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Posts Tagged ‘stimulus’

Cash For Clunkers seems like a pretty good program. Bring in a not-so-great vehicle and get up to $4500 in credit toward a new vehicle, a value virtually no one would get from a traditional trade-in program. There are a few stipulations but nothing outlandish. And it’s helping both the consumer and the economy, right? What could my beef possibly be?

The long-term result. But even the short-term isn’t exactly pretty. Right now, this program is “helping” people buy cars that get “better” mileage than what they had. But $4500 isn’t a great discount on a new car and I don’t know whether most dealerships will allow it to be paired with other incentives or not. If not, buyers are getting screwed. Secondly, the mile-per-gallon average is grossly overestimated and has decreased the last five years or so. Which means buyers get less bang for their buck even when they try to make the best choice. On top of that, until an amendment to the program passed today, August 1, 2009, the cars being turned in were to have their engine blocks “killed” at the time they were traded (officials recommended water glass, a sealant and bonding agent, be run through the engine in place of oil; the damage would be total and irreparable) … except that, at the time of purchase, many buyers do not know if their old vehicle will be accepted into the program. Some dealers required buyers to sign waivers and release forms to indemnify the dealership against damages. Because if the old car wasn’t accepted, or if the new car didn’t meet your standards, or you decided you couldn’t really afford it, or if you needed to back out of the deal in any other way, your old car was already toast. Sorry, Charlie, you said you didn’t want it anymore.

And the long-term outlook is worse.

If you hadn’t noticed, used vehicles are going pretty cheap at the moment. They have been for about, oh, the last eight months or so … since the stock market fell and the country began to worry about ridiculously bloated banking corporations. My biggest beef with this program is how it will take thousands and thousands of perfectly decent used vehicles out of the market. Just how many? Well, using a bit of fuzzy math, I’m going to take the total Cash For Clunkers budget (including the new increase) of $2.95 billion and divide it by 4000, since some people will get a $3500 credit and some get $4500 … and for the sake of brevity I’m going to assume it’s a pretty even split. Okay, now if even 1 in 3 of all those vehicles being turned in were potentially re-salable (I think the average would be much higher than that, but I’ll play devil’s advocate and remain conservative in that respect) that means roughly 245,000 re-salable vehicles will be crushed or shredded by time the program ends.

Want to see a few examples of the “clunkers” being traded in? Here’s a random group provided by the owners themselves.

(Click here to view full-size.)

Yup, those look like total and complete piles of shit. I don’t know how the owners managed to get them to the dealerships for trade-in.

Sarcasm aside, that’s almost a quarter of a million perfectly good cars and trucks, including those above, permanently and irrevocably destroyed. How is that bad? Well, for some sellers it won’t be, because the price of un-crushed used cars will go up. But, ultimately, all those cars and trucks permanently removed from the market will have an effect on prices. What happens when demand remains constant (or increases) but supply diminishes? The price goes up. And that means higher costs for people who can’t afford new cars. It puts one more burden on an already overburdened class and will result in real clunkers getting driven for longer periods because owners can’t afford to replace them. It means greater hardships and fewer choices for low-income owners. And not only will the price of used cars increase, the price of many parts will increase because those hundreds of thousands of vehicles were crushed or shredded with their drive trains intact. (By law, the scrapyards are not allowed to part them out.) So millions of perfectly usable parts will be wasted, salvage operations face a shrinking pool of resources, and low-income car owners foot the bill.

Granted, Cash For Clunkers will probably get some junkers off the road and likely help a section of lower-middle class consumers sign on for a car they couldn’t otherwise afford. But it seems to me that the “cons” here outweigh the “pros.” By far.

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Supposing any reader of this blog has some cursory knowledge of the current state of the American economy (in the crapper) and my inherent mistrust of politicians (crooks, cons, and thieves, the lot of them), here’s my take on the new stimulus that was passed yesterday.

It’s crap.

I know all the governmentals were standing around wringing their hands and trying to think of even one idea that held water but if this is the best they could come up with then we really are a doomed nation. That sounds harsh. Cutting. Sarcastic. And it’s the nicest thing I could think to say. Without knowing the specifics of the bill (because this lowly peon didn’t feel like slogging through 1588 pages of such political grandeur), I have serious doubts about the actions it reputedly mandates and the resulting fallout.

From what has been publicized, the stimulus contains plans for hundreds of billions of dollars to be “diverted to such necessities as dog parks…a frisbee golf course…and an ‘eco-friendly’ butterfly garden.” Oh my, yes, let’s all play some frisbee golf and no one will be worried about their mortgage or the insolvency of their bank or the climbing rates of inflation. By jove, Washington, I think you’ve got it!

According to one CBS article, the stimulus also includes $50 million for the National Endowment for the Arts (for the unemployed artists among us, I suppose). Another CBS article lists $870 million to “combat flu” and $19.5 billion for school modernization. All I can say is, for that much money, they better be giving shots against a deadly and highly contagious version of the bird flu that, like the influenza outbreak of the late 1910’s, poses a tangible threat worldwide. And can’t our schools hang on with what they’ve got for just a couple more years without these billions of dollars? Can’t the sex ed programs just re-use a few of their demo condoms and call it good?

CNN reports $248 million slated for new furniture at the new Homeland Security headquarters…which they intend to spend at least $448 million building (and I’m certain that that project won’t run over-budget…huh-uh). The list goes on:

+ $6 billion to turn federal buildings into “green” buildings (it’s going to take several years for those low-flow toilets to pay that $6 billion back, you know)
+ $110 million to the Farm Service Agency to upgrade computer systems (who the hell are they anyway? never heard of them and their obviously horribly deficient computer systems)
+ $600 million for new hybrid vehicles for federal employees (exactly how many freaking employees are driving cars paid for by the Fed? my employers sure as hell never bought me a new car to get to work or run their errands)
+ $75 million for salaries of FBI employees (it does not state whether these are salaries for new employeee hires or simply raises for current workers…but I’m betting most of it is the latter).

And these are from a relatively short list; God knows what is stuck back in the nooks and crannies of that most voluminous bill (which allocates the equivalent of over $500 million per page). And before I get flamed for my less-than-supportive attitude, let me say here and now that I know most of these objectives would create more work. The problem, I think, is how few of those positions will be permanent. The bill is designed around a one-year time-frame for most of these appropriations, two years tops, and then all that “extra” funding is going to disappear. It might help boost the job market for a few months but then those jobs are going to end and those men and women are going to be looking for work…again. And this bill is too massive to repeat on an annual basis, or even bi-annually. The country is broke as it is, operating in a deficit trillions of dollars deep and getting deeper all the time. Gross and wasteful spending is not a solution to our problems, not by a long shot.

And while we’re on the subject of waste, let’s talk pork. I think Caleb Howe over at AOL said it best

“I mean, look at it this way. If you are cooking a chicken, in a duck … in a turkey, and you decide to wrap it in bacon, then you’ve added pork to your meal. But if, on the other hand, you’re cooking a bacon log, you aren’t adding pork, are you? It’s made of pork. That is it’s nature. You may be adding cheese, or perhaps pineapple wedges (awesome) but you aren’t adding pork. So I guess that’s kinda what Obama is trying to say. This is a spending bill. You don’t have to earmark it when spending is the objective. You can’t, you see, earmark an earmark.”

Splendidly put. This bill is a perfect example of runaway government and blatant misuse but, guess what, it passed and we’re stuck with it now. The pork is on the table and we’re about to be force-fed. For decades and decades, Washington has bled the taxpayers dry while they bloated on ridiculous excesses and obscene expenditures. Democrat and Republican alike. This is just the latest installment of “Screwing the American Public: the Art of Pocket-Lining and Two-Faced Backstabbery.”

Instead of ATV trails and a butterfly garden, how about a legislature that is actually concerned about this nation and how to keep it afloat? How about a modicum of honesty and integrity, just this once, so that these billions and billions of dollars are put to good use and maybe, just maybe, the nation will pull through this mess in one piece? But I ask too much. Silly, silly me.

To read the act yourself, visit ReadTheStimulus.org.

On a side note, the CNN breakdown also shows $125 million for the Washington sewer system but I’m not bitching about that one … with all the shit flying around Washington they need a good sewer system.

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