Will "Clunkers" Save The Economy?

Even those who thought it up were surprised by how successful the "Cash for Clunkers" program was. Not me. I knew it would be huge. This wasn't because I thought it would be so easy for people to take advantage of it. In fact, it wasn't. There are rules. For example, the "clunker" has to have at least 80,000 miles on it. Some people probably drove their cars around the block over and over again to try to get the mileage up (I'm still 39,206 miles short). But I'm sure they were in the minority. The reason I was so certain that it would be a success is because it's just so American.

Americans like new things. We're not like people in other countries who boast that they live in a building that's hundreds of years old. Americans brag that they live in the newest house on the block. We look down upon older things. Notice that the program was not named, "Cash for Classics Cars." In music, an "oldie" might have been recorded in the 90's. Ballplayers are traded when they become "old" – like when they're thirty. So I knew that Americans would jump at the chance if a program helped them get something new.

Because of the positive response of the program, it wasn't surprising that the House of Representatives quickly passed a bill to extend it. And politics being politics, it wasn't surprising that the Senate balked at the extension despite the country's enthusiasm for it.

Of course, not everyone in the House was for it. Texas' Jeb Hensarling mocked it, saying, "Maybe we should have a ‘Cash for Cluckers’ program and pay people to eat chicken." Since I like chicken, I wouldn't necessarily be against that idea. On the other hand, I'd oppose "Cash for Brussels sprouts."

I understand what the witty Congressman was saying. In this program, we taxpayers are basically giving money to people to buy cars. For some reason, that doesn't bother me. I'm a lot happier with this deal than with our giving money to the people who helped our economy collapse. Congressman Hensarling opposed those earlier bailouts, too, but I guess he didn't make the national news since he didn't come up with a "clever" slogan as he did this time. I guess he just couldn't think of "Bucks for Brokers."

I like "Cash for Clunkers." It has put new, fuel-efficient cars on the streets, and infused the economy with much-needed money. It hasn't only helped the car industry and related businesses. People who work at car dealerships shop just like everybody else. So that woman who bought a new Chevy last week might be responsible for the guy across the country selling more fancy dog food. When future students study this phenomenon in college, it might be known as the Camaro-Kibble Effect.

Equally importantly, "Cash for Clunkers" has been a positive symbol. It says to America, "Hey, some programs actually work. Maybe we really can get out of this recession." And there's got to be the feeling that if the ailing auto industry can be helped, there's bound to be hope for Joe's Hardware store.

It's a big opportunity for the American auto industry. More than half of the cars purchased under this plan have been American makes. If these shiny new fuel-efficient cars turn out to be great, more people will buy them even without the "Cash for Clunkers" program. Of course, if they turn out to be junk in a year or so, the industry will be hurt even more, and those who bought these cars will feel that all they got was a newer clunker.

But if the economic experts do all their analyses of "Cash for Clunkers" and come up with positive results, watch for copycat programs. The big one will be "Cash for Firetraps." If people want to get rid of their old, falling-apart houses and buy new ones, the government would help them out. The housing industry won't say "no" to that idea.

Yes, "Cash for Clunkers" tapped into the very American love of getting rid of the old and acquiring the new. I just hope that its success won't make people go overboard. If so, I'm really in danger of my wife trading in her clunker of a husband for a new model. And believe me, I've got more than 80,000 miles on my odometer.

Hummers To The Rescue?

If I heard that someone had actually bought a Hummer in this day and age, I'd consider that big news. So when I heard that someone actually bought the entire company, the Hummer brand, I considered it enormous news. As you doubtlessly know by now, if the deal is approved, a Chinese company will buy the Hummer division from General Motors. This raises many questions, but the big one is WHY?

Last year, sales of Hummers fell 51%, and they are down 67% so far this year. Maybe the new owners think that those who weren't buying Hummers were saying to themselves, "What's holding me back is that they're a General Motors product. I'd buy one of those things if they were just owned by a Chinese company."

The prospective owner is Sicuan Tengzhong, a heavy machinery company. They say they plan to keep selling Hummers in America and all over the world, including China. In China, the Hummers would be subjected to a 40% tax that they impose on vehicles with big engines. So, good luck on that. The good news is that Sicuan Tengzhong says that they are going to continue to manufacture Hummers in this country. So at least for now, approximately 3,000 Americans will be able to keep their jobs. But if I were those workers, I'd keep one eye on the want ads, because I don't know how long they're going to keep making these simulated military vehicles.

It's interesting that General Motors was able to unload Hummer before it sold Pontiac, Saab, or Saturn, the other brands that it is dumping. I would've thought Hummer would've been a tougher sale. After all, the Hummer had come to symbolize many of the admitted negatives of the cars that the American auto industry has been making: It's too big, it's not fuel-efficient, and it looks silly in a nursery school parking lot.

I guess those Chinese businessmen see something in the Hummer that I don't. The parties won't disclose how much money the Chinese company is going to pay for Hummer, but I'm sure it was a bargain. And maybe they made one of those deals the car companies keep advertising on TV -- you know, if the Sicuan Tengzhong executive who agreed to this deal loses his job, G.M. will take back the cars and the Chinese company won't owe a penny.

Legend has it that Hummers came about because of Arnold Schwarzenegger. Apparently, while making the classic film, "Kindergarten Cop," he saw a convoy of military Humvees drive by. He loved the way they looked, so he persuaded the Humvee company to make a civilian version, which became the Hummer. Can you imagine having that kind of power? You'd like to have something, so you talk a company into manufacturing it? I wish Schwarzenegger would look at a commercial aircraft, and call the people who make it and persuade them to make one that's comfortable in coach and always on time.

The Hummer story is filled with irony. Since it looks like a military vehicle, the Hummer has always projected the image of a super-patriotic American car. Some of them are even painted with a camouflage design. The company that made the Humvees that Schwarzenegger admired was located in America's heartland – in Indiana. Now you'd have to go to China to talk to the head Hummer honcho.

It's possible that this arrangement won't end up making either side happy. Why do I say that? Guess who G.M.'s financial advisor is for this deal. It's Citigroup. I'm not kidding. That's the same Citigroup that was so mismanaged that the phrase "toxic assets" came into the vernacular. It's the same Citigroup that received billions of bailout bucks. And that's who G.M. went to for financial advice? That makes about as much sense as a military vehicle company taking business advice from an actor who someday would be governor of a state that goes billions of dollars in debt while he's in office.

Like I said, I'm happy that you Hummer workers won't be thrown out of work, but keep your options open. And don't let them pay you in stock.