Friday, August 7, 2009

‘Cash for Clunkers’ cheated some who really needed it

I’ve heard enough about the “Cash for Clunkers” law to give it a “C-minus.”

The only reason it did not fail completely on the report card was because some consumers and companies used it to trade in a real clunker in the name of efficiency.

In this economy, who could blame someone for trading in a 1999 Jeep with 150,000 miles on it for the $4,500 rebate.

This law gets a C-minus because of what happens – or doesn’t happen – to the cars that are traded in.

If you haven’t heard yet, all cars traded in are to be destroyed and never driven again regardless of condition.

In other words, that 1999 Jeep could have made someone else happy further down the chain, but the dealers are required to pour silicon into the engine and render the car undrivable.

What if someone could have used that Jeep – let’s say in a rural area where a single mom could use a better vehicle to get to her job in a nearby town? The law says “too bad, so sad” to her and raises the overall demand and price for used vehicles.

This Wall Street Journal article further explains how the trade-ins are “killed.”

These cars are not even parted out, further depriving the industries that deal in used and reconditioned parts.

Wouldn’t “Cash for Clunkers” have been better served to recycle rather than completely destroy?

Could they not take a lesson from charitable organizations that deal in quality hand-me-downs? Aren’t we in a hand-me-down economy as it is?

I am curious about the carbon footprint involved with a perfectly good car that gets branded and scrapped as a clunker.

This clunker law needed a second tier, a Phase 2, to reach its true goal of efficiency and economic stimulus. It needed a hand-me-down clause because not all of the cars being traded in have been clunkers.

Heck, we have heard that people traded in restorable classic cars to take advantage of the rebate. Yeah, it made us a bit sick, too.

This law, with its flaws, has boosted some assembly line production at the automakers, but even that could be construed as a bailout.

Are the manufacturers going to use this boon to churn out a pile of 50 mpg cars? The answer is negative. The TV ads will still be there, telling us that 26 mpg highway is “great mileage” for metal, non-recyclable composites and batteries on four wheels. Where will these cars go to die when their time is up?

If the government tries again in the future with another clunker law, I hope they allow some of the passable used cars to help someone else further down the chain.