Is 'Cash for Clunkers' a Bust or a Success?
The government-sponsored Car Allowance Rebate System, commonly known as “Cash for Clunkers,” burned through $1 billion of funding within a week. Last night, the Senate joined the House in a decision to inject an additional $2 billion into the program before leaving for August recess. But is the overwhelmingly popular program a success or a failure? That’s open to interpretation.
Here are the latest numbers: As of Tuesday, 157,000 transactions and $664 million in rebates have cycled through the program, and the average fuel efficiency has increased by 61%. Reports show that the majority of consumers are scrapping their gas guzzling SUVs and trucks for fuel-efficient cars, according to Grist’s Joseph Romm. So far, Cash for Clunkers will produce “annual savings of 3.8 million barrels of oil per year and nearly $1,000 for consumers at the pump, …reduce carbon dioxide emissions by 660,000 metric tons a year,” as Romm reports. Other perks: The clunkers will be recycled and the rebate program offers car owners up to $4,500 to swap vehicles, which is a considerable economic booster.
New America Media reports that the program is a local success in California. After just one week, car dealers praised the program for boosting sales and decreasing the number of inefficient cars on the road. In order for cars to qualify, they must be made after 1985, get fewer than 18 miles per gallon and be insured by the owner for at least a year prior to the trade-in.
Others have marked the program as a washout for exhausting its funds so quickly. As Mike Lillis explains for The Washington Independent, lawmakers might be rushing to support a program without fully understanding its effectiveness.
“Without further information about what models are being scrapped, what models are being sold, and the environmental benefits of the swaps, critics worry that the program might be failing its stated goals of reducing emissions and a reliance on foreign oil,” Lillis writes.
Many Senate Republicans oppose Cash for Clunkers because the program’s thresholds are too low to have any real environmental impact. While the environmental regulations do need to be fine-tuned, Salon’s Andrew Leonard senses that obstructionism is the real motive behind GOP opposition, considering their poor environmental track record. “Here’s a program that is clearly having a stimulative effect, and they want to nip it in the bud—because anything that the Obama administration can tout as a success is a failure for the GOP,” says Leonard.
But this should come as no surprise. Republicans are often hesitant to support government-run programs (just think of healthcare reform), but that doesn’t mean that it’s ineffective. Rachel Maddow highlights that the program encourages consumers to spend money, pumps high demand into the car industry, and helps Americans switch to cleaner, more fuel-efficient cars in a video featured by The Real News.
“Americans are apparently loving this program,” says Maddow. “Car dealerships are mobbed for the first time in years. Ford says their sales are up this month over the same month last year and that’s the first time they’ve been able to say that since 2007.”
Historically, the auto industry has played a key role in helping Americans pull through recessions and set the economy on a path towards recovery, as Senator Sherrod Brown (D-OH) points out in an interview with Maddow. However, the auto industry has rarely been able to juggle both economic and environmental interests. Part of what makes Cash for Clunkers so unique is its ability to align dissimilar interests to reach common goals.
Meanwhile, Adam Schlesinger notes for Air America that the program is “providing an excellent incentive to reduce emissions.” Data provided by the U.S. Department of Transportation shows that consumers are purchasing new cars that get about 10 more miles per gallon than the car they traded in, which saves them money and trips to the gas station.
Vice President Joe Biden called the Cash for Clunkers program an “unqualified success,” as Rachel Slajda reports for Talking Points Memo. “It has boosted demand for cars and spurred consumer spending. And our critics say they don’t think this program is helping. Well, all the economic indicia point to the opposite direction—it is helping. I think it would be hard to tell … the thousands of people who have just traded in gas guzzlers for more efficient cars that this is having no impact,” said Biden.
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