One Month After Cash For Clunkers: No Change, Auto Sales Still Falls While Gas Consumption Doesn't

Cash for Clunkers was one the brain-child of Democrats who were looking to stimulate the economy while lowering carbon emissions. This was supposed to more environment-friendly programs designed to revive the flailing car industry:

Transportation Secretary Ray LaHood declared in August that, "This is the one stimulus program that seems to be working better than just about any other program."

Unfortunately, it did neither. Just as your humble pundit and others predicted, it was a complete failure:

If that's true, heaven help the other programs. Last week U.S. automakers reported that new car sales for September, the first month since the clunker program expired, sank by 25% from a year earlier. Sales at GM and Chrysler fell by 45% and 42%, respectively. Ford was down about 5%. Some 700,000 cars were sold in the summer under the program as buyers received up to $4,500 to buy a new car they would probably have purchased anyway, so all the program seems to have done is steal those sales from the future. Exactly as critics predicted.

Cash for clunkers had two objectives: help the environment by increasing fuel efficiency, and boost car sales to help Detroit and the economy. It achieved neither. According to Hudson Institute economist Irwin Stelzer, at best "the reduction in gasoline consumption will cut our oil consumption by 0.2 percent per year, or less than a single day's gasoline use." Burton Abrams and George Parsons of the University of Delaware added up the total benefits from reduced gas consumption, environmental improvements and the benefit to car buyers and companies, minus the overall cost of cash for clunkers, and found a net cost of roughly $2,000 per vehicle. Rather than stimulating the economy, the program made the nation as a whole $1.4 billion poorer.

So after Obama, Pelosi, and Reid spent $1.4 billion of our kids money, we're back to where we were before the spending folly.

The Wall-Street Journal article summed it up perfectly. So, I'll end the post with that:

In the category of all-time dumb ideas, cash for clunkers rivals the New Deal brainstorm to slaughter pigs to raise pork prices. The people who really belong in the junk yard are the wizards in Washington who peddled this economic malarkey.

Predictable: Cash-For-Clunkers Goes Bankrupt; House Races to Bailout Program; Schumer Wants More

As I reported back in June, the Cash-for-Clunkers is a disaster of an idea as the government ran out of money almost as soon as they started and became "nightmare now for everyone involved."

The House has already approved $2 Billion more to prop up this "clunker" of a government program. Apparently that isn't enough for the senator from New York, Chuck Schumer, isn't satisfied with that amount. He wants double:

Senator Charles Schumer, one of the original sponsors of the bill, said the program ran out of money because skin flints in the Senate wouldn't give him the $4 billion he wanted for the program, which gives people up to $4,500 toward buying fuel efficient cars to replace their old gas guzzlers.

He took it even further to mock those who didn't want to give him more of your money to begin with:

"There were people in the Senate who didn't like the program and they said 'We won't let it go through. We will filibuster. Try $1 billion and see if it works,'" Schumer said.

He said those senators now have egg on their face.

"This week's evidence shows that people who said the program wouldn't work, who said that the program was the wrong thing to do, are very wrong themselves," Schumer said.

I think we differ in our understanding of "works". If he defines it as people are bringing in the cars to sell their cars for up to about 7x as much as anyone would pay for it, if they would pay for it at all. Then, ya, it works. The fact that people would do sell their cars for much more than they're worth was never in doubt. I would do the same.

The way that I think most other people define "works" it doesn't even come close to working. Car dealers say that it is a mess. It's going to take billions of our money to get ALL of the "clunkers" off the road. That is money that we don't have in our proverbial pockets. We must to borrow it from China and he to pay interest on the loan. There is very little return on our investment. We are not going to be able to sell the cars that are being bought. Therefore, we are never going to get that $1B back. If the extra $2B expansion goes through, that money will not be seen again, either. Do we really want Chuck to have his way and up the ante up to $5 Billion total?