Think of it this way: A clunker that travels 12,000 miles a year at 15 mpg uses 800 gallons of gas a year. A vehicle that travels 12,000 miles a year at 25 mpg uses 480 gallons a year. So, the average "Cash for Clunkers" transaction will reduce US gasoline consumption by 320 gallons per year. They claim 700,000 vehicles so that's 224 million gallons saved per year. That equates to a bit over 5 million barrels of oil. 5 million barrels is about 5 hours worth of US consumption. More importantly, 5 million barrels of oil at $70 per barrel costs about $350 million dollars. So, the government paid $3 billion of our tax dollars to save $350 million. We spent $8.57 for every dollar we saved.
I'm pretty sure they'll do a great job with our health care, though!
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You're missing a lot of important facts in this article. First off, only one year is calculated. If you calculate the typical ownership length of a vehicle (8 years) you get 2.8 billion dollars saved. Also, 3 billion wasn't spent on the program. 2.6 Billion was spent overall which would leave a 6 billion dollar savings. Also, the program wasn't meant just to save gas money it was used to spark what was left of the automobile industry in the U.S., which it has done. It created a 7.3 billion dollars extra in revenue for car companies. That's a pretty good return on the 2.6 spent and that's not even calculated all the taxes placed on the cars. Same thing goes with healthcare. People get so caught up on this one year debt. A non-partisan government committee has said, yes, a lot will be spent now, but in the long run it will return a huge profit.
ReplyDeleteCorrection to my last comment. A 2 billion dollar savings.
ReplyDeleteJustin, you, too are missing some very important points. The loss of 700,000 good running clunkers resulted in losses in other areas of the economy. Mechanics lost work, and some their jobs, aftermarket auto parts sales went way down, thereby laying off sales and manufacturing jobs, and the shipping that goes along with it.
ReplyDeleteSubsidizing one single facet of the marketplace may play to some heartstrings, but cuts others exponentially.
The government needs to stop thinking that it knows what is best for us, and step out of the business of taking over business.
700,000 of the millions of cars on the road? Hardly laid off many workers. Also, the credit was just enough to push most people over the edge to buy a new car. They were already planning on doing it and the credit just finished the deal. Make sure to include the amount of jobs saved in Detroit and the amount of dealerships that were able to re-open last year. Clunkers played a large part in that. The car manufacturers even admitted that, though they were hesitant about the credit at first.
ReplyDeleteWhen someone says something stupid to you like they will pay you to do something you would have done anyway, you jump at the opportunity because you would be the stupid one if you walked away.
ReplyDeleteI love the Prius that Washington helped me buy and I don't miss my old GM vehicle at all.