A Clunker of a Deal
Nov 05, 2009
1 Comment
Just about every news wire is talking about--SURPRISE--that countless pickup trucks were traded in for . . . pickup trucks. In fact, about 15% of the new cars that owners drove off the lots thanks to this program got less that 20 mpg. You may not think this was an egregious amount, but when you consider that buying a new car is the equivalent of putting FIVE years worth of carbon in the air, the program's a flop. What started out as a way to improve the environment and air quality is now a program that a desperate Obama Administration wants to tout as a way in which it is "saving" the economy. What any credible economist will tell you is that cash for clunkers did nothing but "pull demand forward," i.e., throw a bone to those that most likely would have purchased a new vehicle soon anyway.It's been a year since Obama was elected as president, and that pride and euphoria, unfortunately, is turning into disappointment and cynicism. I think Obama is turning into another Clinton Democrat--someone from a humble background who has become smitten by the powerful and prestigious people who hover around the Oval Office. It shows in the Wall Street crowd that's advising him (I really wish now Buffett were Treasury secretary, not Doogie Howser), and his fundraising-laden schedule. And overall, I liked Clinton and thought he was a solid president--but he was also lucky in that he (and we) benefited from a technological revolution that allowed us to live and work most of our time on the Internet.
Sometimes I wonder if Obama & Co. are waiting for the "green collar" economy to take off. But renewable energy and green technologies require more than a few smarties in a garage hooked up to a server. These technologies require massive sums of capital, changes in the regulatory climate, and time. Many people, including the editor of this site, are questioning whether they really will be part of this "green economy" and are looking elsewhere.In fairness to Obama, the economy won't turn on a dime, and yes, he inherited a mess. And to his favor, I think far too many people are bored with the Republicans, who really don't have any ideas on transforming the economy. They are a tragic comedy, led by Sarah Palin, Michelle Bachmann (her yammering is hilarious), Eric Cantor (the Reps' whiny answer to Richard Gephardt), and John Boehner (his perma-tan should be enough warning about climate change!).
Nevertheless, the frustration I have with cash for clunkers is that it was a token program to placate a few constituencies . . . and just did not give any push we need to transform our energy or transportation infrastructures. What's amusing, however, is that the group who benefited the most, the car dealerships . . . are mostly Republican.
Did you benefit from the cash for clunkers program? We'd love to hear your story.
I live in the Detroit area (one of those “placated constituencies” you deride), so pretty much anything automotive is going to affect our lives in some way. With our 15% unemployment in Michigan, CfC was sold to us as a way to get some of the factories back to work while helping the environment.
On a personal side, I have two friends who were called back to work as a direct result of CfC. One worked second shift at a parts factory, the other at a steel factory. Obviously, this is anecdotal, but the point is these factories and the people who work in them won’t get converted to “green” manufacturing overnight (as you rightly allude to). And a program like CfC does put people back to work essentially overnight, plus then you have supplier jobs, local community jobs, etc. etc..
I think that the biggest problem with CfC was a “branding” problem, not an environmental or economic one. I’ve heard many complaints about CfC, but I’ve heard few viable alternatives that would put people directly back to work in closed plants and dealerships within a few days. CfC did that. Additionally, I’ve seen several of the studies that claim the sales were “pulled ahead” and there’s no argument that it happened. But I would disagree with your characterization that it threw “a bone to those who would buy a new car anyway”. Definitely there was some of that, but the average age of the trade-in was somewhere between 8 and 14 years old (depending on which manufacturer). Folks with a 1995 to 2001 model year car or truck will definitely be in the market for a vehicle at some point (how long can they keep them running??) – though I think a strong case could be made that many of these were not pull ahead NEW sales so much as a shift from potential used vehicle to new vehicle sales. The fact that auto sales haven’t completely collapsed at the end of CfC is evidence of this, as well.
Plus, I thought the stimulus funding provided about $18 billion for investment in public transit, $11 billion to upgrade electric grid, $14 billion for renewable energy investment, and another $27+billion for highway and bridges to push towards “transform[ing] our energy or transportation infrastructures”. That seems like it would have been an overly aggressive goal for CfC, but it might have been sold that way (again, that’s a branding problem).