How much should the nation’s parents tax the future income of their children to borrow and pay for “Cash for Clunkers”? (Update 1)

If “Cash for Clunkers” artificially raises the price of relatively inexpensive used cars for the nation’s young and poor, could it unintentionally and indirectly increase “taxation” on many to benefit a few?

 

How many “Cash for Clunker” buyers are financing, and how much are they borrowing from whom with what money from where?

 

What is the net environmental difference between the already functional “Clunkers” cashed in, and the mileage of the replacement cars, minus the energy and resources consumed in producing the new and destroying the old?

 

Are some auto buyers, who may have made a poor consumer choice to qualify for “Cash for Clunkers” being rewarded, as many of the ineligible who made relatively better purchasing decisions are penalized, and then taxed even more by government borrowing to pay for the subsidies?

 

How many relatively small independent auto dealerships (many very recently) does “Cash for Clunkers” exclude, and how much could sales fall relative to the subsidized "eligible" dealers?

 

All the program does is shift demand forward. Those clunkers were going to die at some point. Now sales are up this year which will cut into next year's demand, at the expense of everyone not getting free money.

 

…If the government wants more "success", it can give everyone $4,500 for a car. Short-term demand will soar. But long-term demand for cars would crash for the next few years, taxpayers would be stuck with the bills, and valuable resources would be wasted on cars rather than productive assets.

 

…the more free money handed out, the bigger the ultimate tragedy.

 

Mike "Mish" Shedlock