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Thread: Cash for Clunkers cost taxpayers $24K per car

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    Cash for Clunkers cost taxpayers $24K per car

    Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports Edmunds.com

    Cash for Clunkers Results Finally In: Taxpayers Paid $24,000 per Vehicle Sold, Reports Edmunds.com

    SANTA MONICA, Calif. — October 28, 2009 — Edmunds.com, the premier resource for online automotive information, has determined that Cash for Clunkers cost taxpayers $24,000 per vehicle sold.

    Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as CARS, but Edmunds.com analysts calculated that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway, regardless of the existence of the program.

    Ironically, the average transaction price for a new vehicle in August 2009 was only $26,915 minus an average cash rebate of $1,667.

    "This analysis is valuable for two reasons," explained Edmunds.com CEO Jeremy Anwyl. "First, it can form the basis for a complete assessment of the program's impact and costs. Second—and more important—it can help us to understand the true state of auto sales and the economy. For example, October sales are up, but without Cash for Clunkers, sales would have been even better. This suggests that the industry's recovery is gaining momentum."
    "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

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    I would think the 3/4 of people who would of bought anyway and received a discount would be<an assumption> people not just getting by so wouldn't much of that of gone to consumer spending? That extra cash didnt vanish it was a direct tax cut to a portion of the middle class

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    Quote Originally Posted by Roosveltrepub View Post
    I would think the 3/4 of people who would of bought anyway and received a discount would be<an assumption> people not just getting by so wouldn't much of that of gone to consumer spending? That extra cash didnt vanish it was a direct tax cut to a portion of the middle class
    It wasn't an assumption, but based on forecasting and looking at temporal offshifts in consumption. I'd agree that many of those who purchased were middle class, but I'm sure that there were upper and lower class in decent volume there as well - people tend to save up towards an expected purchase and can therefore shift consumption by a few months if necessary (whether it's moving ahead or delaying the purchase).
    "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

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    Quote Originally Posted by Shek View Post
    It wasn't an assumption, but based on forecasting and looking at temporal offshifts in consumption. I'd agree that many of those who purchased were middle class, but I'm sure that there were upper and lower class in decent volume there as well - people tend to save up towards an expected purchase and can therefore shift consumption by a few months if necessary (whether it's moving ahead or delaying the purchase).
    I meant my assumption. I understood yours was based on some inputs.

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    I'm still a tad bit confused. The article wasn't clear about where this $24,000 in costs came from.

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    Quote Originally Posted by Ironduke View Post
    I'm still a tad bit confused. The article wasn't clear about where this $24,000 in costs came from.
    The intent of the program was to create new purchasers of cars. However, most people who bought cars under the program were going to purchase anyway in 2009 and simply shifted the timing of their purchase to take advantage of the government handout. In other words, these purchases didn't stimulate the economy directly since they were going to purchase anyway.

    I'd agree with Rooseveltrepub that there would be some indirect effects since these people would now have extra money in their pockets, but it'd be tough to pin down whether this effect was strong or weak, and given the savings rate over the past year or so, it's indirect impact would arguably be on the weaker side.
    "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

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    Former Staff Senior Contributor Ironduke's Avatar
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    What I'm taking away from the article is that there was a burden on the average taxpayer of $24,000 per car sold. So, if there were 300,000 cars sold, I take it, from what the article is arguing, the total burden on taxpayers was $16.6 billion. The language in the article doesn't seem clear enough. I'm confused about where that number comes from.

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    Quote Originally Posted by Ironduke View Post
    What I'm taking away from the article is that there was a burden on the average taxpayer of $24,000 per car sold. So, if there were 300,000 cars sold, I take it, from what the article is arguing, the total burden on taxpayers was $16.6 billion. The language in the article doesn't seem clear enough. I'm confused about where that number comes from.
    The program did not cost more than advertised. What it didn't do was stimulate demand more than 125,000 cars for the amount we paid. We spent 3 billion and generated 125,000 additional sales. The other 575,000 sales would ahve been made anyway. Each of those 125,000 additional cars sold thus cost us $24,000

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    Quote Originally Posted by zraver View Post
    The program did not cost more than advertised. What it didn't do was stimulate demand more than 125,000 cars for the amount we paid. We spent 3 billion and generated 125,000 additional sales. The other 575,000 sales would ahve been made anyway. Each of those 125,000 additional cars sold thus cost us $24,000
    Exactamundo.
    "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

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    Quote Originally Posted by Shek View Post
    Exactamundo.
    As far as stimulus efforts go, I think it was worth doing. 125,000 cars is an increase. It also infused cash into the credit markets both government and private money that had been been in the proverbial mattress.

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    Quote Originally Posted by zraver View Post
    As far as stimulus efforts go, I think it was worth doing. 125,000 cars is an increase. It also infused cash into the credit markets both government and private money that had been been in the proverbial mattress.
    There were much more effective ways to create a stimulus than the Cash for Clunkers program. However, in comparison to the glacial federal spending from the actual stimulus package, Cash for Clunkers looks like a knight in shining armor.
    "So little pains do the vulgar take in the investigation of truth, accepting readily the first story that comes to hand." Thucydides 1.20.3

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    Still benefited the automakers. FORD posts a PROFIT! Bwahaha. I guess the people appreciate the free-market (i.e. non-state owned auto manufacturers)

    Or should I say non-STIMULATED automakers? What is PC these days?

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