Last year, I traded in my “clunker” for a used sedan with 50% better mileage. The condition of the car was pretty poor, so instead of trying to trade it or sell it, I sold it for scrap. It was worth $400. With the collapse in scrap steel prices, it’s closer to $200 now.
When I bought my clunker, it was most likely a trade-in from somewhere else. The life cycle goes like this. In order to sell a new car, a dealership will offer maybe $1,000 for any piece of junk. They then sell it off to another dealer. Then I end up buying it for over $1500.
So why are dealerships taking a fraction of the value of a car now? The government is paying for it with the stimulus slush fund. In fact, that $1 billion wasn’t quite enough and another $2 billion was added. So every household in America is paying a $30 tax so that people who can afford to spend $10,000 or more in a bad economy can get an extra deal.
A lot is made about the supposed failure of trickle down economics. So instead of giving money to “the rich” in tax breaks so they (as mostly small business owners) can hire more people, they give money to the upper middle class so they can buy new homes and new cars and not hire anyone. This is the perfect example of how to create a jobless recovery.
The car scam is a perfect example of how this administration doesn’t understand the first thing about economics. They thought setting aside a little money would help people who wanted to green up be able to. But now, everyone is taking free government money while they still have a job. People are turning in the junker in the driveway they never use for a new SUV in the garage. This won’t help the environment, adding all that scrap into the system. It won’t help the auto unions. Inventories are high and companies are already producing the minimum number of cars to stay afloat. When this program ends, auto sales will drop like a stone.
And Jackass wants to save money on health care? Really?