Weighing in on the Cash for Clunkers…

I promised myself I’d never talk about politics. Political topics are a surefire way to create chaos.

But…

All I have been hearing about for the last week on every news station in San Diego is the Cash for Clunkers program and about angry car dealers who have decided to cut off the program early. Dealers have found themselves swimming in paperwork and unable to get timely reimbursement for the Clunkers (most dealers in this area have been reimbursed for less than 25% according to the reports). The Clunkers program was expected to last until November but quickly ran out of money in the first few days. More money was added to the pot, but it was used faster than expected as well.

And of course…

The local news stations have tied this topic to the heated healthcare reform debate. The ‘failure’ of this program has caused people to worry about governmental competence when it comes to their health.

What do you think?

Posted by Beks on August 24, 2009 at 5:00 AM in General Personal Finance, Life Experiences, Living Frugal, Misc | 30 Comments »
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Dollar Bill responded:
Posted: August 24th, 2009 at 6:16 am
Weird….I”m in Miami and the news has had nothing but praise for the program….the car dealers are staying open until midnight to sell cars, etc.

I do watch NBC though…..if you watch a right-leaning news program then that might be why it’s all negative. Or maybe it’s just a California thing though.
jaye responded:
Posted: August 24th, 2009 at 6:28 am
In the past, my husband and I were both self employed and had to pay nearly $20,000 per year in health care costs for our family of 5. That cost was incredibly onerous, and we are comfortably middle class (well…not that comfortable, but you get the picture). Looking back, I think that pushed us into debt even more than anything else, as we’ve never been lavish.

Needless to say, one of us had to go work for someone else, just so we could get health care.

While I don’t believe that the government is perfect by any means, I feel strongly that it has to step in to improve the health care situation. Healthcare is so expensive in the US that it really can tip the balance (to poverty) for many struggling families and put good, small companies out of business.
Donna responded:
Posted: August 24th, 2009 at 6:44 am
The Cash for Clunkers program is a good idea in theory, but the reality is that our elected officials make everything so damn complicated it’s no wonder dealers are frustrated.

It’s also pretty wasteful. I know the goal is to have cars that consume less gas, but why would you take a functioning car off the road (and destroy it–WTF with that provision?) and replace it with a NEW car which requires resources to make and contributes to pollution? I don’t believe this is meant to be an environmental action at all. It’s more of an economic stimulus, which unfortunately probably put a bunch of people into a car payment who otherwise can’t really afford one. Which is why they probably had an old clunker in the first place, which isn’t a bad thing. I just sold me new car in order to pay cash for an 11 year old car that gets really great gas mileage!

Jaye, I hear you on the health care costs. We have a family of four and our monthly premium is over $1,000 a month. Sorry, but something like health insurance should not cost 1/4 of our take home pay.
Caitlin responded:
Posted: August 24th, 2009 at 7:43 am
Well, I’m not sure what TPTB expected. They increased the Cash for Clunkers program to include cars and trucks that are nearly clunkers themselves, instead of cars that would help both people and the environment, instead of neither. Donna is right; I bet lots of people now have a car payment when they didn’t before, and on top of that they don’t have a car that’s much more efficient.

Canadian Healthcare FTW!
Jill responded:
Posted: August 24th, 2009 at 7:58 am
Lord help us when the disorganization and inefficienies that are government run health care. What about health care reforms that aren’t a part of the health care bill — like limits on malpractice claims. That alone would go a long way toward reducing health care costs. I do not want the government telling me if my grandfather is worthy of medical care or if my micropreemie was born too early to bother trying to save. That’s what the Obama system would set us up for. No thank you.
Jeremiah Redden responded:
Posted: August 24th, 2009 at 8:01 am
I think the cash for clunkers was a horrible idea.

My first car was a clunker, because 1.)that is all I could afford and 2.) who would want at 16 yr who is still learning to drive to have a brand new car!

So what this program did was just trash 750,000 possible cars for young adults who really need that clunker! What a waste!

As a registered nurse, I don’t have the energy to even attempt to go into the whole healthcare debate! Lets just say that if Obama-care does get passes…rationing of healthcare WILL definetly come about! If that is what you want keep on supporting it…if not then make your voice known!

Thanks for tackling these heated issues!
Nicole responded:
Posted: August 24th, 2009 at 8:26 am
Donna’s comment:
“which unfortunately probably put a bunch of people into a car payment who otherwise can’t really afford one. Which is why they probably had an old clunker in the first place”

Brilliant. I’m certain it must be true.

The government needs to be cut back, not increased. They need to stay out of health care. How many trillions in debt can we have before our currency is worthless in the world market?
Catherine responded:
Posted: August 24th, 2009 at 8:39 am
I think any time you put the government in charge of something versus the private sector, the quality goes down and the price tag goes up.

Right now, health insurance is expensive, but everyone can actually get health care. Anyone who wants the government in charge should go stand in line at the DMV, and then imagine standing in that same line while dealing with a painful, urgent medical condition. It might be worse, but it definitely isn’t going to be any better than that.
Lisbeth Tanz responded:
Posted: August 24th, 2009 at 9:15 am
I think the Cash for Clunkers program highlighted the fact that many people have been hanging on to old cars because they couldn’t even think about affording a new one. The rush on the dealers didn’t really surprise me. People are hurting right now and “free” money is free money. (Of course, as others have pointed out, it’s not truly free if the new car owner has a payment he/she didn’t have before.)

In terms of healthcare, I have no problem with an overhaul. Having been a corporate employee with great insurance to now being a self-employed freelancer with lousy, but expensive insurance has highlighted how disproportionately the costs for medical care are allocated. I posit that the average person with employer provided healthcare has no idea what it costs to go to the doctor or get a prescription filled in the uninsured world. I took care of my dad for the last 3 years of his life and had to wend my way through Medicare. That was my wake-up call to take better care of myself and stay healthy – I doubt Medicare will be around when I’m old.

Also – the point made earlier that everyone can actually get healthcare is not true. Not everyone can afford it. I barely can and I have what really amounts to a discount program, not health insurance. I pay for my doctor visits out of pocket and these are applied to my deductible, which is quite high. I’m lucky I’m healthy. But there are plenty of families in the U.S. who rely on Emergency Rooms for their healthcare. We all pay for that.
Lynn responded:
Posted: August 24th, 2009 at 9:18 am
Cash for Clunkers is a joke. Most of the cars being bought are Toyotas and Hondas. So much for helping out American companies. At least Ford is getting some business out of it. Americans just don’t want American cars…way to go government for bailing out companies that make cars that Americans don’t want!

Obama said it best when he compared Fed Ex and UPS to private run health care and the USPS to Gov’t run health care. God help us if the healthcare the democrats are proposing is going to be anything like the USPS. What a joke.
dcs responded:
Posted: August 24th, 2009 at 10:38 am
I don’t know about the auto companies, the economy, or the planet at large, but I do think that getting $4000 for a truck I paid $700 for three years ago (and used all of twice this year), plus a hefty factory rebate, plus a deduction for the sales tax, was a good deal for me personally.

I’m not sure how it being so popular it sells out early. I think the news stories are hyping (or possibly inventing) the dealers’ discontent. Their “early termination” in most reported cases (I know, not all) is simply an unwillingness to start new deals when there may not be time to complete them by the deadline, which makes perfect sense and does not necessarily indicate problem with the program itself. Just because 75% of deals have not been completed does not mean they have been rejected. The program was entirely voluntary, and the dealers were very willing participants.

I think comparing comprehensive healthcare reform to a brief, complicated, temporary program involving multiple federal agencies, thousands of dealers, and given only 30 days by Congress to go from zero to full implementation is overly simplistic and of limited value. Focusing on it diverts attention from real issues that need addressing while adding little if anything useful to the discussion.

But that’s just one layman’s opinion.
Lynn responded:
Posted: August 24th, 2009 at 11:41 am
dcs…healthcare needs to be reformed. There is no doubt about it. But the gov’t wants to do it quickly just like the CARS program and that is the problem. Why does it need to be done so fast? What’s the rush? I would be all about health care reform if they actually thought it out, took their time, and wrote a bill that everyone can read. Oh, and also implemented a plan that the congressmen/women themselves would also be required to be enrolled in! LOL!
Claire in CA, USA responded:
Posted: August 24th, 2009 at 12:06 pm
If you think that universal healthcare will be cheaper than paying high premiums, you’ve got another thing comin.’ This is just one more step in Obama’s plans to make us into a Socialist country. Quality of life will be drastically altered and diminished should we end up paying over 50% in income tax as they do in France. Wake up!

Do you know that there is a provision in the health care reform plan that allows the gov’t to access your IRS records? Why in the world would they need to do that? And? The provision also allows for ANY governmental agency to do the same.

Here’s a great article, explaining how Obama says one thing, but his plan says another.

http://money.cnn.com/2009/07/24/news/economy/health_care_reform_obama.fortune/
Rose responded:
Posted: August 24th, 2009 at 12:18 pm
As a Canadian, it is sad listening to the misperceived talking points aimed at scaring Americans into complacency. The concepts of “death panels”, “rationing” etc are INSANE. Certainly there are horror stories in any system, Canadian or otherwise, but overall, me, my family, friends, colleagues etc have received EXCELLENT and timely care from start to end of life in the Canadian system.

Look at the statistics. Your government is already spending DOUBLE per capita on health care compared to Canada’s and you STILL have to pay extra to receive care for your families. And all that extra money and Canada’s not too far behind you in terms of overall quality according to the WHO. Ask any Canadian or European in a “socialized” medical system, and probably 95% would NOT want the system you have.

I live in one of the more highly taxed provinces and our tax rate after deductions for both federal and provincial income taxes was 22%. If the Canadian gov’t taxed for health care what the American gov’t spends, and included what HMO’s charged to cover health care, the government would be able to pave a highway in gold to every hospital (kidding, but you get my point). That would be essentially the same as paying 59% income tax in a “socialized” system. So why aren’t Canadians paying that if government-run health care is so inefficient?

Because as beaurocratic and expensive as the government-run healthcare system is here, it is not nearly as inefficient as HMO-style care. There is no money spent on marketing, no government lobbying, much less litigation to both health care professionals AND insurance companies. There are no shareholders to be responsible to, only taxpayers who want the gov’t to break even.

I believe there is a happy medium in any situation. The Canadian system is very flawed as well. There are family doctor and equipment shortages and definitely limited access to quality care in rural areas to name a few issues. Canadians are just as unwilling to introduce private health care measures as Americans seem to be with public, despite the improvement in overall care if we would just open our hearts and minds to a different way of doing things.
sf mom responded:
Posted: August 24th, 2009 at 12:33 pm
Cash for clunkers was VERY successful, that’s why they ran out of money!
Yankees Chick responded:
Posted: August 24th, 2009 at 2:44 pm
Wow – I have to comment on this comment:

“Right now, health insurance is expensive, but everyone can actually get health care. ”

This is NOT true at all. A major problem with the current health care system is that people are being denied due to pre-existing conditions, which health care companies can define as… pretty much anything they want!

Last year I was in the market for health care and applied for coverage with literally (not joking) every single available company to me. I was aware that it would be expensive, but was denied by EVERY SINGLE COMPANY because of a pre-existing condition.

The worst part? My pre-existing condition wasn’t even something that would have cost these companies millions of dollars (not that that would make it OK, but you know what I mean) – no, I simply had a diagnosis of “clinical depression” and 2 prescriptions for it, and was thus denied by EVERY SINGLE COMPANY.

So, previous commenter, I regret to inform you that you are sadly incorrect. I was more than willing to pay whatever it took to get health insurance, but was literally not allowed to do so.

How is that “American”?

Please, Obama, do whatever it takes to reform this system.
Didi responded:
Posted: August 24th, 2009 at 2:51 pm
I’m a Canadian also and although our system (as any system really) isn’t perfect, I would not want the American style system. I’m sad to hear of all the negativity directed at a Universal health care system and I would question where the real sources for the negativity comes from. I for one sleep fine at night knowing that I can go to the doctor if I have a problem or hospital without fear or losing my savings and in some cases people are losing their homes!! Seriously people, I’m not sure who put the socialism fear into Americans but look at the system you have.. is it really working? Maybe there is a happy medium between the two systems I don’t know but if I had to choose.. it would be Universal health care hands down.
mv responded:
Posted: August 24th, 2009 at 2:57 pm
Lisbeth Tanz says “People are hurting right now and “free” money is free money.”

Really, is it truly free?

Doesn’t it come from me & you, and at this point, from 2 generations down the road. Is that what people want? To continue to finance the future of this country? $9 trillion deficit projected for the next 10 years? And please, don’t blame the previous administration. I’m no Bush fan, but you can only blame the previous administration for so long. Obama’s policies are directly adding to the trillion’s of dollars worth of deficit we will have to endure for the coming decades. The projection of $1 trillion over the next 10 years for health-care is a joke. It’s going to cost way more than that. Way more than that.

Catherine hit the nail on the head when she said “I think any time you put the government in charge of something versus the private sector, the quality goes down and the price tag goes up.” Gov’t is the single biggest money waster and provider of shoddy products.

Jeremiah Redden was also correct in saying: “I think the cash for clunkers was a horrible idea. My first car was a clunker, because 1.)that is all I could afford and 2.) who would want at 16 yr who is still learning to drive to have a brand new car!” Exactly! I want to get a motorcycle, never had one, but I can’t tell you my first one won’t be a bran new shiny machine. No way, I will troll my trusty craigslist for a nice used one.

Many people out there can’t afford a new car. This program does nothing but take away affordable cars from certain people, and put other people in debt. I’ve read stories about people who wouldn’t think of buying a car without this program because they couldn’t afford it. Tell me, if a car costs $25k and you get $4500 back – if you couldn’t afford $25k, then I’m sure you can’t afford $21.5k either. When you get done paying the P&I on that note, it’s going to be nearly as much as it was with out the rebates. Simple economics folks. Simple economics. Welcome to the next wave of debt. Ina few months or so, the latest up-and-coming business will be the Repo-man/woman coming to get your car.

Have any of you ever wondered where all the steal is going, from these ‘clunkers’ that have to be destroyed? Go look it up – it sure as heck isn’t staying here in the U.S.

Have you heard what the next ‘Cash for’ program is? I’m sure most you haven’t. It’s been kept undercover by either this administration or the pathetic mainstream media.
- Ladies and gentlemen, I introduce to you ‘cash for your old appliances’. Yes sirree, we want to take away more of your working-in-perfect-condition stuff, under the guise of
‘free money’ which really isn’t free (we take it from the hard-working tax payer to spread it around). So come on in to your local home appliance store. Buy stuff you can’t afford and we’ll take that old working appliance off your hands. We’ll destroy it and send the recycled material to the same location we’re sending the steel from the cash-for-clunkers program. But we won’t tell you were that is because then some of you may not participate.
mv responded:
Posted: August 24th, 2009 at 2:58 pm
sf mom – cash for clunkers has only paid out 2% of claims and is rejecting 4 of 5 claims – that is why many dealers dropped from the program early. In cash-heavy business, you can’t afford to wait to receive your rebate from the government.

I wonder what will happen to the claims that are denied? Will the dealer be SOL? Will they try to go after the consumer? Why isn’t the msm reporting on this?
Krystin responded:
Posted: August 24th, 2009 at 3:06 pm
I’m a Canadian living in the US and I can’t believe the medical system down here. I hate the fact that I have to decide whether I have enough to pay for my copay if I’m sick, or suffer, where in Canada I would have just gone to the dr.

I just got rid of all of my medical bills ($600) and then I broke my toe…so now I’m paying another $600 off. Money I could be putting into savings to buy a house.

My mom is on the list to have a lung transplant…something that she would NEVER be able to afford if she lived down here. I am GRATEFUL for socialized medicine, and I too am sick and tired of hearing all of the negative lies about the gov’t choosing who you see, or how long you live, or if you’re ‘worthy’ enough to live.
If you think that’s how socialized medicine is, then you need to head right back to the 1950s and pal up with McCarthy, because that’s how ridiculous it is.

My husband, who is not a fan of the current administration, would be the first to tell you that he didn’t believe in socialized medicine…until he married me, and can see how it TRULY is. He’s all for healthcare reform, he’s just worried how it’s going to be paid for. Which is a legitamate concern. Not like the smear campaigns against current countries who have socialized medicine.

I wasn’t going to post anything, but there’s only so much you can listen to, before you burst.
mv responded:
Posted: August 24th, 2009 at 3:09 pm
Yankee Chick, you say “So, previous commenter, I regret to inform you that you are sadly incorrect. I was more than willing to pay whatever it took to get health insurance, but was literally not allowed to do so.”

That is not true. Under HIPAA (Health Insurance Portability and Privacy) law. Many people know this as the privacy law, but it also covers Portability – which means an insurance company cannot deny you insurance for a pre-existing condition. The loop hole here is that the premium is nearly double what it would be otherwise.

The thing with Health Insurance companies is that they are, for the most part, for-profit, publicly traded companies, and by securities law, must show a profit. If they enact business policies that purposely prevents them from posting a profit, then they enter securities violations, and all the ramifications that come with it.

Health-care reform MUST happen. The thing is people just don’t want it to be what this administration and Congress are forcing down our throats. This is the problem that no one seems to understand.
David @ DINKS Finance responded:
Posted: August 24th, 2009 at 4:39 pm
Well, I have a different viewpoint – WHY are we even running cash for clunkers? How does it make our nation wealthier? It actually makes us much worse off because it has created artificial demand as well as destroying resources (clunkers are scrapped).

mv said this:
“Health-care reform MUST happen. The thing is people just don’t want it to be what this administration and Congress are forcing down our throats. This is the problem that no one seems to understand.”

I would agree. Personally, I think health care is more of a service/good. It is not a right, because if it was a right it means we have claims on other people’s property (time, money, etc.) but we really don’t. This is beside the point, though, to the fact that the proposed health care reform is unaffordable to government. Whoever thinks that we can afford universal health care right is living in an economic fantasy land.
Meg responded:
Posted: August 24th, 2009 at 5:58 pm
I have a few issues with the cash for clunkers problem but my main concern is why we have to “recycle” these vehicles by basically trashing them.

There are many charities which make thousands of dollars every year from the sales of donated cars. They use this money to pay their workers, upgrade services, and provide community outreach. Why weren’t these cars given to these charities? Now some figures are showing that certain charities may have to reduce their services from 30 to 50% b/c the loss of these donations during a time when more people need their help.

I think the program was thrown together without much thought given to the outcome.

I don’t know my opinion on universal health care yet (still reading) but I hope our government officials would put more thought in to it than they did the cash for clunkers program.

Meg

onourwayonline.com
Nicole responded:
Posted: August 24th, 2009 at 7:18 pm
My, my, talk politics and everybody has an opinion:)
I too have heard from several dealers here in CA, that they have only received 25% of the money they were supposed to get from the government. That said, car dealers should learn from this. Reduce the price of their cars, give fair money for trade-ins, and you’ll sell lots of cars. No government needed IMHO:)
Tonya responded:
Posted: August 24th, 2009 at 10:46 pm
There is no way we can know if cast for clunkers was a success or not until a few months down the road. The program was meant to serve as a jump start to the auto sales industry and we won’t know if that happened until some time has passed and we see how sales go.
NOTHING from the government is free….it is paid for by the taxpayers of this country and as things are going now future taxpayers.
I’ve had a family member who worked for the federal government, one who bid on government contracts, and I myself was employed at a private practice that contracted with state government offices. What I learned from my own and my family members experience is that the bureaucracy becomes overwhelming and any job that involves a goverment agency costs more, has more waste, takes longer, and becomes bogged down in paperwork/red tape.
I believe that instead of having taxes conveniently taken out of our paychecks every citizen should have to actually write out a check to the government to cover our taxes. That way we would be more aware of what we are paying to run this country, instead of being so used to the money being taken out that we don’t even notice it, and we might demand a little more accountablility.
I do believe something needs to change regarding health care…..I DO NOT think handing it over to the government is the answer.
Dollar Bill responded:
Posted: August 25th, 2009 at 5:59 am
Wow…..so people think that gross polluting clunkers are a resource?? This program took some really unsafe, polluting vehicles off the road (I hope it took a bunch of those monstrous Hummers off the road too). I am so glad that the vehicles have to be scrapped!!! We (America) are decades behind Europe and Japan in terms of fuel efficiency standards. Even Obama’s new rules for fuel efficiency aren’t doing enough (manufacturers only have to have their ‘average fleet’ be a certain MPG. So they can still sell their monstrous Suburbans, etc.).

As for health care. I am also a Canadian and have been living in the US for the last 10 years. I just finally got “good” insurance….and lo and behold last night I spent 30 minutes on the phone disputing charges from a recent lab visit. The insurance company told me this “It is your responsibility to tell th e provider what category to bill the services.” Fortunately, I have a PhD and am pretty educated and can actually do this….but what about those who aren’t? Or the elderly, who may be suffering from dementia, etc. It’s sickening. I am just so shocked that there are people who don’t want a better system….but then again, I’m betting they are the ones with really good insurance, are in the top 5% of the income in the US, or have never had an ill family member.
I’m not saying government run health care is the right answer here in the USA, but we do need some type of reform.

But then again, I’m a bleeding heart liberal….I’d vote for Brad Pitt and his platform of gay marriage, legalize marijuana, tax marijuana platform
Stephanie responded:
Posted: August 25th, 2009 at 6:40 am
I’m sure a lot of people think Canadian socialized medicine is just great, and most of the time, I’m sure that people get the treatment they need. However, several weeks ago, friends of ours who are canadian citizens (currently living in the U.S.) were visiting their family in canada. Their son was running around and fell, and in the process bit part of his tongue off. His parents rushed him to the emergency room to have it sewn back together, but when they got there they were told that they wouldn’t be able to help them as they didn’t have any remaining funding for that type of procedure. They were refused treatment because the hospital was basically out of money and wouldn’t even accept their Blue Cross insurance (from the U.S.). So they drove their son and his tongue that was hanging off all the way to Montana. I’m sure that was fun.
philaby responded:
Posted: August 25th, 2009 at 11:38 am
I don’t think we’ve seen the full ramifications of the CFC program. Is the program moving auto sales from late this year and next year into right now? Will the auto industry sales numbers take a dive in a few months?

I do think that this program is a going to cost the lower middle class and poor. Many of those who know that they can’t afford a new car (even with the program) are still driving their “clunkers”. Good luck trying to get replacement engine parts (or an inexpensive replacement engine) when something goes wrong. I also think that we will see the price of used cars going up as inventories are affected. That’s basic supply and demand.

All in all, not too keen on this government program…
Susan responded:
Posted: August 25th, 2009 at 6:12 pm
We need healthcare reform. It’s the primary reason I voted for Obama. The legislation isn’t perfect, but it’s a step in the right direction. It’s not right that health insurance — and therefore affordable access to care — is denied to so many Americans. I’m one of the lucky ones who can afford an individual policy, but even with that, the premiums are expensive and I have to pay for practically everything because of the very high deductible. I’m not complaining though. I know plenty of people who aren’t insured because they’ve been denied coverage due to a pre-existing condition or because they can’t afford the premiums. If healthcare reform fails because of the lies of the radical right (death panels, etc), the future looks bleak.
Beks responded:
Posted: August 25th, 2009 at 8:04 pm
Obviously this is a split issue. I’m not going to try to change anyone’s mind – I think we all are pretty set on what we believe. It’s good to hear opposing opinions. Thanks!!!