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Seattle PI: Cash For Clunkers a Flop
In news both environmentalists and economists could have predicted (oh, wait
, they did), President Obama's "cash for clunkers" program, which paid auto owners a bonus of up to $4,500 for trading in their old cars for brand-new, more fuel-efficient models, has done little or no impact on either the auto industry (which it was supposed to boost) or auto emissions (which it was supposed to reduce). The program, the PI reports, "bought little progress toward either of the program’s stated goals, according to research by environmental think tank Resources for the Future
."
According to the report, “the average fuel economy was only 0.65 miles per gallon better than it would have been among newly purchased cars had the program never existed.” Additionally, 45 percent of the new-car buyers who took advantage of the program would have bought new cars anyway, the study found.
Why isn't the news surprising? Let's go to the Wall Street Journal, from early August 2009, which called the scheme "crackpot economics."
The headline: "Cash From Clunkers: Let's have a $4,500 Subsidy for Everything."
As for the environmental argument that encouraging people to buy new cars would reduce fuel emissions? Well, the WSJ predicted the failure of that one, too.
The program, the WSJ notes , set the bar for "fuel-efficient new cars" incredibly low---so low that auto owners could get a $3,500 rebate for trading in an 18-mpg "clunker" for a 22 mpg replacement. (The $4,500 rebate kicked in with a 10-mpg fuel-economy improvement.) SUVs, of course, had even lower standards.
And, indeed, according to the PI, "Among all vehicles bought during the program in July and August, 'the average fuel economy was only 0.65 miles per gallon better than it would have been among newly purchased cars had the program never existed.'”
According to the report, “the average fuel economy was only 0.65 miles per gallon better than it would have been among newly purchased cars had the program never existed.” Additionally, 45 percent of the new-car buyers who took advantage of the program would have bought new cars anyway, the study found.
Why isn't the news surprising? Let's go to the Wall Street Journal, from early August 2009, which called the scheme "crackpot economics."
The subsidy won’t add to net national wealth, since it merely transfers money to one taxpayer’s pocket from someone else’s, and merely pays that taxpayer to destroy a perfectly serviceable asset in return for something he might have bought anyway. By this logic, everyone should burn the sofa and dining room set and refurnish the homestead every couple of years.
The headline: "Cash From Clunkers: Let's have a $4,500 Subsidy for Everything."
As for the environmental argument that encouraging people to buy new cars would reduce fuel emissions? Well, the WSJ predicted the failure of that one, too.
The program, the WSJ notes , set the bar for "fuel-efficient new cars" incredibly low---so low that auto owners could get a $3,500 rebate for trading in an 18-mpg "clunker" for a 22 mpg replacement. (The $4,500 rebate kicked in with a 10-mpg fuel-economy improvement.) SUVs, of course, had even lower standards.
The problem with all this, as Duke’s Bill Chameides pointed out last month, is that making a new car produces, on average, about 6.7 tons of carbon dioxide. By his calculations, it would take at least five years to “pay off” the environmental impact of building the new car with a 22-mile-per-gallon purchase. That SUV might be even worse—the estimated payback time is almost 20 years.
And, indeed, according to the PI, "Among all vehicles bought during the program in July and August, 'the average fuel economy was only 0.65 miles per gallon better than it would have been among newly purchased cars had the program never existed.'”
