Saturday, August 01, 2009

Our Cash, Your Clunker, What About Jobs?

The Cash Allowance Rebate System, or “CARS,” better known as “Cash for Clunkers” has proven itself to be a big success. So successful that it ran through the $1 Billion allocated for it in the first 4 days, requiring its own ‘bailout’ of another $2 Billion to keep the program going.

All across the nation we hear of buyers getting a ‘cash for clunkers’ deal for their old gas guzzler, trading it in for a new fuel efficient car and leaving it at the dealer for the mandatory destruction of the engine, rendering the trade-in largely worthless, other than for scrap metal.

Selling us on the program, we are told, “The idea is to spur vehicle sales while the industry is struggling with the effects of the economic downturn. U.S. auto sales are selling at a pace of about 10 million units per year, down sharply from a few years ago when they sold at the historic level of 15 million vehicles annually.”

Transportation Secretary Ray LaHood said, “[he] expects the program to spur sales of 250,000 new cars in the United States over the next few months,” adding This will be a huge boost to car manufacturers across the country.”

We then read of a buyer at McEleney Autocenter in Clinton, Iowa, who traded in an old Ford truck and “drove away with a brand new Hyundai Accent.”

In New York, we hear that “Business was humming at Crestmont Toyota/Volkswagen.”

From around Chicago we read of a buyer who brought in their 1990 Ford Econoline for a deal from Gregory Hyundai in Highland Park.

The general manager of Willowbrook Kia/Ford tells us, “There's a lot of interest, and there’s a lot of junk out on the road.”

Again we are told of a buyer from Barrington, Illinois who traded in his 1999 Oldsmobile Bravada in and drove out in a brand new 2009 Hyundai Santa Fe.

Gene Bradshaw, president of Beaverton, Oregon based Carr Auto Group says, “his Beaverton Subaru and Chevrolet dealerships were pulling in the most Cash for Clunker shoppers,” over other dealerships in the group selling American cars in Vancouver, Washington.

Bradshaw then claims, “This is the first stimulus program that has actually trickled down and helped stir the economy. You have a car dealer and a salesman making a profit; you have the trucking company that hauls (the cars) making a profit and scrap metal companies making money.”

How reassuring that must be to the employees of 789 Chrysler Dealers who lost jobs when the White House Car Czar directed they lose their franchises, with upwards of 2,000 General Motors dealers facing the same fate.

Vancouver, Washington’s Allen Webb, who was one of those who’s Auto Group lost Dodge franchise added, “The Nissan store and the Mazda store are doing the best.”

With two major American manufacturers coming out of bankruptcy, why are our tax dollars, above and beyond millions of tax dollars pumped to those 2 manufacturers, bolstering sales for imports?

Didn’t Obama’s Transportation Secretary LaHood tell us, “This will be a huge boost to car manufacturers across the country?”

The owner of Highland Park Ford Lincoln Mercury informs us that with incentives tilted toward some import lines, “I think the industry would be better served with a flat rebate for anybody that buys a new car, or even better, anybody that buys an American car.”

Can someone tell me why we are in such a deep recession, yet bailing out imported car manufacturers?

And what about “Jobs?” Just what jobs stand to be created in any long-term capacity by a temporary program as this? Surely the country, the taxpayers, cannot afford to keep giving away up to $4500 trade-in or a $100.00 car with little scrap value, can it?

Will it even help the UAW led manufacturers who have a glut of unsold cars to sell off first? Surely they don’t intend to manufacture more and more cars with a glut of unsold cars, do they?

Will this supply any help to employees of shuttered dealerships that the Car Czar and manufacturers said must be put out of business?

With this program scheduled to cease come November 2009, what then? What will keep buyers coming in when the countries unemployment will most likely have grown beyond the current 9.5%, as predicted by the messiah himself, Barack Hussein Obama?

What happens when the ‘finger is pulled out of this crumbling dike?’ What then when people who used our tax dollars to finance a new car they couldn’t afford last month realize they may not be able to keep up with payments?

Will we have yet another government savior program to give away even more of our tax dollars so they might be able to keep their shiny new cars we are buying for them?

What about the poor who must rely on older vehicles that do not qualify for a “cash for clunker” deal and need repair parts? Usually they travel to the nearest junkyard for their parts. But, with engines destroyed, rendered useless and the cars crushed and shredded, what do they do?

Hope the bus line stops close to the minimum wage job they hope and pray they will have?

With the initial outlay of funds drying up so quickly, Rep. Jerry Lewis (R. Ca.) asked, “If this is how the government is going to handle billion-dollar programs affecting all Americans, I ask, whatever will we do if this administration takes control of our health care?”

Dan Mitchell of the Cato Institute stated, “This is not good for economic growth. You’re simply getting people to use existing income to spend on cars. Getting people to spend more of their money on cars mean they will have less money to spend on other things.”

Mitchell added, “Economic growth is not getting people to spend more money on products, it’s getting them to have more income.”

Countering critics, Bruce Belzowski of University of Michigan says, “It’s hard to say they’re incompetent when the program is creating jobs, stimulating the overall economy and reducing emissions. Where’s the loss here?”

The “loss here” is in the bogus claim of “creating jobs!” Where are these jobs? At best, a few jobs in a troubled industry are saved for a while, but how many of those in the countries the imports selling so well are built?

Reinforcing that is more words from Bruce Belzowski when he adds, I don’t think it was meant to save the auto industry.”

No? Then why in the hell are we doing it?

UPDATE: The House passed the request for an additional $2 Billion to bolster this program and the Senate is pondering it. Reuters ran an article on Aug 3, 2009 U.S. auto sales bolstered by rush to dump ‘clunkers’ that tells us, “Ford Motor Co’s sales rose 2 percent.”

Further down it tells us, “U.S. auto sales overall,,,, fell 12 percent from a year earlier.”

Still further down we read, “Chrysler posted a 9 percent sales decline for July. GM sales were down 19 percent.”
“Sales for Toyota Motor Co were down 11 percent; Honda Motor Co was off 16 percent and Nissan Motor Co sales fell 25 percent.”
“Hyundai Motor Co posted a nearly 12 percent sales gain for July.”

It would appear, as per the supplied numbers, our “Cash For Clunkers” would be more aptly labeled the “South Korean Bailout Act.”

Curiously enough, below the article is a link to a video report, More GM Layoffs Likely, Company Says

Again, why are our tax dollars being given away like this?


Angie Lee said...

C'mon, Lew. You already know that in a month or two when these folks lose their jobs and can't make their payments, we will be bailing them out as well. Also heard tell of some folks taking their brand-new fuel-efficient cars (after they got the $4500 credit from the dealer), reselling them and buying stuff like... brand new F-150s.


It is absolutely sickening that these cars are being destroyed. If they don't want them back on the road, why not just dismantle them and sell them for parts instead of destroying them?

LewWaters said...

Useable engines are the most profitable portion of a scrapped car, Angie. Depending on the engine and scarcness, we have had to pay $2500.00 and more for certain ones.

I guess the "greens" running this pig in a poke don't realize a freshly reconditioned engine emits much less emissions than does a worn out one that does not qualify for the CFC promgram.

I still have yet to figure out how incentives to purchase foreign cars helps our two manufacturers who just went through bankruptcy or what jobs a short spike in sales supplies.

But what do I know? I only have 43 years in the automotive trade.

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LewWaters said...

And what are they trading it in on, Van?

Would they not be able to replace it without this program of throwing out other people's money?

What else should we be given up to $4500.00 of others people's money to buy?

New furniture for my house? A new roof for it? Maybe an extended vacation?

Where does it end?