The Dark Side of 'Cash For Clunkers'

Sure, the "cash for clunkers" program, under which people turn in their gas-guzzlers for a credit towards new car is good for the environment, but what about the consequences for certain sectors of the economy? MSNBC reports that used car dealers, auto-parts businesses, and charities are all suffering because of the program. "Cash for clunkers" is estimated to take 5 percent of used cars--roughly 750,000--off the market. This means higher prices at auctions, fewer cars at the used lot, and higher prices for customers. Low-income shoppers in the market for a cheap used car are now less likely to find one for around $4,000. "All of a sudden, they're out of the marketplace," one used car salesman said. Used auto-parts shops are also getting fewer parts because all cars turned in through the program must be demolished. One administrator for the Salvation Army (which accepts donated cars) summed up the frustration with the program: "I realize the car manufacturers need the help. God bless them. But don't forget about the Salvation Army. We need your help, too."