You may have read in the news that the Cash for Clunkers program is being scrapped, after ONE WEEK. Let me explain the basic problem with the program and why it lived such a short life.
Don't panic, I know the President and Congressional leaders could not do the math but I promise to make it simple for you the average non-accounting type.
Congress appropriated $1 Billion for the program
sounds like a lot right?
Each car that qualified and was traded in is worth at least
$3,500 so that's 285,714.28 cars. ($1B/$3,500)
Let's be generous and round that up to 286,000. I saw a 1/2 a car once but I never have never seen 0.28 of a car.
There are 16,000 car dealers signed up for the program.
That works out to about 18 cars per dealership. (286K/16K)
Even with all the bad news about car sales there were about 13.2 million cars sold at approximately 20,000 car dealers last year. That's an average of 660 cars per dealer in a year. If a dealership is open 200 days a year they sell about 3 cars per day. (even if they were open 300 days a year it's more than 2 cars per day)
So at 3 cars per day to sell 18 cars will take the average dealership 6 days.
I know not every car that sells would qualify for the program, but I figure that is offset by the fact the above average dealerships most likely would participate in the program and some of them sell 600 cars in less than 2 months. Plus some of the cars qualified for $4,500 in rebates not $3,500. These are approximations.
Besides, I am trying to keep the math simple just in case someone from the government actually reads my blog.
Too bad the Whitehouse doesn't have any accountants working for them, or they could have pulled out their calculator and told someone that one billion dollars in the program was going to last ohhh about a week!
They do say that Congress is looking for more money for the program. I have an idea sell GM!
And just in case anyone from Washington does read my blog, I just want to go on record as saying how much I respect you fellas over at the IRS.
UPDATE
Bloomberg has reported the House approved an additional $2B for the Cash for Clunkers program. $1B lasted a week, I have brought you this far so today's pop quiz is how long will another $2B last? Oh where is all that bailout money when you need it?
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One would think they would check with this thing that they call the "Congressional Budget Office" on matters such as this. Of course, most of Congress voted FOR this bill without reading it, it makes since that none of them sat down to do the math or check with the CBO.
ReplyDeleteOooh oooh wait, I think I have the answer....... hold on, let me make sure I have enough fingers to count this up...
ReplyDeletePlease tell me you saw my bit on how dealers must destroy perfectly functional engines BEFORE filing the paperwork and then wait for reimbursement?
Why doesn't the federal government just pay a bunch of degenerates to go around blowing up cars? I mean, it would accomplish the same goal, FORCING Americans to plunge further into debt on the government dime, right? And would probably be cheaper.
This entire thing makes me sick :( And sad.
LOL...very good accounting. I followed your math precisely, but then I am an average citizen not a legislature where the only math they understand is what goes into their pocket.
ReplyDeleteOh and by the way, the IRS is watching to see if you are naughty or nice. I think you sucked up perfectly the them in this post!
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