Originally Posted by Villages Kahuna

My son (who works for Ford) visited us over the weekend and commented that the Cash For Clunkers program was working exceedingly well. There is the typical confusion and forms to be completed that accompany any government program, but in the Detroit area at least, many dealers have as many as 100 pre-sold cars, awaiting only Senate approval of the additional $2 billion for the program. I've seen some reports that even the additional $2 billion might not last more than a week, if approved.

While maybe not intended as a stimulus, this program is working quite well in that respect. Not only are people ordering more fuel efficient cars--the more fuel efficient the new car is, the more of the $4,500 maximum government support the buyer gets. So, the effect is that the fleet of cars on the road will get slightly more fuel efficient. At the same time the program--if increased by the $2 billion being considered--will result in roughly 1 million new car orders.

One million new car orders is still less than 10% of industry projected sales for the year. But it sure will put lots of people back to work in a real hurry. This is exactly the kind of stimulus that, if it could have been replicated with the other $785 billion in stimulus funding, would have had an immediate economic effect.

Some will argue that the program is another "transfer of wealth", with the taxpayers helping new car buyers pay for a new car. In normal economic times, this kind of program should have been funded by the car companies themselves. But with that not being a possibility right now, I can't see very much wrong with this program at all.