Ignore The Spin. Cash For Clunkers Was A Win, Not A Failure.

September 5, 2010 at 11:23 AM (Uncategorized)

Cash for Clunkers has been declared to be “a classic government folly” by those on the right. The argument is that the Clunkers program, by permanently removing 700,000 vehicles from the market last year, has driven up prices for used cars this year (by about 10%). Conservatives and libertarians are spinning this to mean that the Clunkers program has penalized poor people who might have wanted to buy a car this year.

I respectfully disagree with that assessment. The resale value of my car is now 10% higher than it would have been otherwise. If I wanted to sell that car this year, I would be in a slightly stronger position to do that than if the Clunkers program hadn’t happened. If I were to buy a new car, my current car has a slightly higher trade-in value. If I were to buy one of those slightly more expensive used cars, the slightly more valuable price of my own used car offsets most of the cost increase.

In that last scenario yes, the Clunkers program makes buying a used car a tiny bit more expensive. What, you wanted a government program that was 100% perfect without a single trade-off? While you’re at it, you may as well wish to live in some fairy tale paradise where everyone rides a unicorn to work. In the real world, nothing is 100% good or 100% bad.

Oh, and let’s not forget that this shortage of used cars is very temporary. It will not magically reach into the future to take more cars off the market. The supply of used cars will be back to normal within the next year or two.

Cash for Clunkers is also being condemned as a failure because the environmental impact is small. Yes, the annual impact is small when compared to overall gasoline use and carbon emissions, but the program does have an environmental impact. The newer cars will spew slightly less toxic smoke into the air. The newer cars will make better use of each gallon of gasoline they burn. The newer cars most likely have better safety features than the cars they replaced, so they’ll kill a few less people on the highways.

So yes, Cash for Clunkers failed to magically cleanse the atmosphere of all carbon dioxide or to close the valve on all the pipelines pumping oil into the United States. It also failed to wash anybody’s dishes or cut anyone’s lawn. Obvious failure is obvious.

Give me a break. It was an improvement. A tiny, hard-to-see improvement, but it was an improvement. That’s all we can realistically expect from the government these days. The entire country is so polarized that hardly anything can be accomplished. We very nearly degenerated into rioting last year during the health care reform debates.

Republicans are sore at having lost power, so they have decided to simply sit in a corner and sulk instead of representing their constituents by governing. A quarter of Democrats are so conservative that it leaves me baffled as to why they bother to run as Democrats instead of Republicans. In this environment, it’s a miracle that anything at all gets accomplished. Any forward progress is going to have to come in small increments, with progressives and liberals fighting against conservatives and libertarians for every inch of ground.

Conservatives and libertarians top off their demonization of Cash for Clunkers by pointing to how much it cost. In order to achieve even the small improvements it made, the program spent billions of dollars in a wasteful manner. I’ll concede that, as a way of reducing carbon emissions or saving gas, it wasn’t very efficient. Very true.

But then, that wasn’t the point of the program, was it? I’ll remind everyone that we are in a recession, in case the large number of people without jobs had gone unnoticed. We are broke.

What is the cure for a recessed economy? Money, and lots of it. When the economy is going down the drain, the quickest and most obvious way to reverse the situation is for the government to loosen the purse strings. Between Roosevelt’s New Deal and World War II, the United States spent more money than any government had ever spent on anything and it brought to an end the Great Depression. It was the largest economic expansion in history and it created the modern United States and the entire middle class.

Let’s all stop for a moment and snicker at the conservatives and libertarians while they sputter in incandescent rage at that last paragraph. They will never admit that government spending does anything but harm the economy, regardless of the fact that history disagrees with them.

Cash for Clunkers had a few minor positive bonuses for the environment and that’s nice and all, but that wasn’t the point of the program. The point was to inject cash into a failing economy. For the brief time the program was active, auto workers, truck drivers, mechanics, car salesmen and insurance salesmen were back at work and could put a few more bills behind them.

Cash for Clunkers gave us some modest, permanent benefits and briefly put people in the auto industry back to work, in exchange for a small, temporary trade-off in a very limited set of circumstances. I’ll take it. That was a job well done. Frankly, I say let’s do it again and on a bigger scale. Only next time, let’s limit it to purchases of hybrid and electric vehicles.

(h/t Library Grape)

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