How Cash for Clunkers Hurts the Poor

Posted by Lorren on August 8, 2009

Cash for clunkers was introduced several months ago as a way to “help” people get more fuel efficient cars. What it has turned into has only been a handout for people who were probably going to buy a new car anyway, and it is hurting the people that can afford cars the least.

We have two cars in our family. We have a paid-for 1987 Buick Park Avenue, and a 2006 Chevrolet Cobalt that is preferable to driving, but it’s not paid for. I don’t know what gas mileage our 1987 car gets, but I’m sure it’s not great. Our Cobalt recently got 36 mpg when traveling from Washington to Arizona, so I have no complaints there!

You would think that cars like our 1987 car would be exactly the kind of car they’d want to see turned in. It’s old, the gas mileage isn’t great, and sometimes I worry about its reliability. In reality, our car is almost too old to be considered a clunker! You would think that they’d want people to turn in the really old cars, but no, if your car is over 25 years old, they want you to keep on driving and polluting with it.

Secondly, the government only allows new cars to be purchased under the cash for clunkers deal. If you’re driving a “clunker,” you probably can’t afford to purchase a new car. Although since the government’s definition of clunker is a car that’s not really that old to begin with, I guess that there would be middle class Americans that would like to turn in their cars for new ones. But for people that are out there driving true “clunkers,” like myself, $4500 isn’t going to help. Heck, the chances are, I will end up replacing my 1987 Buick someday with a $4500 car, if there are any left by the time I can get enough cash to do so (I originally paid $1400 for this car, and I later put $1600 in repairs into it).

Cash for Clunkers hurts the poor because somewhere down the road, those cars that are being turned in for scrap are going to cause a problem in the market. People like me, that can’t afford new cars, are going to have to drive our real clunkers further into the ground, because there won’t be very many inexpensive cars left out there that we can pay cash for. I would love to trade up in car someday and purchase a higher quality clunker to drive around in, but because of this bill, there will be fewer cars for me to select from when I am in the market for a car. I suppose that some people will go into debt to finance a car that they now have to pay more for, but that’s not always a smart thing to do. Debt is a slave that I try to avoid like the plague, and I hate the amount of debt that I do have. C4C just might force me to drive my gas guzzler a little longer.

But that is going to cost more too, because there will be a shortage of parts for my old clunker. My car got into an accident a couple of years ago, and a friend of mine from church fixed it up for me. He got some of the parts out of a wrecking yard. These cars that are being scrapped are now removing parts from the market that could otherwise be used.

I remember reading in The Grapes of Wrath how they destroyed food by spraying paint or poison on the food. I remember thinking how foolish it was to destroy food when there were so many people starving out there. Now, as far as I know, there are not a great deal of starving people in this country, thanks to food stamps and other programs like that, but there are people that are enslaved in debt. C4C lures middle class people further into debt when they should be trying to save their money. It also makes it more difficult for less well-off Americans to stay out of debt, by making affordable transportation more difficult to find.

I wonder how many of these new cars that people are purchasing from C4C will end up on the repo lot. Perhaps I’ll be purchasing one of them as my next car.