The Recession

How People Can Game the Gov's 'Cash for Clunkers' Giveaway

| by Cato Institute

My son’s station car is an old Ford Explorer AWD which, despite being a V-6, was
rated at about 15 mpg. Approaching 100,000 miles, the SUV’ s resale value is
very low.

The House approved a bill to give him a $3,500 voucher to buy a car that is
supposed to get only 18 mpg, or $4,500 if it gets 20 mpg. Only 18-20 mpg? That’s not moving us much closer to President Obama’s pie-in-the-sky 35.5 mpg
goalpost is it?

Popular Video

SNL is not a fan of the Trump administration, and it shows with every new skit they produce. Do you think they need to tone it down?

Consider how easy it would be to game this giveaway program
by using that $4,500 voucher to buy a big SUV or V-8 muscle car.

First of all, with Chrysler and GM dealerships folding, it should be easy to
buy a mediocre Chevy Cobalt or Dodge Caliber for about $10,000 more than the
voucher.

Popular Video

SNL is not a fan of the Trump administration, and it shows with every new skit they produce. Do you think they need to tone it down?

What you do next is sell that boring econobox, even if you
end up with $1,000 less than you paid — that still leaves you with $3,500 of
free money, courtesy of taxpayers.

As this process unfolds, the flood of resold small cars will make it even
harder for GM, Chrysler and Ford dealers to get a decent price for small cars,
because of added competition from new cars being resold as used.

That’s their problem, not yours.

So, take the $9,000 net from reselling the crummy little car plus the $4,500
from Uncle Sam. Then use that $13,500 to make a big down payment on a
used Cadillac Escalade, Toyota Tundra pickup or Corvette.

File this under “unintended consequences” (my own file is running out of
space).