Commentary Magazine


Topic: Cash for Clunkers

Speaking of Failed Big-Government Programs…

The ongoing debacle that is the administration’s rollout of ObamaCare has reignited debate about technocracy and big-government liberalism. But Democrats who worry that their mode of coercive politics will be discredited by ObamaCare should be thankful it took this long.

A very well-timed reminder of this arrived yesterday from the Brookings Institution. Scholars at the left-leaning think tank analyzed the so-called “Cash for Clunkers” program, the 2009 “stimulus” program intended to get cleaner cars on the road by providing cash vouchers for those who trade in older gas guzzlers and buy newer, more efficient cars. The administration patted itself on the back when the program ran out of money, apparently pleasantly surprised that people took free money during an economic downturn. But Brookings confirms that this was, of course, a terrible program. Here are their major findings:

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The ongoing debacle that is the administration’s rollout of ObamaCare has reignited debate about technocracy and big-government liberalism. But Democrats who worry that their mode of coercive politics will be discredited by ObamaCare should be thankful it took this long.

A very well-timed reminder of this arrived yesterday from the Brookings Institution. Scholars at the left-leaning think tank analyzed the so-called “Cash for Clunkers” program, the 2009 “stimulus” program intended to get cleaner cars on the road by providing cash vouchers for those who trade in older gas guzzlers and buy newer, more efficient cars. The administration patted itself on the back when the program ran out of money, apparently pleasantly surprised that people took free money during an economic downturn. But Brookings confirms that this was, of course, a terrible program. Here are their major findings:

  • The $2.85 billion program provided a short-term boost in vehicle sales, but the small increase in employment came at a far higher implied cost per job created ($1.4 million) than other fiscal stimulus programs, such as increasing unemployment aid, reducing employers’ and employees’ payroll taxes, or allowing the expensing of investment costs.
  • Total emissions reduction was not substantial because only about half a percent of all vehicles in the United States were the new, more energy-efficient CARS vehicles.
  • The program resulted in a small gasoline reduction equivalent only to about 2 to 8 days’ worth of current usage.
  • In terms of distributional effects, compared to households that purchased a new or used vehicle in 2009 without a voucher, CARS program participants had a higher before-tax income, were older, more likely to be white, more likely to own a home, and more likely to have a high-school and a college degree.

That last part just seems like pouring salt in the left’s wounds. Not only was the program a massive failure, but it was also, by the way, a taxpayer-funded subsidy for white homeowners–just in case the left reached for an “inequality” or race-based argument in a desperate attempt to shut down the debate on the program.

And along those lines, conservatives will especially like that first finding in the list above: a tax cut would have been a better stimulus than this program. Of course, that isn’t a very high bar to clear; here’s the headline from the Washington Post’s Wonkblog: “Almost anything would have been better stimulus than ‘Cash for Clunkers’.” It would have been difficult to come up with a worse idea for a stimulus than the program Obama chose.

It’s not like they weren’t warned, however. As the Post notes:

The program had something for everyone: It would lend a hand to the ailing U.S. auto industry. It would tamp down on oil consumption. And, once launched, the program proved so popular with consumers that it burned through $1 billion in its first five days. Sure, a few critics argued that the program wouldn’t be very cost-effective, but no one was really listening.

But, as it turns out, the critics were on to something.

Yet we’ve known for almost a year that some aspects of Cash for Clunkers were failures. Part of the rationale for the program was to help the environment. In early January of this year, the environmental-news website Grist.org reported that Cash for Clunkers “drove right into a brick wall of waste.” (It’s fair to say the program was at least a stimulus for headline writers.) Grist explained:

Billed as stimulus both for automakers and the environment, the Car Allowance Rebates System, better known as Cash for Clunkers, turned out to be clunker itself. Besides fueling more unsustainable new-car-buying consumerism, the program also destroyed thousands of older, functional vehicles — vehicles that, according to the Automotive Recyclers Association (ARA), were almost 100 percent recyclable. Through Cash for Clunkers, about 690,000 vehicles had their engines destroyed and many were sent to junkyards, bypassing recycling companies altogether.

Perhaps unsurprisingly, auto dealers are speaking out to defend the boondoggle. Politico sums up their defense of the program: “And since many states and localities place high taxes on auto sales, the program generated $900 million for municipal and state coffers, according to the auto dealers.” That’s the defense: the program was a massive waste of taxpayer money whose benefit was to increase tax revenue during an economic downturn.

So yes, ObamaCare should serve to discredit big-government liberalism. But so should just about every other ill-conceived program dreamed up by the Obama administration.

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