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'Clunkers' Ends, Cue the Self-Congratulation

The Post just reported that "Cash for Clunkers," the popular program that subsidizes the trade-in purchase of fuel-efficient vehicles, has once again run out of money, even after the $2 billion boost Congress gave it earlier this month. Cue another round of congressional self-congratulation.

Democrats love the program because they can claim (as many probably think) that it’s both green and good for the economy. They have also discovered that, deficit or no, Americans like it when the government buys them cars. You can see the light bulb flickering on overhead.

Too bad that it’s unclear just how much good the program is doing the environment, due to the ecological effects of producing replacement cars and the fact that many participants in the program are using their cash to buy SUVs.

And too bad that stimulating car purchases -- rather than, say, employing more Americans in public works projects or handing them cash in the form of safety-net benefits -- surely comes at the cost of other industries, manipulating consumers’ preferences rather than simply stimulating aggregate demand. The scheme probably hurts future auto sales, too. Even if subsidies are continued, once the pool of eligible car buyers dries up, sales might plummet -- as happened in France after a similar program ended.

So what’s Congress to do? Putting a lot more money into the program and placing fewer restrictions on the subsidies might be tempting. But it’s not wise.

By Stephen Stromberg  | August 20, 2009; 6:01 PM ET
Categories:  Stromberg  | Tags:  Stephen Stromberg  
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Comments

This was a temporary program. It was to run either until the money ran out, or we hit November. The money has run out, so, as planned, it's ending. I'm baffled by your theory that Congress would "put a lot more money into the program" at this point. The additional $2 billion at the beginning was a course correction because the program was so extremely successful that it was going to last just four days. That obviously wasn't fair warning to potential buyers. But that was a one-time fix.

I believe what we have in this little essay is what's known as a "straw man." You are pretending that Congress wants to pump in more money (they don't) and that makes a straw man it's easy to knock over. Not hard to win an argument when you are making up the lines on both sides.

Posted by: fairfaxvoter | August 20, 2009 6:36 PM | Report abuse

Yes, this program would be using stupid logic if one doesn't concede that it's only real purpose was as another sop to the car industry and employees. It is now approaching $70B dollars, in stimulus grants, energy grants, financial stimulus, ripping off industry bondholders ad nauseum

The least they could have done was to require the new cars really be fuel efficient, say 30/gal. but no, 4 mpg better? So what? It is unclear that the energy taken to destroy the old car and build a new one is less than the fuel/energy saving.

This is just one dishonest program the Democrats should be ashamed of. (but aren't.)

Posted by: jhtlag1 | August 20, 2009 6:37 PM | Report abuse

The program is classical economic theory, the environment and whatever else is just window dressing. The oldest suggestion for stimulus would be to bury sacks of money in coal mines and pay people to go dig them up. It's to get the people going to the car lots, the car lot owners to advertise in the news paper and tv, the the news paper and tv to pay their printers and delivery men and reports, and so on and so forth. Hopefully not diverting money from other industries, but getting people to hurry up and spend money they were just going to spend a little later. Sales might plummet, but maybe they won't, all those people who came into the dealerships might be tempted when otherwise they would just sit at home. We're not a country where you can just grab a few thousand men and build a bridge anywhere you like anymore, so this is what you get.

Posted by: Dremit97 | August 20, 2009 7:07 PM | Report abuse

Thank you for your opinion, Mr. Stromberg. We need people such as yourself to speak out.
"Straw man"? Sorry, I just don't get it.

Posted by: william19 | August 20, 2009 7:26 PM | Report abuse

Cue the congratulations? For what? That they found a bunch of people to accept handouts at a dizzying rate? What else? That it caused a brief spike in auto sales, which, now that it's ended, will sink back down into the abyss?

Did it create jobs? Reopen any closed US auto factories?

Typical Democrat handout program - a cheap little high but with no long-term benefit. And at a cost of $3B.

I guess if you have a President with a plummeting approval rating (50.7% on pollster.com) you'll pretty much pat yourself on the back for anything that hasn't turned out to be an abject failure.

Posted by: johnwp | August 20, 2009 7:31 PM | Report abuse

The program is classical economic theory, the environment and whatever else is just window dressing. The oldest suggestion for stimulus would be to bury sacks of money in coal mines and pay people to go dig them up. It's to get the people going to the car lots, the car lot owners to advertise in the news paper and tv, the the news paper and tv to pay their printers and delivery men and reports, and so on and so forth. Hopefully not diverting money from other industries, but getting people to hurry up and spend money they were just going to spend a little later. Sales might plummet, but maybe they won't, all those people who came into the dealerships might be tempted when otherwise they would just sit at home. We're not a country where you can just grab a few thousand men and build a bridge anywhere you like anymore, so this is what you get.

Posted by: Dremit97 | August 20, 2009 7:07 PM |
_________________________________


I couldn't have said it better than this. Dremit nails it.

Posted by: lostinthemiddle | August 20, 2009 7:41 PM | Report abuse

Let's see....have a 1998 Subaru Forester with 200k...use to get about 25hwy/17city but the revised govt mileage said 21mpg. Use it for local driving only as I can't trust it for long-distance trips. No clunker $.

Posted by: AStMarysConstituient | August 20, 2009 7:42 PM | Report abuse

Cue the congratulations? For what? That they found a bunch of people to accept handouts at a dizzying rate? What else? That it caused a brief spike in auto sales, which, now that it's ended, will sink back down into the abyss?

Did it create jobs? Reopen any closed US auto factories?

Typical Democrat handout program - a cheap little high but with no long-term benefit. And at a cost of $3B.

I guess if you have a President with a plummeting approval rating (50.7% on pollster.com) you'll pretty much pat yourself on the back for anything that hasn't turned out to be an abject failure.

Posted by: johnwp | August 20, 2009 7:31 PM |
________________________________________
________________________________________


"Automakers led last month's bounce in industrial production. They reopened...and increased their output to meet consumer demand fueled by the federal "cash-for-clunkers" program. "


from the Washington Times(well known for their liberal talking points):

Factory production up first time in '09
By David M. Dickson
Originally published 04:45 a.m., August 15, 2009, updated 02:47 p.m., August 15, 2009

http://www.washtimes.com/news/2009/aug/15/factory-output-shows-spark/

"Automakers led last month's bounce in industrial production. They reopened...and increased their output to meet consumer demand fueled by the federal "cash-for-clunkers" program. "

Posted by: lostinthemiddle | August 20, 2009 7:45 PM | Report abuse

"Straw man"? Sorry, I just don't get it.

Posted by: william19


????
You don't get what a "straw man" is?
http://en.wikipedia.org/wiki/Straw_man

In this case the straw man is the idea that Congress might continue funding this program. Fairfaxvoter is right. That was never on the table.

Posted by: lostinthemiddle | August 20, 2009 7:53 PM | Report abuse

I agree what a waste! We could have funded the Iraq war for almost a week with that 3 Billion dollars! Money blown just to make a bunch of middle class smoes feel better, it just makes me sick!

Posted by: markswisshelm | August 20, 2009 8:19 PM | Report abuse

Yes, Mr. Stromberg - do tell us what is wise. Thank you for sharing.

Posted by: GaryEMasters | August 20, 2009 8:46 PM | Report abuse

how can people pan a program that was fairly cheap and had some perks for regular folks. the right has no shame, no dead or injured and much cheaper then Iraq (12 billion a month for 6 plus years)

Posted by: retiredfa00 | August 20, 2009 9:06 PM | Report abuse

Fake-grinning dweeb stromberg: The program did what it was supposed to do, it worked, and now it's over.

Get a life, sissy boy.

Posted by: binkynh | August 20, 2009 9:08 PM | Report abuse

Can we have "cash for old laptops", "cash for old school supplies', "cash for eating out", "cash for non-organic food", "cash for sales tax", "cash for music CD", "cash for VHS tapes", "cash for expired lottery tickets", "cash for expired prescription drugs", "cash for old houses", "cash for last year's halloween candies and costumes" ... We should give out more one-time hand-outs to stimulate the economy.

Posted by: ryip | August 20, 2009 9:26 PM | Report abuse

Funny how we're rebounding from a mortgage crisis caused by putting people into homes they couldn't afford and we throw this program in as a "fix" when it causes the same problem: people who are driving sub-$5000 cars are now financing $25K+ cars that they likely can't afford. When they fail to make the payments, the banks get stuck with the new cars and the poor people are stuck without anything to drive. A "clunker" is better than walking around. Crazy.

Posted by: conservativeliberal1 | August 20, 2009 9:39 PM | Report abuse

'Clunkers' Ends, Cue the Self-Congratulation

And cue the disdain from somebody named Stephen Stromberg. Thanks for letting us know you're superior to these Republicans:

Senate: Collins, Snowe, Bond, Voinovich, Brownback, Alexander, Corker

House: Whitfield, Aderholt

Posted by: merelymyopinion | August 20, 2009 10:34 PM | Report abuse

This program is a perfect example of government-sanctioned idiocy in action. I doubt if many of the destroyed cars were truly "clunkers." Very sad to see so many still-useful vehicles sent to a premature death when they could have continued to provide economical transportation. I can only hope that the program itself will now disappear into well-deserved oblivion.

Posted by: RAB2 | August 20, 2009 10:48 PM | Report abuse

Has anyone did a study to see what the incomes were of the car buyers who took advantage of this program?? My gut feeling is that these were mostly middle class or upper income people who basically got $4500 to buy new cars. How many poor people were trading in 1998 Ford Explorers and then buying new Toyotas or Pruis's??

If you look up boondoggle in the dictionary, they show you the Cash for Clunkers program.

Posted by: sunnyroberto | August 20, 2009 10:50 PM | Report abuse

So Republicans get re-elected by cutting taxes and Democrats get re-elected by giving away tax revenue. Which is more ethical?

Posted by: fallsmeadjc | August 20, 2009 11:22 PM | Report abuse

Mr. Stromberg, you are close to bull eyes and I would like to add:
What is going to happen six months from now when thousands of these buyers default on their auto loans?
I have said from the start of this economic slowdown- the government is buying dollar for dollar to restart the economy when in reality that is impossible, is just a fantasy.
The initial negative indicators that hit us deep in our pockets remain alive and our government continues experimenting with others economic challenges without realizing a dent on any.
Take for instance- housing, credit, unemployment and the most important of all consumer confidence, the trust on our fundamentals. All are in suspense, adrift without a port- I do believe the most cost effective program must be consumer confidence, because positive actions and results brings the trust and hope that is going to be over "soon".
The Cars program was well intended, but poor executed that as of this writing Auto Dealers in the country still are waiting for payment (they trust in the idea and resolve) in the millions of dollars for some, creating another imbalance in the economy. Why?
Lack of progressive thinking or fast pace ideas without foundations?
I do have some of the answers- we /our government lack the ability of vision, of completion- when is out off control (Cars program) just quit! Is anyone thinking out there? Our Government have empty our coffers, have patch all our worries with dollars like wallpaper, have gone into a pure disorganize adventure without any consideration for failure- no plan B.
Let's go back to the drawing board and correct the deficiencies that go us here, Housing, Credit in the market and Unemployment.
But after all, a good start is trust in our leaders and the confidence of a stable future, is not that expensive, is free of any Congressional appropriations-and more, would never increase our deficit.

angel1962

Posted by: angel1962 | August 20, 2009 11:29 PM | Report abuse

Although it was promoted as a good idea, the dealers who will wait months for their money, do not think so. Typical government run program.

Posted by: EZ2C | August 21, 2009 8:29 AM | Report abuse

I'm sorry, I thought the Democrats were all about helping the poor and middle class? These people don't have the money to buy new cars. They have to get by, fixing or buying old clunkers for transportation. One man's definition of clunker is another man's much needed transportation. All this program did was help dry up the pool of cars available to them, as well as used parts. The people running out to buy new cars and trade in their clunkers now have a new car they can't pay for to go with the house they bought during the boom and can't pay for either.

Posted by: markd3 | August 21, 2009 11:58 AM | Report abuse

I'm sorry, I thought the Democrats were all about helping the poor and middle class? These people don't have the money to buy new cars. They have to get by, fixing or buying old clunkers for transportation. One man's definition of clunker is another man's much needed transportation. All this program did was help dry up the pool of cars available to them, as well as used parts. The people running out to buy new cars and trade in their clunkers now have a new car they can't pay for to go with the house they bought during the boom and can't pay for either. Evil banks are obviously at fault, loaning all those people money to buy cars they can't afford, in response to an ill advised, poorly executed government carrot.

Posted by: markd3 | August 21, 2009 12:01 PM | Report abuse

I'm glad my tax $$ went to help someone else buy a car.

Hey I need a new television - do you think the government will help me buy one?

Posted by: ngg426 | August 21, 2009 12:41 PM | Report abuse

I think a lot of the obesity problem can be traced to the consumption of sugar-filled sodas.

Since the Cash for Clunkers was such a success at getting consumers to do the right thing, I think the governement should start a Cash for Soda Cans program. Consumers could trade in a full soda can for a bottle of water and receive 15, 20 even 30 cents per can. The water bottling industry would be stimulated and so would the freight industry. We would also reduce the number of calories we take in and be on our way to better health.

Of course, the fulls cans of soda would have to be destroyed ... perhaps by adding gelatin thereby stimulating that industry too.

WOW what a great idea. This has to be worth $10 Billion in government funding. I'm going to email my Congressman.

Posted by: onehanded | August 21, 2009 1:47 PM | Report abuse

I work dfor a large automotive group that owns multiple dealerships in the US. While this program resulted in more sales of certain units, it also is a horrific wast of taxpayer money.Not to mention the waste of perfectly good and servicible used cars that lewer income people and kids could have actually afforded. Now we have created artificialy high prices in the used car market and hurt people who could have used the good parts when those cars were junked by killing the supply of parts and raising the prices from salvage. Way to go environmental radical nutheads, this program didn't help save the planet and just put your kids further in debt to China. I sure am glad 10 billion dollars just went from our current administration to fund oil exploration in Brazil! Hey, here is an idea, lets create manufacturing companies here in the US for people to work at, that worked once upon a time here in AMERICA!

Posted by: bigbrothercfg | August 21, 2009 2:27 PM | Report abuse

We are still mired in a bust that is the end result of to much debt- public and private. So we contrive a scheme to publicly borrow $3 billion to bribe individuals to take on more private debt, I fail to see how this is in any way a good thing. Unless, of course, you wish to base what "works" on obscene profits and pay scales in the worthless paper trading industry.

Posted by: cowlesmw | August 21, 2009 2:42 PM | Report abuse

The "Cash for Clunkers" may not be wise, but it is very smart. It provides a personal buy-in for average Americans who (like me) cannot quite grasp the precise reasons for all these costly federal initiatives.

The cost of the program in dollars is peanuts (in the Everett Dirksen sense), even if it lasts five years or more. But, it is so immediate to many Americans that its political ramifications are astounding and deserving of deep respect.

Posted by: wgmadden | August 21, 2009 5:24 PM | Report abuse

People say it is a good idea to negotiate the new car price before you tell the dealer that you have a clunker!

Jimhenry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info

Posted by: jimhenry2208 | August 22, 2009 5:29 AM | Report abuse

I suspect some will say I am mixing apples and oranges, but the fiasco involving dealer reimbursement by the government under the Cask For Clunkers program is but one more reason why the government needs to stay out of health care reform.
Thousands of auto dealers are anxiously awaiting promised $ from the feds while many teeter on the edge of financial ruin.
The government offers up numerous reasons ( excuses) for the delay in getting the promised money to dealers, but call it what it is-- government ineptness, bungling, and just overall snafus as usual when the government gets involved in private industry.
And you want this bunch involved in your health care?
PLEASE!

Posted by: texda | August 22, 2009 9:20 AM | Report abuse

Dear "fairfaxvoter", You need to take a trip to DC and visit a couple of the hotels around the corner from the capital. Take a walk in the lobbies and peak into the side rooms - you will find quite nearly everyone of our Congress and Senate entertaining special lobby groups in line with their envelopes and special messages. Clue in - if you think these 'elected' officials are in it for the majority of legal citizens you are sadly mistaken. Cash for Clunkers - sorry, but as Stromberg reports, this is nothing more than a government hand out of our hard earned money going toward another ridiculous program.

Posted by: trumpit | August 22, 2009 7:10 PM | Report abuse

I wish it had been done as Germany did. $6000 any date then my husband could get rid of his '78 El Camino which runs his life.
He says it is his hobby.
He has plenty of others including things I would like him to do. Ann Bier
The only peoblem Germany had was a few bad guys reselling them.

Posted by: jimsbier | August 24, 2009 10:35 AM | Report abuse

1. The auto industry was hit more than others when the credit industry froze. This help both auto industry and to unfreeze consumer credit.

2, Yes, the law of supply and demand works, Lowering the cost to the consumer- and all the free adverising on the news - helped sell more cars, but our govt. provide $3500 -$4500 - not the full purchase price.
2.b. It helped drive up the value of our govt. investment in GM and Chysler. We may break even on the deal.

3. An new SUV that gets 9%- 18% better gas milage than an old SUV still help the environment and lower import of oil. It also allows customer choice to live in some form. I thought that Republicans liked choice when it comes to economic things.

Posted by: Landknelson | August 24, 2009 3:04 PM | Report abuse

What bothers me most is the total destruction of good cars! Now there will be shortage of inexpensive used cars. Now, the low paid working stiff won't be able to afford a used car. Reminds me what my Mamn told me. During the depression, FDR destroyed corn, killed cows, as well as other foodstuffs) so the wholesale price paid to farmers would rise.

Posted by: PalmSpringsGirl | August 24, 2009 9:50 PM | Report abuse

I don't know why people are getting all worked up about this program. It worked fine as intended. It gave a boost to some spending, that's what we need now in this recession. As a side benefit, some modest improvements in gas mileage to save a little energy. And not that much money from the taxpayers, compared to things like war spending and bailing out banks. Some people just love to carp about everything, I guess.

Posted by: catherine3 | August 25, 2009 10:52 AM | Report abuse

I think Congress should wait until there are viable ELECTRIC vehicles priced to compete with the gas cars and then enact a REAL incentive program(40 Billion) like the cash for clunkers to get ALL the gas USERS off the road for good.

Posted by: Goth | August 25, 2009 11:49 AM | Report abuse

VP TAMMY DARVISH of DARCARS Automotive Group -

She was the one that was whining back in Jan about all the dealerships that would be closing-

She was on C-Span complaining about the CARS program.

I wonder if she realized what Chapter 7 in December 2008 - what the GOP wanted for GM and Chrysler-would have done to dealerships? Versus the Chapter 11 President Obama worked for?

I wonder if she is an expert defining the difference between Chap 7 and Chap 11?

She also commented on C-Span that too many people expect their congress person to know about Health Care and Birth Certificates!

EXPERTS of BIRTH CERTIFICATES?

Who is the EXPERT of a BIRTH CERTIFICATE TAMMY DARVISH?

Posted by: sasha2008 | August 25, 2009 11:54 AM | Report abuse

How did Toyota make out? What percentage of
Japanese cars did they buy?
Did this stimulate the economy in Japan or
in the USA???

Posted by: umt123 | August 25, 2009 8:55 PM | Report abuse

How did Toyota make out? What percentage of
Japanese cars did they buy?
Did this stimulate the economy in Japan or
in the USA???

Posted by: umt123 | August 25, 2009 8:58 PM | Report abuse

The Republicans are busy recycling again. This time they're recycling the argument that buying a Prius doesn't really help the environment because it takes energy to build a Prius.

This is the stupidest, most misleading argument I've seen in ages.

Yes, it takes energy to build a car. However, it doesn't take any more energy to build a fuel-efficient car than it does to build a gas-guzzler. Unless people are going to stop buying cars altogether, the Replublican argument makes no sense. If people are going to buy new cars, they are going to buy either a gas-guzzler or a fuel-efficient car. They're both going to have the same energy costs to manufacture; therefore, take those costs out of the equation.

Posted by: sjones77 | August 26, 2009 8:11 AM | Report abuse

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