OPINION: ‘Clunkers’ may be too much of a good thing

The “cash for clunkers” program was a much-needed shot in the arm for the auto industry, according to key supporters, including Transportation Department Secretary Ray LaHood.
LaHood said that the (initial) $1 billion program would help the struggling U.S. auto industry when it was launched two weeks ago.
Turns out, he was partially correct. Six of the top-10 selling cars were foreign brands: the Honda Civic (No. 2), Toyota Corolla (3), Toyota Prius (4), Toyota Camry (6), Hyunda Elantra (8) and Honda Fit (9).
The remaining four were U.S. makes: Ford Focus (1), Ford Escape (5), Dodge Caliber (7 )and Chevy Cobalt (10.)
But a little shot in the arm is better than no shot at all, right?
Certainly benefiting from the program have been auto dealers, scrap yards, mechanics and others in the auto industry – at least temporarily.
Another plus was getting those gas-guzzlers off the road and replacing them with more fuel-efficient vehicles.
According to U.S. News and World Report, the top eight models being junked were SUVs, either a Ford Explorer or Jeep Grand Cherokee. Rounding out the top 10 (or bottom 10, depending on how you look at it) were a 1997 Ford Windstar minivan and a 1999 Dodge Grand Caravan.
But last week, after the program had burned through that first billion in week, LaHood and others were looking for another $2 billion since it appeared American were snapping up the deals faster than anticipated.
The program originally was scheduled to end Nov. 1, or whenever the $1 billion ran out.
Dealerships across the country – and here in Northeast Mississippi – lauded the program in the beginning because it provided a much-needed boost.
But after a week of trying to log in their deals into the system, there was clearly frustration and confusion about just how the program was working – or supposed to be working.
Some experts say that the program is a double-edged sword. They say that the boost in sales will only be temporary, and that the vehicles would have sold anyway.
What will happen two or three months from now when the rush is over? Will the auto industry and Congress look to put more money into the program?
Something else to think about – consumers who buy the cars will put off buying other high-ticket items, like furniture and electronics, further depressing those already hard-hit markets.
The government says it wasn’t prepared for the initial response to “clunkers” and had to adjust. Bugs in the system had to be worked out and more money was thrown into it.
Details were overlooked despite the best intentions.
If there are serious issues with a $1 billion government-sponsored program, is there any wonder some people are worried about a $1 trillion government-sponsored health care plan?
We’ve already had a few too many shots in the arm. We don’t need another shot in the dark.

Contact Dennis Seid at (662) 678-1578 or dennis.seid@djournal.com.

Dennis Seid/NEMS Daily Journal

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