Tea Party said Cash for Clunkers Was a Failure...After all these years...Brookings: Cash for Clunkers Was a Failure

Tea Party said Cash for Clunkers Was a Failure...After all these years...Brookings: Cash for Clunkers Was a Failure

No surprise. All Cash for Clunkers did was make used cars more expensive for low and middle income Americans and give a tax credit to those who were going to buy a new car anyway. Way to go President Barack Hussein Obama.

Cash for Clunkers program falls short of goals to help economy, environment

Published November 03, 2013•
FoxNews.com

WASHINGTON – The Cash for Clunkers program that was pitched to the public as a big boost for the economy and the environment turned out to be nothing more than a lemon, according to a new study released by the Brookings Institution.




In fact, the Car Allowance Rebate System (CARS) known as Cash for Clunkers, did little to help the environment and was “far more expensive per job created than alternative fiscal stimulus programs,” according to new research led by Ted Gayer and Emily Parker of Brookings.

Sold as an economic stimulus and an environmental salve, the program made early progress in jump-starting the ailing auto industry.

Initial data seemed to indicate that the program, which offered $3,500 to $4,500 for people who trade in their old cars for a new one with higher fuel economy, was popular.

The plan, which was the brainchild of the National Highway Transportation Safety Administration, was championed as one that would stimulate the economy, create jobs and reduce emissions. But ultimately, all of those lofty goals fell short of expectations.

For starters, the fuel-economy requirements ended up being fairly loose. For example, a person trading in a vehicle like a Hummer, which clocks in 14 miles-per-gallon, could get a $3,500 voucher that would go towards a new SUV with 18 miles-per-gallon. Experts argue that the small gains made in efficiency would be offset by the energy costs put into manufacturing a new car.

“The existing evidence also suggests that these sales were pulled forward from sales that would have occurred otherwise in the future,” Gayer and Parker said. “Ten months after the end of the program, the cumulative purchases from July 2009 to June 2010 were nearly the same, showing little lasting effect.”

Americans traded in 700,000 “clunkers” between July 1 and Aug. 24, 2009, according to Brookings.

While the study found that the $2.85 billion program provided a short-term bump in vehicle sales, the program only provided a small boost in employment which the government watchdog group says could have been done easily through other fiscal stimulus programs like reducing employers’ and employees’ payroll taxes.

The environmental gains made through the program weren’t all that impressive either, according to the study.

Read more: http://www.foxnews.com/politics/2013/11/03/cash-for-clunkers-program-falls-short-goals-to-help-economy-environment/

Now we agree on something. Cash for Clunkers was simply stupid. When a nation thinks they are so wealthy that they destroy perfectly capable cars to create a false demand and use taxpayer money to accomplish the same.......it will fail. It did. An across the board tax credit for buying a new car in that year would have saved billions and would have stimulated the economy three fold on this dud called cash for clunkers.

2seaoat wrote:Now we agree on something.  Cash for Clunkers was simply stupid.  When a nation thinks they are so wealthy that they destroy perfectly capable cars to create a false demand and use taxpayer money to accomplish the same.......it will fail.  It did.   An across the board tax credit for buying a new car in that year would have saved billions and would have stimulated the economy three fold on this dud called cash for clunkers.

Grand idea, no wonder that's what President Barack Hussein Obama is trying to do. Some new sort of voodoo economics.

How does paying people to buy a car save billions of dollars?

How does paying people to buy a car save billions of dollars?

Let me help you.....the International Monetary Fund said recently as two weeks ago as reported on TV that austerity does not work and that economic recovery comes from stimulus. 70% our economy is driven by consumer spending. The Obama Administration while sitting in a sinking ship decided to stimulate the economy which was a good decision, but they literally used the wrong vehicle. The tax credit is a proven method to stimulate and influence consumers buying decisions. When the economy stopped its nose dive the government saved billions of lost revenue and increased expenses. Stimulus was the right decision, just the wrong vehicle with clunkers and the destruction of perfectly working vehicles.

2seaoat wrote:How does paying people to buy a car save billions of dollars?

Let me help you.....the International Monetary Fund said recently as two weeks ago as reported on TV that austerity does not work and that economic recovery comes from stimulus.   70% our economy is driven by consumer spending.  The Obama Administration while sitting in a sinking ship decided to stimulate the economy which was a good decision, but they literally used the wrong vehicle.  The tax credit is a proven method to stimulate and influence consumers buying decisions.  When the economy stopped its nose dive the government saved billions of lost revenue and increased expenses.  Stimulus was the right decision, just the wrong vehicle with clunkers and the destruction of perfectly working vehicles.

Still...nothing.

Amazing, Socialists always say that the only reason Socialism hasn't worked is that it is done the wrong way.

Please show a link to a RELIABLE source stating that spending money, you do not have, will stimulate the economy.

California is BROKE, so they way for them to recover is to spend hundreds of billions of dollars....  How has that worked for them so far?  How about Detroit?  They've been spending for years, how's that worked out for them?

Greece, Italy, Portugal and Spain, they've were spending like crazy too, money they don't have, how's that working out?

Once again...S-L-O-W-L-Y.

How does paying people to buy a car save billions of dollars?

By the way, where do those billions of dollars come from?

See: Japan... and this cash for crap idea is straight from cass sunstein's "nudge". Cue boards to blame anything else.

Please show a link to a RELIABLE source stating that spending money, you do not have, will stimulate the economy.

You are kidding? Are you serious? Did you never take an economics course in your education, and if you did why did you not pay attention. In 2008 our GDP was not growing and was in fact collapsing. We were in a deflationary cycle. M1 had flat lined and there was no money in our economy. What did you learn in your economics class about monetary policy when you are in a deflationary cycle. I am not going to look up any links because if you do not understand some basic economic principles it is silly to have a discussion with somebody who does not understand the SCIENCE of economics. So tell me what a nation does in a deflationary cycle with monetary policy? No links necessary......no cut and paste necessary......just show if you have the requisite knowledge of economics to carry on a basic discussion of economic principles, because I am not going to waste my time assuming you are smarter than this stupid question.

http://en.wikipedia.org/wiki/Lost_Decade_(Japan)

The strong economic growth of the 1980s ended abruptly at the start of the 1990s. In the late 1980s, abnormalities within the Japanese economic system had fueled a speculative asset price bubble of massive scale by Japanese companies, banks and securities companies. The combination of exceptionally high land values and low interest rates briefly resulted in heightened liquidity in the market. It led to massive borrowing and heavy investment mostly in domestic and foreign stocks and securities. Recognizing that this bubble was unsustainable, the Bank of Japan sharply raised interest rates in late 1989. This sharp policy caused the bursting of the bubble, and the stock market crashed. A debt crisis followed and the Japanese banks and insurances were now loaded with bad debts. The financial institutions were bailed out through capital infusions from the government, loans from the central bank and the ability to postpone the recognition of losses, ultimately turning them into zombie banks. Yalman Onaran of Salon stated that the zombie banks were one of the reasons for the following stagnation. [5] Additionally Michael Schuman of Time magazine noted that these banks kept injecting new funds into unprofitable "zombie firms" to keep them afloat, arguing that they were too big to fail. However, most of these companies were too debt-ridden to do much more than survive on bail-out funds. Schuman believed that Japan's economy did not begin to recover until this practice had ended. [6]

Eventually, many of these failing firms became unsustainable, and a wave of consolidation took place, resulting in four national banks in Japan. Many Japanese firms were burdened with heavy debts, and it became very difficult to obtain credit. Many borrowers turned to sarakin (loan sharks) for loans. (As of 2012, the official interest rate was 0.1%; [7] it has been similarly low for several years.)

2seaoat wrote:Please show a link to a RELIABLE source stating that spending money, you do not have, will stimulate the economy.

You are kidding?  Are you serious?   Did you never take an economics course in your education, and if you did why did you not pay attention.  In 2008 our GDP was not growing and was in fact collapsing.  We were in a deflationary cycle.   M1 had flat lined and there was no money in our economy.  What did you learn in your economics class about monetary policy when you are in a deflationary cycle.  I am not going to look up any links because if you do not understand some basic economic principles it is silly to have a discussion with somebody who does not understand the SCIENCE of economics.   So tell me what a nation does in a deflationary cycle with monetary policy?   No links necessary......no cut and paste necessary......just show if you have the requisite knowledge of economics to carry on a basic discussion of economic principles, because I am not going to waste my time assuming you are smarter than this stupid question.

Once again you "somehow" missed the question.

Please show a link to a RELIABLE source stating that spending money, you do not have, will stimulate the economy.

Well how about that first time buyer who gets that thirty year mortgage.....is that their money.......and when that house is bought what do first time buyers usually do.....spend money to fill that house........now do you need a link to know that 70% of our GDP is driven by consumer demand........so if government cuts our government guarantees, FHA loans and first time buyer incentives.....what is the economic impact?

What happens to tax revenues when the gdp shrinks........do you really need links or do you really believe that folks should buy a house as a cash buyer....and if you do believe that what happens to the value of real estate when only cash buyers can buy houses......try real hard Mr. Markle.....I know you can connect the dots and answer your own question, but maybe I give you too much credit.

2seaoat wrote:Well how about that first time buyer who gets that thirty year mortgage.....is that their money.......and when that house is bought what do first time buyers usually do.....spend money to fill that house........now do you need a link to know that 70% of our GDP is driven by consumer demand........so if government cuts our government guarantees, FHA loans and first time buyer incentives.....what is the economic impact?

What happens to tax revenues when the gdp shrinks........do you really need links or do you really believe that folks should buy a house as a cash buyer....and if you do believe that what happens to the value of real estate when only cash buyers can buy houses......try real hard Mr. Markle.....I know you can connect the dots and answer your own question, but maybe I give you too much credit.

THANK YOU! EXCELLENT ANALOGY!

As you know, the buyer GIVES a mortgage to the bank pledging the property as collateral for the LOAN you receive to BUY the house. The bank gave you the LOAN because they had checked your credit references, income, net worth and determined you could REPAY the loan PLUS a reasonable return on their investment.

IF the bank knew you had no money, with which to repay the loan, they would NOT make you a loan.

IF the bank had no money, it would not matter how good your qualifications were for the loan. A similar thing happened in the 70's and 80's when Florida had a usury law of 10%. Inflation had forced the rate interest above 10% so the banks, quit making loans.

We, the United States have no prospect of paying the loans we have much less any of our unfunded liabilities.

That is what Greece, Italy, Portugal, Spain and others have learned. The can is to big to kick any further down the road. They can't borrow any more to continue repaying the previous loans nor pay their current obligations. See Detroit bankruptcy. They are seriously considering cutting the pensions they promised by 83% which means thousands of their retirees would get 17 cents of every dollar they were promised.

THOSE are the realities.

See also, Japan, the lost decade.

or

FDR’s Treasury Secretary Henry Morgenthau, Jr., in a private meeting at the Treasury Department, May 9, 1939. Morgenthau was lamenting the fact that government deficit spending did not have the intended effect (reducing unemployment).

No, gentlemen, we have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong, as far as I am concerned, somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises…

But why not let’s come to grips? And as I say, all I am interested in is to really see this country prosperous and this form of Government continue, because after eight years if we can’t make a success somebody else is going to claim the right to make it and he’s got the right to make the trial. I say after eight years of this Administration we have just as much unemployment as when we started.