Cash for clunkers breaks down

I’ve been meaning to write a post about this program for the last month or so. The way I figured it, those who took advantage of the program may be able easily end up with a used 2003 Cadillac Escalade that gets 13 miles to the gallon.

Last night we learned the federal governments “cash for clunkers” program is quickly running out of cash due to its unexpected popularity. They will soon pull the plug.

So how could you end up with a nice Cadillac Escalade which gets 13 miles to the gallon? In short, there is no requirement to keep the new car you purchase with the help of the federal governments Car Allowance Rebate System (CARS) program.

Let’s say you pick out and purchase a “clean” car that costs about $17,000 and gets 11 miles per gallon more than your old car. You take advantage of the CARS program, turn in your old car, and get the $4,500 credit applied to the cost of your new car that now only costs you $12,500.

After a few weeks, put the new car on the market and sell it for $15,000, $2,000 lower than the going rate for the car. Take the $15,000 in cash and buy the car you really want!


I’m not taking credit for this idea, since after I thought about it, I found a few other blogs suggesting the same thing. Alan Renyolds at the Cato @ Liberty blog suggested – back in early June – turning a 2009 Dodge Caliber into a sweet 1970s-era Chevy Chevelle SS.

Others blogging include Malkin, Allah at Hot Air,

11 replies
  1. sammy22
    sammy22 says:

    The ways of gaming the system  indeed are many. My favorite, though, is still that of owning a business: it's called our tax system.

  2. gillie28
    gillie28 says:

    This was a billion dollar program, and the government can't seem to get their act together to run it properly.  Bodes well for government-run health care, doesn't it?

  3. donh
    donh says:

    Its called central planning. Command and control economics. Rather than liberty of free markets, we have a Czar commanding a price of $4,500 for very used cars. The Czar set a price far too high. Now we have a shortage. This reactionary government is turning back the clock with this treasonous effort to resurrect the defeated empire of global communism. An internet , vast networks of modern technology ,tools the soviets never had for dominating large populations, they will not achieve any better outcome. However they may create even more suffering. Marxism is a discredited economic philosophy and a proven failure. Woe to those leaders who have failed to learn the lessons of history and arrogantly think they can achieve a better outcome.

  4. Dimsdale
    Dimsdale says:

    And we still have the issue of whether or not (ha!) the IRS will consider this "windfall" to be taxable income.  I, for one, would like to know that up front.

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