"Cash For Clunkers": Did It Work?

CBS News (8/24, Murphy) – Certainly the program…was popular. The first $1 billion, which was supposed to last for months, was accounted for in less than a week. Congress, with a little grumbling from those worried about the cost, quickly poured in another $2 billion on Aug. 6. At a fundamental level, though, what did the cash for clunkers program really achieve? Cash for clunkers had two stated goals: to get greener cars on the road, and to boost the auto industry, and by extension, the U.S. economy. And lo and behold, there are signs that it is working on both counts. The cars purchased under the program get, on average, almost 10 miles more per gallon than the ones being scrapped, and the industry has seen a nice little bounce.

Car sales in July were the highest since August 2008 and up 13 percent over June…At current trends, more than 11 million new cars and pickups will be sold this year — not much compared to the 16 million sold in 2005, but a lot better than the 9.5 million that was projected just a few months ago.

But there is no free lunch here. Those Americans who do not own a car or whose car does not qualify for CARS — and that means about 99 percent of you — are paying for those who do. Strip away the green fig leaf, and this is free money to a small number of households, and a taxpayer gift to a politically powerful industry. But in an era of vastly more expensive bailouts to vastly less popular industries, not to mention lots of stimulus money that has been allocated but not spent, CARS, on balance, looks like a modest success.

Associated Content (8/24, Dougherty) – Cash for Appliances Seeks to Outdo Cash for Clunkers in Fall. Cash for Appliances will work in the same fashion as Cash for Clunkers, except it is household goods that people will be trading instead of cars. Once again, the goal is for a "Cash for" program to get customers to buy more environmental-friendly items, and stimulate the economy. Cash for Appliances will kick off in the fall, with preliminary funds of $300 million…standards are being written individually for each state, and could be put into place by November.