Cars

Claire McCaskill Bags On Cash For Clunkers

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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?