Congress has approved another $2 billion for the "Cash for Clunkers" program after the original $1 billion of funding was almost tapped out within a week.

I guess UAW members can continue to enjoy their $5 co-pays, retirement at 55 and working for management teams whose idea of moving fast is not to hit every button on the elevator on the way up.

With the new funding, auto industry experts estimate that the program will lead to the sale of 750,000 new cars.

So that's 750,000 buyers not in the market next year… or the year after… or the year after that.

This reduced demand for cars in the future will negatively impact the automakers and parts suppliers.

The positive impact of this rebate program will be on the auto dealers — the most politically powerful group of businesses, other than health care companies, at the state level. They did need help, dealers employ far more people than are in the UAW, and maybe this was an appropriate way to help them.

But, regardless of the way you feel about the program itself, as an investor, you're probably looking for a way to profit from it.

How to Profit From "Cash for Clunkers"

For the most part, you cannot invest in the real beneficiaries of the program: the dealers.

But what about CarMax (KMX), Penske Automotive Group (PAG) and AutoNation (AN) — publicly held outfits that sell new and used cars (CarMax almost all used)? Will they benefit?

Theses stocks already have, so you should be looking at them as potential shorting candidates.

What!?! Shorting "Cash for Clunkers"?

That's right. Think about it. These stocks have been on a tear, and the increased demand from "Cash for Clunkers" will give them a boost in the third quarter, and then depress sales for the next couple of quarters.

And because many of the "Cash for Clunkers" buyers may have previously been in the market for a used car, CarMax will probably take the biggest hit of the three.

One other possibility: If you know how to short scrap metal, do it. Prices will be depressed for months due to the mammoth number of cars being scrapped and shredded.

This, in turn, may have a marginal impact on steel prices. Ah, the laws of unintended consequences perfected in Washington.

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