by 320 gallons per year.

They claim 700,000 vehicles so that's 224 million gallons saved per year.

That equates to a bit over 5 million barrels of oil.

5 million barrels is about 5 hours worth of US consumption.

More importantly, 5 million barrels of oil at $70 per barrel costs about $350 million dollars

So, the government paid $3 billion of our tax dollars to save $350 million.

We spent $8.57 to for every dollar saved.

How good a deal was that ? Who did it really help? The upper-middle class auto buyers who had enough disposable income to take advantage of using our tax dollars to further their economic advantage over the lower-middle class and the poor.

It will be interesting to find out, as we will eventually, how much of the three billion dollars ultimately allocated to help the American people purchase new cars, actually was used for that purpose. Another thing that many people seem to have forgotten is the fact that approximately 100,000 buyers actually put their purchases on hold waiting for the Cash For Clunkers program to launch. Did we just cram three to four months of normal activity into just a few weeks and thereby decrease future sales?

If my clunker lasts long enough, I will eventually be driving on all newly paved roads though. Those big green signs are everywhere displaying the good news that Obama is going to save the economy by putting paving companies to work.

What if I don’t have enough money to buy a new car and don’t work for a paving company?

If you take the money spent bailing out the insurance, banking and automotive industries and couple that with the pave to save funds and I am quite certain that each of the tax paying registered voters in this country could have received a huge tax rebate.

If theses funds were given to the hard working tax payers instead of being wasted on helping the ultra-rich keep their bonus packages, the economy would have been truly stimulated.

Average citizens could have paid off loans, mortgages and bought new cars with their refunds.

The clunker driving masses are of little concern to our government after the elections are over. The top one percent of the ultra-rich in this country have more money than the bottom 95 percent combined. They fund the politicians to secure their fortunes and insure their lifestyles will remain regal.

The question is: will the clunker driving masses ever wake up and smell the coffee?

 
 

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