Wednesday, August 05, 2009

Truth Squad: ‘Cash for Clunkers’

The Republicans don’t tell the truth about many things these days, and the “Cash for Clunkers” program is no exception. Republicans claim the program is a “failure”. They say that the very idea is wrong because it’s “wrong” to “pick winners”. They belittle it as spending that will result in no benefit.

The bit about “picking winners” is interesting: If the programme is open to anyone buying a car from any carmaker, how is it “picking a winner”? Well, it IS picking a winner: America.

Consider the top ten clunkers traded in so far, according to the Department of Transportation: 1. 1998 Ford Explorer, 2. 1997 Ford Explorer, 3. 1996 Ford Explorer, 4. 1999 Ford Explorer, 5. Jeep Grand Cherokee, 6. Jeep Cherokee, 7. 1995 Ford Explorer, 8. 1994 Ford Explorer, 9. 1997 Ford Windstar, 10. 1999 Dodge Caravan. Notice anything about those vehicles? Like, oh, their size, for example? 83% of traded-in vehicles have been trucks.

The top ten purchased vehicles are: 1. Ford Focus, 2. Honda Civic, 3. Toyota Corolla, 4. Toyota Prius, 5. Ford Escape, 6. Toyota Camry, 7. Dodge Caliber, 8. Hyundai Elantra, 9. Honda Fit, 10. Chevy Cobalt. So far, 60% of the vehicles purchased have been cars.

This shift from old, bigger vehicles to newer and smaller ones means that the average fuel economy increase so far is 9.4 mpg—a 61% improvement. The newer vehicles also run more cleanly than the old vehicles.

The Republicans sneer that much of the money is going to Japanese manufacturers, because “only” four out of ten of the cars sold are from the “Big Three” American car manufacturers. The problem for Republicans is that according to the Transportation Department, so far more than half of the new vehicles not built by the “Big Three” were, in fact, manufactured in the United States.

Here’s another little fact that Republicans may not realise: Cars made overseas don’t materialise on the dealers’ showroom floors. There are a lot of Americans involved in that business, too.

So, what do we have? Old, dirty, less-efficient, often heavier vehicles replaced by newer, cleaner more fuel efficient and often smaller vehicles. The savings on fuel will be returning benefits to the owners, and America, for years—and it’ll help reduce America’s dependence on foreign oil. The reduced emissions will help reduce air pollution. The lighter vehicles produce less wear and tear on roads, meaning less cost for road maintenance over time. Which one is a bad thing?

We already know the cash infusion the auto industry has had is something they’re certainly not complaining about. It’ll help secure American jobs in the industry. That’s supposed to be a bad thing, too?

The only thing Republicans hate more than a programme from the Democratic Party is a successful programme from the Democratic Party. So it’s probably not surprising they can’t tell the truth about this programme. The “Party of No” can’t do anything positive.

This is the first in a serious of occasional posts in which I’ll take on the lies, distortions and smears of the right.


epilonious said...

"This is the first in a serious of occasional posts in which I’ll take on the lies, distortions and smears of the right."

Oh honey, you don't need to add that disclaimer... it's redundant.

Moving on...

Cash for clunkers is sort of cool, but there are some things that just drive me nutsy about it.

1. The dealers have been the ones slapping "if you trade in a car from the following list, you get $2000 to $4000 cash on the hood of cars from this list!" and selling the cars before filing the paperwork... which means that as little changes occur to the legislation and how the program works, the already beleaguered dealers get royally screwed. Things like little shifts in the mileage numbers which made certain cars ineligible, have already screwed over several.

2. Like most Democratic programmes... it's a mountain of paperwork which requires lots of people on both ends filling out forms and sitting on the phone to talk about how to fill out said forms and then waiting months for the actual payout... or tax break... or however the hell the money is supposed to magically manifest... and there is a good chance they'll cap the benefits... which means it's a red-tape race.

3. The C4C trade-in cars have to have the engine oil drained and replaced with sodium silicate solution (IE, liquid glass) and then started to make the engines seize. While I understand the sleazy possibility about taking government money and then reselling the dirty clunker to someone for an additional $2000, It just feels wasteful to grenade engines. It means parts for the thousands of trucks that people do need will be more expensive than they need to be.

5. Finally, it's market manipulation, and not the good/simple kind where you just tax the crap out of gas and/or thirsty truck engines. Now the government is having to spend money to get people to get rid of their crappy old cars rather than making money from those who want to hold on to them. Also, it means there will be all sorts of loopholes introduced (like with CAFE standards allowing luxury imports to get away with only bringing in smoggy/thirsty big-engined hugemobiles into the states while the other car companies have to sell teeny, horrible little cars at a loss or suffer fines)

As Lewis Black said. The nice thing about TVA and similar government programmes of the 30's... is that when the government spent huge amounts of money to build this huge thing out in the middle of nowhere... we got to keep the f*&%ing thing!

Moosep and Buddy Rabbit said...

With the improved gas mileage, government may collect less tax (through the gas taxes) to keep the roads up. Only time will tell whether the reduced weight of the vehicles will offset the needed revenue for repairs.

Arthur Schenck said...

epilonious: Redundant? I assume you mean pointing out that Republicans use lies, distortions and smears. My pointing it out is something I do when a series of posts are introduced.

As to your points:

1. While it may be true that some dealers get caught in the lurch, is that not the fault of the dealers for trying to rush to cash-in? The "Big Three" automakers all have legal teams that can advise dealers on the correct way to proceed, and I doubt they'd approve of some of the behaviours you described. This sounds more like a quibble than a criticism.

2. Here's a quibble of my own: Surely you meant to say "Like most Government programmes…"? Anything put together by a committee—and Congress is basically just a very big committee—will contain all sorts of paperwork and red-tape. It's a given, regardless of which party is behind it. The one thing I'd grant you, however, is that when formulating programmes, Democrats seem more concerned with regulation to prevent abuse than Republicans do.

3. I thought the same thing about the engines, actually, especially since they're worth far more intact than as scrap metal. However, this is the simplest and easiest way to prevent the clunkers from being put back on the road, or having dirty, inefficient old engines re-used to keep old cars running a little longer. I agree, it is a waste, but it's one that I can live with because of the huge savings in enforcement costs that there'd surely be otherwise.

4. What happened to number four? Teeheehee

5. I disagree: It's not market manipulation as much as market stimulus because it's not on-going. This programme will end soon (with or without more funds from Congress), while, say, an increase in gasoline taxes would endure, eventually manipulating the market into a new normality. Everything that government does or doesn't do could be considered market manipulation. The important question, it seems to me, is whether on balance the action or inaction produces benefits, and problems aside, the "Cash for Clunkers" programme clearly does.

Having said that, I'd prefer not to see a lot of new big Government programmes, apart from certain ones, maybe. But to me, that's not reason enough to avoid programmes like this one.

moosep: That's an excellent point, and one I hadn't actually thought about. I'd bet that gas taxes (or other taxes) will got up to compensate. That'd eliminate the savings consumers get from more fuel-efficient cars, but they'll still be paying less than they would've with their clunkers—plus the air will be cleaner and the use of foreign oil will still be reduced. So, even if they do raise gasoline taxes to compensate for the loss in revenue, I'd say everyone will still come out ahead in the long run.

[LaLa] Lauren said...

About the top 10- also notice something ELSE about the vehicles? They're all American made.

Hondas, Toyotas and Mazdas (cars, I don't know about SUVs/light trucks) will last you 12+ years if you keep them up. I know this from experience. When I traded in my '94 Accord 2 years ago I got $2000 for it. I didn't know about the Cash for Clunkers program at the time, but I wonder how much it would have given me. And really, it wasn't so much of a clunker as it just needed about $1500 in repairs to give it another 2 years or so lifespan. (Before that car, I had a '91 Corolla that I finally got rid of in 2004. It was still going. Maybe not going strong, but still going!!)

Anyway, that has nothing to do with Republicans really, just thought I'd share. I would never buy an American made car because of their reputation for short lifespan and need of frequent repair. And, I've heard that a lot of the Japanese car parts are actually made in the US, and vice versa for the American made cars. Have you heard this, too?

epilonious said...

[LaLa] Lauren:
To be honest, I think the whole "all [nationality] cars are [adjective] and [do something]" thing is a textbook example of prejudice... it's just one that is rarely thwarted because it's not about people, so it's not immoral, and it's easy to pretend your car failing was an isolated incident and then find some story on the internet of a certain kind of car exploding and latch onto it as 'proof' that all of those cars must be horrible.

Thus, you prefer Honda/Toyota/Mazda, get and love them, look the other way when they throw check engine lights or starts eating wheel bearings... and I imagine never even bother to test drive a Ford/GM/Chrysler because well, you've convinced yourself they're crap. Granted, it's not a bad thing you do this... everyone does, you get one horrible car you want to spurn that manufacturer forever and there are enough makes out there to last a lifetime... but it is a prejuduce.

I see a whole lot of Tauruses/Sables, Luminas/Centurys/Aleros, Breezes/Skys/Cirruses still going after 20 years... and I've seen a lot of Camrys, Accords, and 626s start shitting parts at 54,000 miles and become totally undriveable after 7 years. I've seen those roles reversed too. In both cases it had to do with the owner and how much they pampered their car and kept on top of the "this is starting to wear out, you should replace it before it lets go and starts messing other things up" stuff.

Meanwhile, so many companies are blurred now a days. The Toyota Matrix and the Pontiac Vibe are the same car with different body panels, both assembled in the NUMMI plant in California (well, until Pontiac got the axe when GM went bankrupt). The Mazdas you've expressed affection for are mostly based on international Ford platforms (as are Volvos) since Ford owned a controlling interest in Mazda for a decade or two.

Also, all the bits inside the cars that are not engines and body panels are usually manufactured by suppliers. The window/windsheild/blower moters probably came from Bosche or AC Delco. Meanwhile, specialty transmissions might be coming courtesy of Aisin or Getrag... And a bad batch of tires can make a whole line of SUV's look like death traps (Firestones on Explorers).

Thus, the idea that All Domestics are crap is a silly one, the only reason I've found that Domestics are looked-down upon is that they tend to be cheaper, and therefore they are deemed as lower quality as opposed to just having plastic in the spots where the imports have leather or wood-veneer.

To answer your original question: There's a "too accurate to be funny" quote: "An 'import' car manufacturer is a company that is headquartered outside the USA, which assembles it's cars in the USA. A 'domestic' car manufacturer is a company that is headquartered in the USA, which assembles it's cars in Canada/Mexico..."

Otherwise, the main manufacture of the main car bits (engine, structural members, body panels) still tends to occur in the home countries. If you look at your door panel it will probably say assembled in US with 80%+ parts content being outside the US (I'm assuming you're driving an import ;) )

Arthur: I admitted they were nit picks. And the biggest nit pick and the thing I agree with the Republicans on is "why, again, should _I_ have to pay for people to trade in their old SUV's? I've never owned a vehicle that weighed more than 3000 lbs or made less than an average of 27 MPG.... So I don't get squat for owning friendlier vehicles and yet I get to pay for other peoples mistakes." Granted, I'm basing this nit-pick on the premise that the extra $2B is going to be coming from my income tax and not gas taxes or an increased gas/registration fee for vehicles over a certain weight and under a certain mileage. But the last thing Obama or Congress wants to do is increase taxes on energy or goods in "Tough Economic Times".

Arthur Schenck said...

I have several rules in life, like don't spit into the wind, don't pee on an electric fence and don't argue specifics of cars with epilonious. I'm joking—I actually don't talk specifics about cars with anyone because I'm one of those people who are hopeless about cars. Person speaking to me: "What sort of car does she drive?" Me: "A blue one, I think". You get the idea.

Even so, I agree with you, epilonious—or, more accurately, don't disagree with you on the things I don't know anything about, which is a good deal. But I do think you're especially right about people generalising from their own experience. When I was a VERY young boy, my parents had a Ford station wagon. One of the doors fell off (literally), and my dad swore he'd never buy another Ford. The next car was a Chevrolet station wagon, and every car after that until he died was a Buick.

I was never so loyal. However, we now drove Hondas because we lease and they have by far the best deals in New Zealand. However, when the current lease is up, who knows? I think the key to our success with them is that they get full maintenance from Honda every six months, so thing don't have a chance to start falling apart (which especially applies to my 2001 Civic, which is no longer leased, but owned).

Talking about what's "foreign" and "domestic", I remember some years ago there was another "Buy American" frenzy going on, and people were paying to smash "Japanese" cars. One network showed people smashing a Japanese car that had been assembled in the US, and used it to point out how, at the time, some "Big 3" cars were re-badged Japanese cars mostly made in Japan.

Now, as you say epilonious, many of these "American" cars are made in Canada or Mexico. So the whole "domestic" v. "foreign" thing is muddy and, I say, largely irrelevant.

As to why a person who owns responsible cars should be paying to get irresponsible owners to get rid of their SUVs and the like, I suppose one could argue that it's one of those times where "the needs of the many outweigh the needs of the few, or the one." All Americans will benefit from getting heavy, dirty, gas-guzzling clunkers off the roads, and the share that each individual American will pay to do that is minuscule. The same thing is true about a lot of what governments do.

epilonious said...

As to why a person who owns responsible cars should be paying to get irresponsible owners to get rid of their SUVs and the like, I suppose one could argue that it's one of those times where "the needs of the many outweigh the needs of the few, or the one."

Um, that old star trek quote doesn't work. If 85% of the people of the country had old clunkers that were just awful and they were still upside-down on them, I would understand... but that's simply not the case. It's the few regretful scragglers who were otherwise prepared to run their old guzzler into the ground.

People weren't forced to buy SUV's and large trucks... it was a trend justified by a supposed benefit in safety at the cost of efficiency, then the bottom fell out over a series of gas crisises and people were willing to admit they would rather crack a leg in a nasty accident than have to spend $100 to fill the tank each week and the value of the previously premium vehicles plummeted.

I feel it's akin to the old restaurant conundrum: The 3gluttonous jackasses who got a bottle of wine for themselves, appetizers they didn't really share, expensive entrees, and desserts want to split the bill evenly and thus screw over the rest of the people who got only entrees and drank water.

Meanwile, I take issue with the notion that the amount of carbon savings we get by moving off old hugemobiles is going to make an impact compared to things that this money could be spent on... like lowering emissions from coal/oil-fired power plants... implementing nuclear waste recycling and actual new nuclear power plants... grants for bioalgae or other things that make fuel out of sun and air instead of gunk mined from the ground... Subsidizing better train networks so that less stuff has to be shipped cross country with 50-ton deisel-powered megatrucks (steel wheel on steel rail will *always* be more efficient than 18 pneumatic tires on pavement/concrete).

All Americans will benefit from getting heavy, dirty, gas-guzzling clunkers off the roads, and the share that each individual American will pay to do that is minuscule. The same thing is true about a lot of what governments do."

I still think the benefits are dubious. There are way too many ways to de-off-set the emmisions progress (people will probably drive their shiny new focus more/farther than their old explorer with the rattling doors), people are still indebting themselves to get a new car when they had a working and paid-off one, and like all incentive programs... there is a big dip after the incentive ends which can sometimes be alarming.

Arthur Schenck said...

I'm afraid we're going to have to agree to disagree on all this.

The attitude you're expressing is similar to, "I never drive on that street, why should I pay to fill in potholes caused by the people who do?" Or, "I don't have children, why should I pay to support schools?" The answer to such questions, as it is with getting these clunkers off the road, is that it benefits everyone.

The common retort begins with "yes, but…" and goes on to argue, as you basically do, that the virtuous shouldn't have to pay for others' sins. I acknowledge that's a commonly held feeling, but to me it seems incredibly selfish. By spreading the costs around, the cost to each person is miniscule.

I should mention that in the past I advocated things that could've prevented some of these sins, things like high gas-guzzler taxes, dramatically higher fuel efficiency standards, better emissions standards. Not only did politicians of both parties not take responsible steps to provide incentives for people to be virtuous, they arguably encouraged people to sin.

The crux of the argument is, what particular benefit does any one person receive from getting the clunkers off the road. Nothing, if you're talking about getting one clunker off the road. But the more of those cars that are removed, the cleaner the air will be, the less foreign oil that will be needed, the less road repairs will be needed—and that's just for starters.

I didn't talk about carbon savings, though there will be some. I meant the pollution that kills people or makes them sick. Helping to save the planet is a bonus.

Still, you're dubious about any benefit and seem to suggest that things will be worse—increased debt and more driving. Neither of us can know either way, but clearly I'm more optimistic. And I still maintain that in the long run, this program will return far more to the economy than it costs.

Ultimately, we'll just have to disagree.

epilonious said...

No... my complaint is that people who did something I perceive to be stupid (bought a big, heavy gas guzzler during a time of $0.99/gal gasoline) are now being paid off to take care of their mistake.

Thus, my slant on your example is more like this: "they said they just wanted to fill in the potholes with sand so they could build a community center, and now other districts need to pay to fill the potholes because sand didn't work" or "They said they wanted to home school their children... and now I they are asking for me to help pay for special prep schools because they realized their kids were woefully prepared..."

So feel free to call me names (selfish) all you want... but I'm still gonna balk if you ask me to help pay So-and-so's medical bills when they decided to try their hand at knife juggling.

That, and I predict C4C will be followed by a dearth in car sales... and then the government will start doing unsavory things to try and keep the car companies they now own from going under (they already canceled a lot of liability suits and started trying to find ways to weasel out of CAFE standards... ironically). It just seems like a Really Bad Idea... and I think that democratic fans trying to pretend it's some sort of boon like Rural Electrification or the TVA is reaching.

Arthur Schenck said...

No, no, no—not calling you selfish (I don't think you are), just the attitude which for other people is a cover for selfishness. I could've been clearer, but that's nothing new.

I suppose part of our difference on this is our differing views on people's culpability for their mistakes. When everything in business and government was telling them not to worry, why would they? The message they were getting was, basically, "let the good times roll!"

I think they should have been more aware, and I wouldn't have made the same choices, but we are where we are and it has to be dealt with. It's in our collective interest to do so and, anyway, it's not like the government has been doing this every few years. If they do this again in a few years, I'm more likely to be on your side.

I would hope that THIS time the car makers have gotten a little sense and know that this is a temporary bulge, and that once the program ends, it'll be back to normal car buying habits—and people will still buy cars, of course. I'm sure that after the program ends, sales levels will return to normal sooner rather than later, though probably at a lower level than before the downturn.

I can't speak for all Democrats (unfortunately!), but I don't personally know of any "trying to pretend it's some sort of boon like Rural Electrification or the TVA". Those were long term infrastructure programs, not a short term stimulus aimed at several different goals. I realise you may have meant that it seems as if some feel that way, but if anyone is saying it, then I'm with you—they're completely wrong.

The Cash for Clunkers is a short-term program that will have a short-term economic boost that will have mid-term economic benefits. It may also yield long term economic benefits—or it may not. The environmental benefits are immediate and, if matched by other efforts, like the many proposed by the president, can build into really big benefits—or, they may not.

I just think the potential payoffs outweigh any risk, but this is one small part of the many things that'll be required. It seems tome that this is less like TVA than maybe one dam. After all, there are far bigger issues facing the country than this one.

epilonious said...

Every American car company is already coming out with some sort of cool Electric Vehicle product, as are all the non-American ones selling cars in the US, mostly because the US government has been saying things like "CAFE standards are gonna keep increasing". And I think that's a good thing (well, actually, I think that the government should be saying 'we're going to tax you based on CAFE, and the higher the better' as opposed to threatening mean-ness, but that's another mess).

I guess my lash-back is that lots of Democratic fans of the program seem to be going "Well, Republicans hate it so much because it's a Big Democratic Program and It's Working! Let us mock the Republican's pettiness amd lack of forsight!" (which is sort of how I read your first post).

People who think C4C is a dumb plan span the political spectrum... and the ones who love it seem to be the people who had the good fortune to have an old truck... and Democrats who want to laud it as a big success.

Meanwhile, the measure of success right now is "hey, people are taking free money and getting a new car!" They are just assuming/hoping that the economic and environmental benefits will eventually precipitate... and I remain skeptical... and I feel this very well might come back to bite Democrats in the ass as a big waste of money should those economic/environmental benefits be found to be anything less than stellar.