Cash For Clunkers Boondoggle Is A Tax On The Poor

Proof • July 31, 2009

Not only is “cash for clunkers” already bankrupt despite the politicians thinking they’d provided enough money for it to last to the end of the year (think about what that portends for their projections about the price of health care and other types of spending), but the program also represents a tax on the poor. As a commenter noted on another post:

Actually, while obviously encouraging Americans to go further in debt, this program is more of subsidy for wealthier Americans and also very harmful to poorer Americans. Poorer Americans buy used cars. This program is subsidizing richer Americans to buy new cars, but only on the condition that their used cars are destroyed, thus reducing the supply of used cars going forward. I suppose it doesn’t count as a “tax”, but this certainly seems like a tax increase for people making under $250k per year (particularly those making under $30k per year).

So, in short, “cash for clunkers” not only encourages overconsumption by subsidizing unnecessary vehicle purchases and not only does the appropriation for the program represent more deficit spending at a time when our federal government is already bankrupt but it also decreases supply in the used car market thus driving up prices for lower-income Americans.
Basically, this program accomplished the exact opposite of everything it is intended to accomplish.
Hey, let’s put these idiots in charge of health care!

Tags: Asshats, Domestic Issues, Politics

http://Array robert108

Good catch, Rob! It’s even worse, since the program consists of a tax cut for those wealthy enough to buy a new car, but the opposite for those who aren’t wealthy enough to buy a new car. With all the squealing about how the Bush tax rate reductions were “only for the richest Americans”, which was a lie, this Obama program actually fits that description.
Ironic, eh?
Buzz

this certainly seems like a tax increase for people making under $250k per year

Really, you have to make 250,000 per year to afford a new car? And why would you assume that the price of used cars will go up if they take 250,000 of the LEAST desirable cars off the road?

Overall, there were an estimated 250,851,833 registered passenger vehicles in the United States according to a 2006 DOT study.

They are taking 1% of the used cars off the road, the worst of the used cars, the ones that get the LEAST mileage, and in your opinion that is a tax? If anything, the poor people who have their hooptie that you think is so desirable it’s value should go up! It is a Tax CUT for them! That 500 dollar piece of shit is now worth 1,000 by your calculations.
bill-tb

The stupidity is the drain on the pool of reusable and manufactureable parts that are being taken off the market. The very constituents they say they want to help are the very ones that buy manufactured parts, to keep their clunkers running.

Nobody ever said Democrats were smart.
http://ndgoon.blogspot.com/ goon

They just voted to extend this program today.
Brent

Really, you have to make 250,000 per year to afford a new car?

Don’t you remember Obama saying no tax increases for those making under $250k a year???

The bad party of lying all the time is that you can never remember what you previously said.
Buzz

Uh, no. But people making under $250,000/year are a lot more likely to buy a used car.

That is a shame, then you my friend neither has nor ever will get the pleasure of buying a new car.

Having said that bit of sarcasm, it really IS a ridicules statement to say that you have to make 250K to afford a new car.

Many financial experts state that you should spend no more than 20% of your net income on a monthly car payment.

Hmmm, lets do some math. I bring home 1,100 a week/4,400 a month, and that is only making 82K a year. So 20% of 4,400 is 880 a month. If I get a five year loan I would pay 52,800 in payments. lets figure I can not get 0% and have to pay the 2,800 in interest. So I can afford a 50,000 car on an income of 82,000.

Not only far less than 250K but WTF do I need with a 50,000 dollar car? You assumptions are far fetched as usual. Hyperbole at best. Pure bullshit at least.

Pwned again by Buzz.
http://www.valleydeals.com/cgi-bin/board2/YaBB.pl Kevin

Wait until they extend this scam to home appliances and then housing itself.
Bat One

Wait until they extend this scam to home appliances and then housing itself.

Kevin,

The liberals already ran this scam in the housing market when successive Clinton HUD Secretaries, Cisneros and Cuomo, directed that Fannie and Freddie lower their underwriting standards and buy more sub-prime mortgage loans, buying votes of “the poor and disadvantaged” with home ownership. Its what started the chain that got us into this financial mess in the first place!
Buzz

Wait until they extend this scam to home appliances and then housing itself.

Good idea, we would be shutting down coal burning power houses left and right if everyone had energy efficient appliances.
raj58045

You assumptions are far fetched as usual. Hyperbole at best. Pure bullshit at least.

A nice description of your post. You have $880 laying around that you can spend? I doubt many average citizens do. Besides the payments, you also have to factor in the increase in insurance spending. For the average American, new car payments, and insurance rate increases are well above what we can afford.
FlyOnTheWall

I’ve got my own weird bent and see the horrible environmental/ energy use impact. Making a new car uses a HUGE amount of energy, roughly equal to the amount of energy the car uses over its lifetime. The new hybrids are more energy intensive. Energy wise you’re best off to use the car you’ve got, proper maintenance and don’t drive like an ass.
Buzz

I’ve got my own weird bent

I’ll give you that, heck it took more energy to build the Hoover Dam than it will ever generate. Some things are just a mystery.
Farm4$

The Gov. is giving you a $4,500.00 rebate. It didn’t tell you that that is income. Do you think the people using it will be getting a little surprise at tax time?

This program takes off the road the cars that sell for under $4,000.00 on a used car lot. Where are the poor people who can only afford a 1,000.00 car going to find one? Screwed the poor and the young. The kids who needed to buy their first car.

This came from the party that looks out for the poor and the young. Fixed them for voting for democrats.
http://www.bikebubba.blogspot.com/ Bike Bubba

A nice description of your post. You have $880 laying around that you can spend? I doubt many average citizens do. Besides the payments, you also have to factor in the increase in insurance spending. For the average American, new car payments, and insurance rate increases are well above what we can afford.

The person who made this comment brilliantly illustrates what’s wrong with our country; we have people who think it’s NORMAL to have absolutely nothing in their savings account. Thanks, Raj–and if you’re unclear on why this is a problem, visit http://www.daveramsey.com and get started on his seven steps to financial freedom.

To put it gently, to have nothing in savings is to assume that your current employment/income will continue no matter what. Millions of Americans have learned the hard way that this isn’t a good assumption.
FlyOnTheWall

The person who made this comment brilliantly illustrates what’s wrong with our country; we have people who think it’s NORMAL to have absolutely nothing in their savings account.

I didn’t hear him say that but I agree with your diatribe. I don’t have $880 dollars I’m willing to part with for taxes down the road. I do have a decent pile of savings.

The program is pushing lower income people to take on longer term debt. Bad things are happening that won’t hit for 2 – 6 years.
http://www.bikebubba.blogspot.com/ Bike Bubba

Fly; keep in mind that Raj said “can” spend, not “want to” spend. You could spend some of your ample savings, but you choose not to, right? A strict interpretation of Raj’s comment is that most Americans don’t have $880 in liquid assets to their name.

Sad to say, he’s closer to the truth than ought to be the case. No?

Agreed 100% that this is inflating the next economic bubble.
FlyOnTheWall

Cash for clunkers is also hurting charity car donation since many of the clunkers being turned in for a voucher would have been donated to charity for a tax deduction.

I’m an ‘energy efficiency guy.’ I was talking to a ‘car guy’ and both of us were lamenting this atrocity. He was looking at it from the waste of perfectly good engines and whole cars and single mom’s having to pay more for low end vehicles. You would be the ‘charity guy.’ We’re all appalled by this in our own ways and we welcome you to our club. (We have cookie dough on Thursday, I won’t make cookies because of the energy requirements.)
http://www.cars4charities.org/ Cars4Charities

Cash for clunkers is also hurting charity car donation since many of the clunkers being turned in for a voucher would have been donated to charity for a tax deduction.
David

This clunkers program is awful. I have money and a new car. I don’t need any help fro the Gov’t to buy one. A man who works in the office next to me, makes almost 6 digits a year took advantage of this. My daughter, however, who cannot afford a new car, because of payments AND the hike in insurance due to the addition of collision. My wife and I have a 3rd car, which is a clunker. She borrowed it and blew a head gasket. We were going to trade it in and give her a new car. But this car gets an avg of 20mpg on paper. Which makes this car ineligible. So. A man who can afford a new car on his own gets help from our taxes to purchase a new car because he decided to purchase a gas guzzler 15 years ago. And us, who were smart enough to buy a good gas mileage car 15 years ago are screwed in helping someone who REALLY needs it and cannot afford it.

Like I’ve said many times before. Thanks Government for taking half my paycheck and giving me nothing in return.

I would like to as JFK one question. We he said ask not waht your country can do for you, but what you can do for your country.

Well….. I can tell you what I have done for my country in the last 20+ years. I have GIVEN you almost a half a million dollars. So I think it’s fair for me NOW TO ASK IT.

Ask NOT what you can do for your country, but what your country can do for you in RETURN?
http://sayanythingblog.com robport

Really, you have to make 250,000 per year to afford a new car?

Uh, no. But people making under $250,000/year are a lot more likely to buy a used car.

And yes, Buzz, reducing the number of available used cars limits the supply of used cars. Limiting supply without a corresponding drop in demand raises prices.

It’s economics 101.

I blame your unionized public school teacher for not knowing this.

SayAnythingBlog.com

Cash For Clunkers Boondoggle Is A Tax On The Poor

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