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Friday, July 31, 2009

Green Stimulus That Works: Cash for Clunkers

Here's stimulus that Pat Prostrollo, Dave Billion, and us hippies can love: the Cash for Clunkers program is such a doorbusting success that it's burned up its one-billion-dollar budget in barely a week and has buyers and dealers clamoring for more:

The federal program provided rebates of $3,500 or $4,500 to consumers who traded in vehicles with combined city/highway mileage of 18 miles per gallon or less and bought more fuel-efficient new cars or trucks.

The program was designed to run until Nov. 1 or until 250,000 cars had been sold, whichever came first. Many analysts had expected the money to last at least until Labor Day.

..."I hope they will extend the program because it was such a win on so many levels -- for the consumers, for the environment, for all the car manufacturers," said John Sackrison, executive director of the Orange County Automobile Dealers Assn. "It got a lot of people to go car shopping who wouldn't have otherwise."

...Dealers and automakers said the plan clearly sparked a level of interest that had been missing in new-car showrooms, which have looked like ghost towns for much of the last year [Martin Zimmerman, Tiffany Hsu, and Jim Puzzanghera, "'Cash for Clunkers' Program Runs out of Gas," Los Angeles Times, 2009.07.31].

Now it's possible we might have just gotten lucky: car sales had been so slow for so long, there was nowhere for them to go but up. The incentive program may just have coincided with an upturn that would have happened anyway. And I still hesitate to cheer about government programs that encourage people to buy more stuff.

But if we need people to buy stuff to get us out of the recession, we can at least aim at getting people to buy something useful, like cars that get better gas mileage. It looks like Cash for Clunkers is one government stimulus program that's hitting on all cylinders.


  1. This isn't "Stimulus That Works", it is "Government Program that Collapsed!". It is a rushed program with good intent, but was unveiled before it was ready and it crashed. Consumers should be outraged. I can only imagine that a rushed healthcare program will be much of the same.

    Ask any dealer who signed up for the CARS program (Cash for Clunkers). Many of them spent hours and hours trying to get their dealership registered on the government website, following crash after crash and lock-up after lock-up of the government's website.

    The plug is being pulled on this new government program four days after it started and with only 10% of its goal attained. The goal was 250,000 vehicles, but there are only about 23,000 sold and it failed. $5 Billion was allocated, but it was gutted to less than $1 Billion before it started.

    Nobody can really call this a successful program when it sinks like the Titanic after a couple of days. New car dealers are spending millions of their own money to advertise and promote "Cash for Clunkers". They signed contracts to run ads in newspapers, TV and radio. Who's going to reimburse them? Obama? Congress?

    The concept of getting guzzlers off the road and putting new cars on the road makes sense, but this program is a financial disaster for dealers and a black eye for this Administration.

  2. This program should warn everyone that the health care plan being rushed thru will be even more of a disaster. If such a simple thing as cash for clunkers was so under-estimated as to cost, how in the world can we trust the "economic giant minds" in DC to get health care right?!! Answer - we CAN'T!


  3. What?! Linda, by that logic, we should shut down the Army, Navy, Medicare, and all those other big expensive programs that the government can't be trusted to run.

    Rod, the only thing that went wrong here is that Congress, under pressure to keep spending down from all those tea-baggers who don't know good fiscal policy when they see it, cut the budget for the program from $4 billion to $1 billion and underestimated how wildly popular this program would be with dealers and car buyers alike. We need more stimulus like this, not less!

    Of course, I'll defer to the opinion of Pat Prostrollo on this one. His ads have certainly been pushing the program. I'd love to know his opinion today....

  4. Cory, Medicare isn't a program that you should tout as being well run. It's going in the hole too, you know.

    Cash for Clunkers is just a bailout for the auto unions, again paid for by me the taxpayer. Wait until some of the people being conned into buying expensive cars with the lure of a rebate can't pay for these cars down the road. I suppose we will bail out these car buyers then too!


  5. I'm interested in hearing about the success of the project, though I do wonder what happens to those cars traded in. Do they get resold? Is it just a matter of changing who drives the gas-guzzler, allowing those with the funds for a new car to undo their dumb choices that led them to buy such a car and allow someone else to make a dumb move (or maybe just buy a cheap car they can afford now, environment be damned)?

    I DO like this kind of program if it's thought through all the way.

  6. The cars are destroyed and the parts can't be used either, or so I heard.

  7. "bailout for auto unions"?! Come now, Linda—show me one union worker at Prostrollo's getting more bonuses this week.

    Union workers: also known as blue-collar folks with families to feed and mortgages to pay.

    [And I will gladly tout Medicare, the most cost-effective health coverage program in America... unless you're ready to declare we should disband the program and make retirees pay their own medical bills instead of wracking up all that expense for the rest of us hard-working Americans.]

    John and John—I need to do some more reading on what exactly happens to the cars. I thought I heard the engines are disabled... but maybe you can still get the parts? I'll check...

    ...in the meantime, check tonight's Madison Daily Leader: Pat Prostrollo loves Cars for Clunkers.

  8. I mistrust any deal that promises a rebate. In my experience with computers and peripherals, rebates fail to arrive almost half the time. Promise a discount at the time of purchase, and I might go for it.

    Maybe the government can do better than private companies in the rebate business, but I'd hate to find out otherwise at a cost of several thousand dollars. Noooo: Seven times scorched, seventy-seven times cynical.

  9. Actually, the "problem" with this program is that conservative leaders don't like it and tried to kill its funding. They didn't want the Obama administration to have a successful stimulus program because then they would have to admit that their model of how the economy actually works is imperfect.

    They sure didn't want cash flowing into small businesses all over the country and they really, really didn't want cash flowing into Michigan, a blue state with unemployment over 15%.

    I can understand that, because conservative leaders are trying to get their political power back.

    What saddens me is how many people in South Dakota are repeating the arguments of conservative leaders without seeming to register that our state economy is propped up by federal spending all the time. Yet they aren't saying that the programs that benefit us are unsuccessful and should be killed. (Ag subsidies, anyone?) Since South Dakotans are constant beneficiaries of federal dollars, why are we so unwilling to see areas that are in horrible financial pain right now get any federal help? It makes us look mean spirited and ungenerous.

  10. If conservatives want an Obama policy to fail that is helping their constituents, simply for politics, then it's time to think more of term limits.

    If Jeff Sharlet is to be believed (regarding C street), there are a lot of kooks (mostly Republican in this case) that should be recycled.


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