Friday, August 28, 2009

Government Motors sales blitz a success?

The cash for clunkers program is considered a smashing success.In the context of being a taxpayer debt financed bailout,it was as nearly 700,000 cars were sold.It was a true stimulus like a credit card.Instant results with the payback coming later.Weighing the cost vs. the benefits seems impossible.Cars were sold benefiting the entire automaker to consumer chain.Fuel consumption will drop by millions of gallons annually.There are losers also.Gas tax revenues will drop,charities lose out,the mechanics keeping the clunkers on the road,etc.

These are just a few of the industries affected in one way or the other.I figure it's virtually impossible to calculate the cost or benefit of every one to decide if the program was worth it.But the fact is that the program moved thousands of cars.This brings me to another question.Would we have been better served to have spent the tens of billions we have already spent to bailout the automakers on a similar sales incentive program open to everyone instead?

Time magazine reported we have spent $83 billion so far on the auto bailouts.That didn't include the cash for clunkers program and they also claim the total could exceed $100 billion.Could we have put that money into a massive subsidy program designed to build and sell cars?I didn't and still don't support the bailouts at all,but I'm just another one of the constituents that our members of Congress don't listen too so it's a moot point.But just think about it.If $3 billion sold 700,000 cars,my trusty calculator says that $83 billion sells over 19 million cars.

The entire industry sold 13.2 million cars in 2008 including foreign automakers.So we could have exceeded the entire annual global sales by far for the money.How many jobs would that have created?We would have needed the car dealers forced to close just to accommodate the vehicle inventory.The automakers,dealers,suppliers,advertisers and anyone else involved in the business would be setting records,making money and hiring workers.The creditors and investors that got shafted in the bankruptcy would have been saved.

So,take your choice.Was the auto bailout about the Federal Government taking control of the industry or could they have saved it in this manner?More to come...

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