The Cash for Clunkers program turned out to be a complete waste of taxpayer money as it failed to create demand and simply moved it forward, creating a void in auto sales down the road when people would have normally purchased their vehicle as planned. It also destroyed thousands of perfectly good cars, reducing the used car inventory available to the public for purchase.
As anyone who has taken a basic economic course will tell you, when you reduce the supply of something, its price goes up. And wouldn't you know it, the prices of used cars have skyrocketed since the passing of the C for C program. Edmunds has the dirt:
Car buyers on average paid $1,800 more for a used vehicle in July than they paid a year ago at this time, according to Edmunds.com data. That's a 10.3 percent increase, bringing the average cost of a 3-year-old vehicle to $19,248. The price of a Cadillac Escalade spiked nearly 36 percent. "A lack of confidence in the economy is driving more people to used cars, putting upward pricing pressure on a limited supply of vehicles," said Joe Spina, a senior analyst for Edmunds.
There's a tricky aspect to this analysis, because last summer was marked by a used-car buying frenzy spawned by the Cash for Clunkers program. Spina said the effects of that program are hard to isolate precisely. "So many economic factors affect automobile sales and prices. It's believed that the program delayed purchases prior to the program and also pulled sales forward while in place," he said. "The program also eliminated inventory of older vehicles that were traded and then scrapped."
So the economic brainiacs at the White House created a program that cost taxpayers $3 billion - or $24,000 per car sold - and in doing so, raised the prices of used vehicles close to $2000 on average for the middle class. Absolute brilliance.
This is classic liberal policy though: Come up with an idea that looks like it’s helping the people, even though it’s hurting them, and keep them trapped in the lower to middle class so that they continue to vote for the Democrats who are “helping” them. Just look how well it's worked in Detroit.
Wake up people.