Well, first of all because the government program has been good for 225,000 car sales - and that's just based on the initial $1 billion funding. Add another $2 billion and you're talking serious numbers in a year when car sales were expected to only hit 10 million units (that's compared with 17 million in the boom years). The other reason cash for clunkers matters is that it shows a willingness by Americans to spend money. That's a really big deal because consumer spending remains the dominant driver of the U.S. economy, and the inability or unwillingness to buy stuff threatens to stall any recovery before it even gets started. Sure, the government is offering a considerable carrot - $3,500 to $4,500 - but that still leaves a chunk of cash to be shelled out. And people are doing it, a reminder of the pent-up demand that dealers have been waiting for. Last night I noticed an unfamiliar sight at a dealership on Santa Monica Blvd.: customers. From the NYT:
"People are dropping off their cars that they had in the garage that are just not worth selling, yet are actually running," said Brian Allan, general manager of the multibrand Galpin Motors dealership in Van Nuys, Calif. About 200 clunkers have already been bought and put into storage at the dealership, and will be disposed of later as part of the government program. A banner at the lot proclaims "Big Cash for Your Clunker," and some of the trade-ins had "Crush Me" spray-painted on their hoods. Mr. Allan said that his salespeople had been working past midnight this week to process the clunker deals.