Jessica Mondillo’s Blog


Cash for Clunkers not Good for Everyone

13 August 2009

Cash for clunkers may be helping some people, but overall it seems like it may be hurting another group of people more than it helps.

On my local news, car mechanics were talking about the effect of the program on them.  The mechanics interviewed repeated the same sentiment: the program is hurting their business even more than the poor economy is.  People who had some extra money, but not enough to buy a new car without the program, would have spent the money to repair their cars.  Now these people are buying new cars and the car mechanics are losing the few clients that they may have had during these tough economic times.

Another problem the news didn’t mention comes for people who cannot afford a new car, even with the rebate.  These people may have been able to buy a $2,000.00 used car from a private seller if they needed to before.  Now, at least in my area, many used cars prices from dealers or private parties have raised to a minimum of around $4,500.  People who have been more deeply affected by the recession may not be able to afford these higher prices when they are already just barely getting by.

Currently, cash for clunkers helps the wealthy and upper middle class be able to afford a new car while money is tight.  It does not help lower middle class people who are closer to the poverty line or those who are below the poverty line.

An idea I have heard that has a great deal of merit is that the cars should be repaired to give to poorer people who cannot afford a used or new car.  This has a couple of benefits.  Not only do people in need of a new car, like unemployed people, people living below the poverty, or those on welfare, get a running car, if the government paid for local mechanics to repair the cars, the hurting industry would get some assistance and hopefully stop these smaller businesses from closing and thus more people becoming unemployed.  Instead the current program just destroys the cars.

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