Word: cash
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...closing days of Cash for Clunkers, car dealers were turning buyers away, the government website crashed trying to keep up with the paperwork, and even the purple cars were selling. So, what does it tell us about our national character when the most popular government program in years is an economically dubious, environmentally negligible, politically lazy handout from 99% of the population to the other 1%, all aimed at reviving the economy from its vegetative state...
...cash-for-clunkers program a success? The short answer is yes. The program accomplished what it was set out to do, which was to get consumers back into the showrooms and to jump-start new-vehicle sales...
...other hand, the clunker program was overly complicated, a nightmare to manage for dealers and difficult to understand for consumers. I would give the pure sales impact of the program an A and the administration of the program a D. (Watch TIME's video: "The Secrets to Cash for Clunkers' Success...
More importantly, the program was a lifeline thrown at severely cash-strapped dealers. Sales were up. So were the profits. Consumers tend to drop their guards when there are big incentives, assuming that they will get great deals no matter what. As the clunker sales reached a fevered pitch, I think it's fair to say that the deals got much stingier. Many shoppers could have gotten better deals if they had done their homework before going to the dealership. (Watch a video about an optimistic Dodge dealer...
...will the economic stimulus from the program spread? The economic impact of the program is significant but short-lived. If we assume an average selling price of $25,000 for the program, and total unit sales of 700,000, the cash-for-clunkers program generated at least $17.5 billion of economic activity, not including incremental sales of additional products, such as extended warranties, alarm systems and financing revenue for the dealerships - as well as roughly $875 million in sales-tax revenue for state governments. When we add in the fiscal multiplier effect, the net impact of the program was easily...