The CARS program, universally known as “Cash-for Clunkers,” ended last night at 8 p.m. We hope its death is permanent this time. If you were one of the lucky few who cashed in on CARS, congratulations. Its quick demise is still good news for you if you are living in today’s American economy. It may be one of the worst government programs ever invented, given that it was designed to un-stimulate the United States economy. As The Washington Examiner’s Chris Stirewalt wryly observed: “Who knew that free money would be so popular?”
To destroy a perfectly good and functioning car is an act of economic sabotage. No rational person does so voluntarily. But CARS subsidized the destruction of such cars with $3 billion in taxpayers’ money, hoping to improve the environment, and create a short-term burst of activity for automotive dealers. The environmental gain has been modest, to put it kindly. Although the Department of Transportation has been miserly in distributing complete information about the program, Edmunds.com compiled statistics directly from dealers in early August, before Congress threw in an extra $2 billion.
Edmunds’ estimates, based on sales to that point, were far less sanguine than those contemporaneously offered by DOT. They suggest that CARS participants upgraded their fuel efficiency by 51 percent – from an average 16.1 mpg for traded clunkers to an average of 24.3 mpg for their new cars. The final numbers are not in as we write, but CARS is expected to subsidize perhaps 750,000 new purchases, and destroy the same number of clunkers. This means that overall cars improved the fuel efficiency of America’s collective 251-million-car fleet of vehicles by – at most – 0.023 percent.
In other words, if Americans were getting an average of 20 miles to the gallon before CARS, they are getting 20.0046 mpg after it.
The real gain in efficiency due to CARS is definitely smaller than that. Many CARS purchasers would have bought new vehicles anyway without the program. The benefit to the environment diminishes even further when you factor in the amount of energy that went into producing all of the new cars that have been purchased. And so a negligible gain in fuel efficiency came at a cost of $3 billion to taxpayers, plus the program’s cost to the economy. Edmunds estimated the average value of traded clunkers at $1,475, which suggests that $1.l billion worth of capital was destroyed. It isn’t much, but at a time when jobs are in scarce supply and investors are running for cover, should taxpayers be forced to pay to take value out of the economy?
