Lots of “clunking” going on this morning at the Donk, but it’s the hot topic and since this criticism comes from a Dem I thought it worthy of pointing out some opposition from my side of the fence.

From her Tumblr blog:

Of course the cash for clunkers program is popular, we’re giving away money.

My concerns are first, that we are just moving demand around, and that the sales in this program are robbing sales from 2, 3, or 12 months from now when we are going to still need sustained growth in our economy. Remember, around 60,000 to 70,000 people are trading their cars in for new ones every month without this program.

Second, I haven’t yet gotten clear answers on how many deals are currently in the pipeline and how they will wind this program down in a way that will give certainty to buyers and dealers.

Third, I’m worried that an extension right now will penalize the two companies that we just made huge taxpayer invesments in. I’m trying to verify, but I believe, based on my conversations with dealers and other research, that Chrylser and GM both have inventory issues with the cars that qualify for this program. Seems weird we would invest billions of taxpayer dollars in two American companies in an effort to save them, and then extend a program that could penalize them.

I realize all car sales, both foreign and domestic, are good for the economy, but I hate the idea that there may not be a level playing field for the next few weeks because of inventory issues.

I’ll take these one by one.

First, yes, it’s giving money away. But that’s what we’re doing with stimulus dollars anyway, and there’s always some amount of wealth redistribution when you do that. As far as shuffling demand around, I don’t know that I buy that. An additional 3 to 4 grand can turn somebody into a buyer fairly quickly, especially when you’re talking about smaller, lower priced, more fuel efficient cars.

Second, I agree that it’s not clear, but one has to imagine that if it does go over we’ll figure it out so consumers don’t get screwed. After all, we’re talking about a couple billion dollars here and why we’re even fighting about it seems silly to me. This is a drop in the bucket, but it means A LOT to consumers.

Third, when people buy 250,000+ cars in a week, America benefits. Not only that, if GM and Chrysler are running out of stock, well, that’s a good thing…is it not? After all, one of the biggest problems they had was too much inventory. This will help them wind that backlog down. And yes, she’s right that there will be spillover to foreign car makers…but I doubt many of those cars are being shipped over. Most foreign car companies make their autos here, so it’ll ultimately benefit our economy. Personally, I don’t see the problem, and if McCaskill wants people to buy GM and Chrsyler, propose upping the amount of rebate somebody gets for those two brands.

What do you think?

  • Jimmy the Dhimmi

    Of the top 10 models of cars destroyed by the program, all ten are from American auto companies.

    Of the top 10 models purchased in exchange for the “clunkers,” 6 are foreign.

    The federal deficit is being increased in order to destroy perfectly functional cars, who’s replacement parts are made in America, in order to encourage Americans to go deeper into debt to finance new foreign-brand automobiles.

    The government is doing everything it can in order to re-flate the consumer debt bubble and massive trade imbalances of the past decade. What happens when ineterest rates have to rise again?

  • Bob

    There’s a little more to the details on this one. Missouri has lost a lot of jobs at companies that supply components that go into new cars and as replacement parts for older ones. Imports, whether assembled in the U.S. or not, do not use those parts. The program, by not requiring purchase of U.S. vehicles disadvantages the so-called “Tier-1” suppliers who contract to produce things like sparkplugs, water pumps, etc.

    Inventory is indeed a problem for Chrysler. I want to C4C a ’93 Grand Cherokee for the ’09 Patriot. Last week there wasn’t one in inventory anywhere in the state of Missouri.

    Claire: thanks for using common sense in place of party politics to represent us … even this one voter who never market the Democrat side of a ballot until voting against Jim Talent.

  • Yes, it’s giving money away. But…

    We can always count on you for that one Justin. Since you have proven that you’ll reliably defend every fed gov’t expenditure like this, why bother arguing?

    I’ll simply point out that this money is coming out of the pockets of everyone else who pays taxes but didn’t get a car purchase subsidy, and leave it at that.

  • Tom

    If we went through a billion dollars in a week, that suggests that maybe we could have had a smaller subsidy (or higher MPG requirements), and still have had plenty of sales.

    Kranky – unfortunately, the money isn’t coming out of everyone’s pockets, at least right now. It’s just adding to our colossal national debt. I have genuine fear that we could end up turning into Argentina.

    Remember when a billion was a lot of money? Sigh…

  • Tully

    And the top-selling vehicle under Cash for Clunkers is … an SUV! Also in the top 10 are two pickup trucks and another SUV.

    But apparently you’d never know it from reading the government’s reports

    Also, it seems like the big winners from C4C is not Government Motors. Ford has done right well.

  • mw

    I am liking McCaskill more and more. She is also calling bullshit on the administration hackery that health care protesters are corporate plants:

    “I disagree that the people showing concern over some healthcare proposals are “manufactured” Real folks, strong opinions.”

  • LantermanC

    By shuffling demand around, Claire doesn’t mean just mean that we’re speeding up the car buying process, she means that the person would likely have spent their money on something else, like clothes or a vacation, or a home remodel. We’re just shifting the demand from one sector to another by changing incentives and priorities.
    I think Clash for Clunkers is a good idea for the environment, but am skeptical to the economic help it will provide. Also, let’s be honest here, this program is meant to help the poor, which I’m fine with.
    It might be wrong, but I wouldn’t have minded seeing a bigger discount if you purchased an American car or more incentive for more fuel efficient cars. After all, if the government owns portions of American car companies, it is in our best interest to see these companies flourish to a point where they can be competitive on their own again.