Friday, October 2, 2009

Cash for Clunkers .... Thud!

As expected, as soon as the "cash for clunkers" program lapsed, auto sales plummeted. September sales for GM fell 36 percent, Ford sales fell 37 percent and Chrysler sales dropped 33 percent. The September collapse in auto sales offset the sales generated by the cash for clunkers but unfortunately will not offset the hit to taxpayers of this foolish program.

The national debt is now higher because of the cash for clunkers program. The economy is no better off and car sales are about where they would have been before this waste of taxpayer money. Another lesson that never seems to get learned.


SRoeCo said...

I would argue that the program was not a waste of money, or at least was significantly less a waste of money than other government programs.

One of the (if not the) most important, long-term challenges that the world faces today is environmental sustainability. The Cash for Clunkers program was a massive success encouraging people to upgrade to more fuel-efficient vehicles. Now, yes, we might agree that this is a marginal improvement compared to the $3 billion in debt that it cost. However, I argue that this improvement is substantially more tangible and cost effective (in terms of return on investment) than the money spent elsewhere.

One example would be the $1.9 trillion to $2.4 trillion long-term estimates of the cost of the Iraq and Afghanistan wars. The Cash for Clunkers program is .0015 (15/10,000ths) the cost of these wars. It also had a well defined goal/ end, was short-term, and resulted in measurable improvements.

Yes, car sales slumped, and returned to their pre-C4C lows, but this does not mean that program was foolish. It was a small step in the right direction of taking action to reduce our negative impact on the environment.

ps: I went to school with your daughter and respect your insights.

Edwin T Burton said...

Good comment! I would argue that there might be better ways to tackle environmental sustainability than through "cash for clunkers." I also think that merging economic stimulus with environmental issues is not the best way to approach either problem. In the case of "cash for clunkers," I think it failed on both counts. But, your comment makes some very good points.