Cash for Clunkers likely extended despite controversy
The Senate is expected to vote on a bill on Thursday to extend the Cash for Clunkers car trade-in program, but experts contend there are more cost-effective ways to get environmental benefits.
The government-funded program, where people can get up to $4,500 for trading in a car for a new, more fuel-efficient model, has been so popular that it may run out of funding by the end of the week. The House passed a bill to extend the program with an additional $2 billion which, if the Senate passes its version, would give consumers until Labor Day to trade in cars, according to an Associated Press report.
The program has spurred vehicle sales in the ailing auto industry for both U.S. and foreign suppliers. But the program has its detractors, with some warning that the sales spike is temporary and that there are less costly ways to promote green technologies.
"As a carbon dioxide policy, this is a terribly wasteful thing to do," Henry Jacoby, the co-director of the Joint Program on the Science and Policy of Global Change at the Massachusetts Institute of Technology told the Associated Press for an article that analyzes the environmental benefits. "The amount of carbon you are saving per federal expenditure is very, very small."
The cars that are being bought are on average 18 percent more fuel efficient than the cars they are replacing, according to the Department of Transportation.
But the overall impact from the program in reducing greenhouse gas emissions is about saving one hour of the U.S.'s carbon dioxide emissions, according to the AP analysis written by Seth Borenstein.
"It's not that it's a bad idea; just don't sell it as a cost-effective energy savings method," Michael Gerrard, director of the Center for Climate Change Law at Columbia University said in an academic journal. "From an economic standpoint it seems to be a roaring success. From an environment and energy perspective, it's not where you would put your first dollar."
Also, the additional $2 billion in funding to extend the program would come from a loan guarantee program for deploying renewable energy projects, such as solar and wind farms. In the current financially constrained funding environment, renewable energy company executives say that the Department of Energy loan guarantee program is very effective.
"Redirecting one-third of the monies allotted to the loan guarantee program to reseed the Cash for Clunkers program--which has already taken an estimated 250,000 pollution-heavy cars and trucks off the road--appears to be a politically advantageous, though economically short-sided, move," wrote analyst Nadav Enbar in an IDC Energy Insights paper.
He calculated that the $6 billion originally allocated for the DOE loan guarantee program could result in over $100 billion in economic activity in the U.S.
See CNET Car Tech's choice of six cars that get the full trade-in value of the Cash for Clunkers program and meet the maximum price requirement.
Martin LaMonica is a senior writer for CNET's Green Tech blog. He started at CNET News in 2002, covering IT and Web development. Before that, he was executive editor at IT publication InfoWorld. E-mail Martin. 
Go big government- you're doing such a great job!
Please control my life even more by proxy of your 'green' ideas! I'm loving it!
+1
Amen
Yes, but is it highly-visible economic activity? Republican leaders won't acknowledge the existence of any stimulus projects except ones on their fron lawns. Perception is really important here.
Making public transport a viable alternative to car use would cut down on emissions massively but I guess there's not so large an industry pressure group behind that.
You mean that buying a car from a dealership, which was shipped to them after being built in a factory, and that factory will have to build another to replace it, which might be sold under this program starting the cycle over does nothing to help the economy and employment situation? It is just throwing money down a hole? Even though it has helped post an increase in car sales, which of course has nothing to do with getting the investment in the US auto companies back which will lessen the deficit that the GOP only cares about when they are out of power.
I wonder why the GOP is in the wilderness?
I agree with Obu, public transportation would be a better investment, but the problem is according to the GOP that is just wasteful spending as well. If only we had a train system like Europe or Japan has, the economic benefits would quickly pay for such an ambitious project. The cash for clunkers program is a stopgap measure, but at least it has economic benefits.
The program is just simply clearing out excess inventory quicker. Excess inventory which would have been sold anyway, through price cuts / rebates / incentives / whatever you want to call them.
The car manufacturers aren't suddenly opening new plants to build more cars to "replace" ones being sold by this program. Instead they're still going to close down plants to _reduce_ next year's excess.
So the government is only loosing $2.5k per car.
I think the new car mpg mandate should have been higher to get this rebate.
What is happening to the old car. Is it getting resold or trashed.
djeshelman and others please look at this link
http://www.wasteonline.org.uk/resources/InformationSheets/vehicle.htm
To summarize: on the average car 98% of metal gets recycled. 90% of the battery. 25%of plastic
I agree with the sentiment that perhaps a higher mpg mandate should have been put in...but as it stands most people are buying cars with higher than the minimum mpg anyway. Last I saw, the average increase in mpg from clunker to new car is roughly 10mpg. Doing some quick math...and that first $1 billion in the program reduced our yearly oil expenditure by over half a billion dollars (250k cars X 10k miles per yr X 10mpg). If you assume that the reduced oil consumption comes at the expense of imported oil...that's a serious chunk of change each year that doesn't go overseas (and thus continues to circulate in our economy, generating more value as it does). It's not the whole solution by any stretch, but it's not as "meaningless" as so many pundits have claimed..and that's before you figure in the prime-the-pump stimulus effect of the immediate local economy. But you have to remember that most of these pundits are the same savants who advocate the wholesale offshoring of our manufacturing capabilities and followed the Cheney's mantra of "deficits don't matter"...EXCEPT when a democrat is in power /rolleyes.
So the government is only loosing $2.5k per car."
Faulty logic. The government would have gotten the tax money regardless of the existence of Cash for Clunkers.
Many cars turned in were paid for. Now, the banks are the ones benefitting from new car loans.
I suspect most news cars are coming from dealer inventory and not new manufactured ones. So, where is the stimulus here?
What's being sold is this year's inventory -- which would have been sold anyway through various dealer or manufacturer incentives to make room for new models. This program has ZERO influence on the number of cars to be produced or sold NEXT year, chiefly because the program probably wont even exist next year.
All the program is doing is replacing the manufacturer as the incentive provider. That doesn't create any NET new economic activity, because it doesn't change either the supply or the demand in the long run.
Jhenry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info
THE bank that is truly benefiting from the loans is the Federal Reserve, which is a Private Bank!
Support the bill to AUDIT the Fed! HR1207 & S604:
http://www.campaignforliberty.com/campaigns/hr1207home.php
http://www.youtube.com/watch?v=LA8IM550tTU
Henry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info
- by Mortgage100 August 10, 2009 7:05 AM PDT
- I guess different people have different circumstances and therefore different outcomes from the clunkers deals.
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