The cash for clunkers program sounded like a good idea. A lot of old, junky, gas-guzzling, emission spewing jalopies would be traded in, their owners would get a huge payment for them, and then use that payment toward the purchase of a new vehicle with much better mileage and much cleaner exhaust. Some really crummy vehicles would be permanently taken off the roads and replaced by clean, efficient, dependable cars. Dealers would sell a lot of cars and the manufacturers would get some of their financial pressure released. Everybody wins. It did not work out exactly that way.
Dealers got a big boost in car sales, so they benefited. The car makers got a much-needed opportunity to move some inventory. Some people who obtained new cars would not have done so without this program. So it was not without benefits. However, Congress, in its time-honored tradition of screwing up simple things, created a program that did less and cost more than it should have.
Congress stipulated that the vehicle cannot be more than 25 years old. That meant that some of the rattiest junkers on the road did not qualify. Those beat up, rattling, emission-spewing, gas-guzzling, unreliable pieces of rusting iron that people sell to each other for four or five hundred dollars are still on the road. These are not the much loved “classics” that many people admire so much. They are basic transportation, and the only reason anybody drives them is because they cannot afford better. They could have offered them $4000 for that old rattletrap and taken it off the road. Instead of being able to use those funds only toward the purchase of a new car, they should have been allowed to use them however they chose. Dealers and automakers still would have had a big boost in sales, but it would have also stimulated the economy as a whole instead of just a select portion.
Instead, a lot of people traded in perfectly good cars because it gave them a chance to get a new car they could not otherwise afford. Those vehicles are required by law to be scrapped. Our federal legislators are truly brilliant people. They created a program that destroys some good, fairly fuel-efficient cars and leaves the real clunkers on the road. A better program would require the vehicles traded in to be at least ten years old. If we offered $4000 for your running, licensed, insured vehicle, with the money paid directly to the owner and with no strings attached, it would be a powerful stimulus to the whole economy. A lot of people would still use the funds to help purchase a new car. The other people would buy a newer car than the one they had and spend whatever money was left over. That would provide a stimulus to the whole economy rather than just car dealers and manufacturers.