Well said, clear and concise. The Obama administration has tried to get their hands on every industry in America, from cars (GM, Chrysler) to insurance companies (AIG) and now, used cars. Cash for Clunkers is completely inline with other liberal prioritie, control of the American economy.
>> Jonah Tuesday, September 8, 2009 4:21 PM

The worst part? They're just subsidizing their buddies in the car industry. They're teaching Americans a valuable lesson: don't invest in R+D, invest in a lobbyist.
>> Jackson Tuesday, September 8, 2009 5:01 PM

I'm curious, mostly worried, to see what economic effect this will have on automobile markets in the future. I have a feeling it will screw up supply and demand (think used car markets), and that the ripple effect it creates will add to the harm already done.
>> PJP Tuesday, September 8, 2009 5:28 PM

Government solutions lead to more problems which, of course, requires you know who to come to the rescue with more solutions.
>> Fred Wednesday, September 9, 2009 9:31 AM

This analysis likely overstates any fuel saving. Cars that get 25 MPG are likely to be driven farther in a year than are cars that get 15 MPG.
>> Bill Wednesday, September 9, 2009 3:59 PM

Actually Bill - the average number of miles a car is driven in one year is 12k. So they're right on the money. And what leads you to believe this? Do people who can afford newer, more fuel efficient cars travel farther? Are they more upwardly mobile and can therefore take vacations, etc? I'm not certain this is an assumption you are willing to make son.
>> Not Quite Bill Wednesday, September 9, 2009 4:27 PM

This big-government logic just wears me out. Facts don’t matter. Free market economic principles don’t matter. Productive economic incentives don’t matter. The only thing that seams to matter is perception and the need for change, right now. This is crazy.
>> Craig Covello Wednesday, September 9, 2009 4:45 PM

My supposition is based on the law of demand. The cost per mile driven is less with a 25 MPG automobile than it is with a 15 MPG automobile. All-else-equal, I would expect a low MPG car to be driven fewer miles per year than a high MPG car.
>> Bill Wednesday, September 9, 2009 4:57 PM

Here is a link to some data that support my contention. http://mjperry.blogspot.com/2009/08/fuel-efficiency-doesnt-lower-demand-it.html
>> Bill Wednesday, September 9, 2009 5:09 PM

I think PJP has a point in what will happen in the used car market. I've thought from the beginning of this "cash-for-clunkers" that there will be a huge used car market in it's aftermath. Looking for a new car? Wait until the idiots that jumped at the chance of up to $4,500 (surprise! taxable income!)can't make the payments on their shiney new cars and they're repossessed. Smart buyers will wait until this influx happens whether the cars be foreign or not, and Government Motors will be once again scrambling.
>> Joe Wednesday, September 9, 2009 5:43 PM

Even considering cost savings over the life of the vehicle it makes no sense. The taxpayer spent $3 billion and ($3.8 billion with interest) to save $375 million /year. Assuming a seven year average life, the saving in gasoline would be $2.6 billion compared to a cost of $3.8 billion. This is why politicians don’t run businesses and that the government is going deeper into debt.
>> art Wednesday, September 9, 2009 6:04 PM

One of the original rationales for the bill is lost in this argument, to produce less CO2 by having more efficient cars on the road. The need for this is still up for argument as far as I can tell. But even granting their point, 700,000 cars would have a minimal impact, making this a stupid use of funds. It would be like spitting on a house fire.
>> don Thursday, September 10, 2009 3:58 AM

224 million gallons of gasoline yr at approx $2.75/gal is $600 million, not $375. Cars run on gasoline, not crude oil. Saving $600 million per year means a payoff of the investment in 5 years a 20% return on an investment of $3 billion thereafter. Even adjusted for current inflation, that's not such a bad deal. Sure beats current savings money market fund rates.
>> Ric Thursday, September 10, 2009 12:41 PM

Ric makes a good point with the math. I assumed they did the math correctly. I checked the Energy departments conversion table. In a barrel of oil you get 20 gallons of gasoline. If you save 224 million gallons per year that equals 11.2 bbls of oil not the 5 million assumed above. At $75/bbl that's $840 billion. Stick with the philosophical argument that taxpayers shouldn't subsidize other individuals or have their wealth redistributed. That is theft.
>> art Thursday, September 10, 2009 1:08 PM

This math only makes sense if you look at the program for one year. But seriously, does anyone only drive their car for one year? The average age of a trade-in through the program was 14 years. So let's carry this math forward for 14 years, and the savings are over $5 billion. Looks like it did save us money after all!
>> Ivan Thursday, September 10, 2009 4:05 PM

When you write, "Looks like it did save us money after all!", who is "us"?
>> Bronc Thursday, September 10, 2009 7:04 PM

Us as a country, spending collectively. I use it in the same vein that the original article is comparing 1-year's $375M savings to $3B spending. Simply carrying that out to 14 years, which was the average age of the traded in cars, changes it to $5.25B in savings compared to $3B in spending.
>> Ivan Thursday, September 10, 2009 7:10 PM

Ivan, carrying it out 14 years? The annual gas saving involves looking at the MPG of a new car vs. the MPG of the trade-in. Are you claiming the trade-ins would have been used for 14 more years so that this MPG difference would have prevailed over the entire life of the new car?
>> Twila Thursday, September 10, 2009 7:31 PM

Twila - No, I'm not saying that. But what I am saying is that the C4C plan created an incentive for the buyer to get a more efficient car, as opposed to one of a similar make/model which is what most people do. So instead of buying another less-efficient vehicle, they are now in a more efficient vehicle.
>> Ivan Thursday, September 10, 2009 7:39 PM

Ivan, so in order to come up with your $5.25 billion figure, you are assuming that everyone who bought a car under the C4C plan would have other wise been driving a less fuel efficient car - old or new - for the next 14 years?
>> Twila Thursday, September 10, 2009 7:45 PM

Twila - It would take only about half of the people increasing mileage who otherwise wouldn't to break even on the $3B. And that's assuming oil stays at $75 for the next 14 years and doesn't rise. The whole "analysis" ATR presents above is short-sighted garbage.
>> Ivan Thursday, September 10, 2009 10:52 PM

"short-sided garbage" seems a little strong. You are correct that looking beyond the first year is important. Also, the earlier observation brought out by Bill should be considered.
>> Twila Friday, September 11, 2009 12:31 AM

I would like to add a small counterpoint to Bill's argument (which I agree should not be overlooked). In that study, did higher fuel efficiency really lead to more driving, or did people who had to do more driving tend to buy more efficient vehicles? For example, let's say you are looking at a 50 mile round trip to/from work each day. Are you more likely to purchase a car that gets 18 or 28 miles per gallon? The study doesn't address that at all.
>> Ivan Friday, September 11, 2009 12:40 AM

Regardless of the direction of causation, if more fuel efficient vehicles are, on average, driven more miles per year than are less efficient vehicles, a fuel-saving calculation of the C4C program that doesn't account for this will over-state fuel saving.
>> Twila Friday, September 11, 2009 11:26 AM

I'm not a math wizard by any means, so all of you are correct in your calculations. I only want to point out that, to me, if you have a more efficient vehicle, and your apt to drive more miles, doesn't that defeat the stated purpose of the C4C program? "REDUCE CO2 EMMISSIONS." The more miles driven = more emmissions.
>> ljb Friday, September 11, 2009 12:36 PM

The thing about those calculations is that they don't factor in the long term. Sure it spent 3 billion in one year and only gets 375 million in that given year, but it's gonna be another 375 million the next year with no additional cost. The 3 billion is just the start up cost while the savings are over a more long term. It's not like everyone's going to be switching vehicles every year. Given those numbers and a life span of even just five years on the more fuel efficient vehicle that brings the total savings to what...1.875 billion...and that's a low life expectancy for a vehicle, meaning the vehicles will probably last longer than that and continue to save more money.
>> Joe Friday, September 11, 2009 3:21 PM

When you write, "Looks like it did save us money after all!", who is "us"? >> Bronc Thursday, September 10, 2009 7:04 PM Us as a country, spending collectively. >> Ivan Thursday, September 10, 2009 7:10 PM It cost me money through my taxes to pay for someone else to purchase a car that will save them even more money in their use. That is legal highway robbery.
>> Houston Rao Friday, September 11, 2009 5:43 PM

@ Houston Rao - Goodness me oh my! You are right. And my social security payments are going to someone else (I'm only 26). And someone else's grandfather paid into my public school education! And my taxes go to roads that other people drive! And my tax dollars went to fight a war that I don't believe in! And tax dollars go to certify that food is safe to eat even if I don't eat tomatoes! And tax dollars go to certify that Viagra doesn't kill people as a side effect, even though my penis still functions! Wow. I hope you don't feel lonely now that you know you aren't alone in not benefiting from every single tax-payer initiative.
>> Ivan Friday, September 11, 2009 9:22 PM

That's an interesting perspective --- we are already inundated with programs where people are coerced, through taxes, to support programs they don't agree with and they don't benefit from. Why worry about one more like the C4C income transfer program?
>> Beth Friday, September 11, 2009 11:31 PM

Check this out for some math on the CO2 argument http://blog.bcarc.com/2009/08/05/some-math-on-the-cash-for-clunkers-program/comment-page-1/
>> Jody Saturday, September 12, 2009 10:25 AM

Flawed math, cars run on gasoline not crude oil like another reader pointed out. Look at http://www.snopes.com/politics/gasoline/clunkers.asp and it doesn't look bad at all.
>> Alexis Tuesday, September 15, 2009 10:15 PM

How many people who participated in the program were already going to buy a car? Looking at these numbers over 5 or 10 years assumes that these clunkers were going to be on the road that long. I bought a more efficiant car 2 years ago when gas prices began to rise. Should I get my neighbors to pay me for saving the country money?
>> Tim Thursday, September 17, 2009 4:11 PM

I'd like to see some math on the actual fuel cost of producing the new cars in the first place. As a country we destroyed a whole lot of cars that had some years of life left in them. In order to replace these, we spent a tremendous amount of energy (a.k.a oil. coal, etc) to manufacture the steel, rubber, and all the other materials that make up a car. I don't remember where I saw it, but I read once an article that talked about the true fuel cost of a car over its lifetime and a significant part of that cost was manufacturing, not just what it burns while being driven for 10 - 20 years.
>> RobM Monday, September 21, 2009 6:11 PM

It's so funny. Math is so wrong. You can not make 1 barrel gas out of 1 barrel of crude oil. It's from 5% to 30% in best case. With current gas cost you already got ~$600mln in savings per year. It's only for 12K mileage. With 35K per year its $1.8 billion savings for $3B spending! How long you run your car? One year or more? What about to spent $3B to save $5.4B in 3 years? These guys never learn math. That's why we are here in deep crisis after 8 years of ignorance.
>> Bob Tuesday, September 29, 2009 6:30 PM

http://www.snopes.com/politics/gasoline/clunkers.asp do a little research folks...
>> cr33p3r Wednesday, September 30, 2009 9:05 AM

SNOPES is wrong in how they equate the numbers. SNOPES is adding the entire cost of the barrel of crude to the savings. The actual math in their example should work out like this: Using SNOPES numbers of 191.5/19.5 but now calculate the value of that ratio to the barrel percentage that is gasoline (19.5/42)*$75=$34.82 Multiply by 9.8 million and you are back to $341.25 Million which I might add is even less than the above “savings” of $350 million.
>> A little more math Wednesday, September 30, 2009 7:31 PM

Poor people can’t afford a new vehicle, even when you give them $4500 for their old one, and if they get creative financing to obtain the vehicle they get put into a credit crunch, Obama has practice bailing those people out. The average clunker has lots of life left in it in parts which small businesses sell to poor people, those parts will no longer be there; demand will drive the price of the available used parts up and poor people suffer again. Who cares we are saving the planet? Not really, the carbon footprint of producing a new vehicle is greater than keeping that clunker on the road, even with the gas savings.
>> and a bit more reality... Wednesday, September 30, 2009 7:37 PM

It's pathetic that people can get slapped in the face by fact, only to try and find some limp way to wriggle out of it for partisan reasons. At the end of the day, you need 2 barrels of oil to make 40 gallons of gasoline (approx). Even the dumbest of Republicans should be able to understand this.
>> Sorry, snopes is dead accurate Friday, November 27, 2009 10:11 PM