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Tuesday, September 22, 2009

More Cash for Clunker Doubts

More information on the ills of the government’s “Cash for Clunkers” gimmick.

William Jeanes, the AOL Autos columnist, notes a few things:

• A new survey of those who purchased vehicles under Cash for Clunkers noted that 17 percent of those buyers experienced some or serious doubts about the purchase – that’s more than twice the typical “doubt” rate.

• “Three revealing line items in a separate CNW survey noted that the drain on the family coffers would be offset by reducing the pay-down of credit card debt, deferring home improvement and removing money from non-targeted savings. About one-fifth of buyers surveyed cited each of these categories as the number one source of their car payment bucks.”

• And for good measure, there will be no fuel savings from the shift from clunkers to new, more fuel efficient cars. Why? Jeanes cites research noting that these cars will be driven more often and farther distances. He notes: “The approximately 700,000 total vehicles moved under the program will therefore use an additional 42 million gallons of fuel annually during the first years of ownership.”

• Oh yes, and there’s the following little matter: “Other critics groused that Cars for Clunkers took $2.8 billion from the general roster of 300 million citizens and handed it tax-free to a small group of 700,000 citizens.”

Don’t you just love government?

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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