Consumers who traded in their clunkers through the program also benefitted financially, generally speaking. Based on preliminary data, Edmunds.com estimates that the average cash value of the traded-in clunkers was $1,475. The owners of those vehicles earned rebates for either $3,500 or $4,500, depending on the replacements vehicles they chose. Edmunds.com Senior Analyst David Tompkins, PhD, points out that many will also save money on gas each month, thanks to their more efficient new purchases.
So the government is paying consumers $4500 for assets with a market value of $1,475. Well of course it's a popular program with its participants -- Obama is buying up dollar bills for $3.
Left undetermined is whether consumers have been enticed into more expensive cars they cannot afford by this $3000 windfall. It seems like just yesterday when the Obama administration was slamming credit card companies for enticing people into debt with low teaser rates or slamming mortgage companies for enticing people into mortgages they could not afford.
By the way, someone needs to explain the economics behind the theory that lining auto dealers pockets with taxpayer money is stimulative to the economy:
"Our analysts have determined that dealers are enjoying a 20 percent increase in gross profit per sale involving a clunker trade-in since the program launched."