Regarding Erik’s Cash for Clunkers Fail post, the point of cash for clunkers was twofold- to provide a short term direct stimulus to both the economy and to the devastated auto industry and the supply chain that supports millions of jobs and to get shitty gas guzzlers off the road. How do I know this? The title of the bill:
To accelerate motor fuel savings nationwide and provide incentives to registered owners of high polluting automobiles to replace such automobiles with new fuel efficient and less polluting automobiles or public transportation. as introduced.
Far from being a failure, it was a smashing success in both regards (.pdf):
In early 2009, with the nation suffering from a recession of historic proportions and the
automobile industry experiencing drastically reduced sales volumes compared to recent years, Congress considered a variety of proposals for fleet modernization programs. Several countries had already enacted such programs using various models, with the common trait being a government incentive to trade in an older vehicle for a new, more fuel-efficient one.Congress eventually enacted the Consumer Assistance to Recycle and Save (CARS) Act of 2009, 49 U.S.C. § 32901, signed by President Obama on June 24. The Act set out the basic requirements concerning which vehicles were eligible to be traded in, which new vehicles were eligible to be purchased or leased, credit amounts, how the trade-ins had to be disposed of, penalties for fraud, and the general period for eligible transactions (July 1 through November 1). For example, trade-in vehicles had to have been continuously insured in accordance with State law for a period of at least one year immediately prior to the trade-in. The statute defined passenger automobiles and three categories of trucks, and set fuel economy and other restrictions on which types of trade-ins could be paired with which types of new vehicles.
In fact, it was so successful, if everyone will remember, they had to add more money to the fund:
With the active support of the Office of the Secretary of Transportation (OST) and the Office of Management and Budget (OMB), the team accomplished all of these tasks in the allotted
time. The agency issued the final rule on July 23. By July 24, the website was available for dealers to register. On July 27, dealers began submitting transactions for review. The program was so well received by dealers and the public that deals sufficient to absorb the $1 billion available for credits were entered within the program’s first several days. On August 7, just 12 days after the system was opened to submissions, Congress enacted an appropriations bill that provided an additional $2 billion to the program’s initial $1 billion. (Pub. L. No. 111-47.) This tripled the volume of transactions NHTSA had expected to receive.
This was not a long-term approach, it was a one time attempt to ease a serious economic crisis with a direct infusion into the economy, as well as doing some good for the environment. This was an easy way to keep a major component of the economy alive on life support while also doing a great deal of environmental good. And do you know how I know it was not a long term economic policy? Because we aren’t doing it anymore! Funny, that!
The point of the cash for clunkers was not so Matt Welch could trade in his Acura (which, I assume he drives when he is not in France accepting their free health care). I understand libertarian revulsion regarding “tampering” with the free market, but for the life of me, I can not figure out why this program causes so much distress. It was $3 billion dollars, it set out to do something finite and accomplished it with a great deal of success, and compared to the hundreds of billions of dollars we give away to major manufacturers and oil companies (in the free market), it was a drop in the bucket. It was a creative, innovative, and successful government action to deal with our ongoing environmental and economic crisis, and again, for the life of me, I can not figure out the hatred it engenders, unless you just hate the idea of the government doing things well.
And finally, unless people were trying to turn in their ’99 Honda CRV for a 1974 Ford LTD, I can’t figure out how this upset that market.
mikefromArlington
“And finally, unless people were trying to turn in their ‘99 Honda CRV for a 1974 Ford LTD, I can’t figure out how this upset that market.”
It didn’t because Honda CRV wasn’t on the list of acceptable cars. It just wasn’t a true statement.
chopper
i don’t get the hate either. apparently, nothing gets people riled up more than a successful government program.
Steve
Cash for Clunkers was a complete failure in the fantasyland world of perfect economic models where, if a transaction would be beneficial for the economy, then it would already be happening through the magic of the market with no need for an assist.
To put it another way, there are no empirical arguments that the program was a failure, but why let that stop you.
dmilligan
We used the program to dump a worn out Explorer for a Chevy HHR at a time when otherwise we wouldn’t have been able to afford a newer car. I think the program was great.
Citizen_X
See the beginning of that sentence.
Mark S.
It was a smart program. What we’re finding, though, is that the economy has deep problems and it’s not a problem of giving it a little kickstart. I think the problem is that a lot of our wealth was based on a real estate bubble and we’re not really producing shit in this country.
J
Thank you. But it does raise the question why EDK is posting…
Midnight Marauder
I, for one, am stunned by this turn of events.
beltane
Thank you. I stayed out of that one. Last time I ventured into an EDK thread, the little libertarian boys in the back row shot spitballs at me.
neill
Yeah, and there’s practically no used cars out there for sale anymore, and all of ’em aint worth shit, and they’re too expensive…
the food sucks and the portions are small… why do glibertarians remind me of jewish mother jokes?
Southern Beale
Far from being a failure, it was a smashing success in both regards (.pdf):
THANK YOU!
Jeeeeeeezus. I’ve been telling people that for months.
The whole “but they destroyed perfectly good cars!” meme is a wingnut talking point anyway. I remember hearing that after the program was begun that a right wing acquaintance was telling me about how seeing all of these parts go to waste was just killing everyone who is an old car enthusiast (which in Tennessee translates into “rednecks with four cars on blocks junking up the front yard.” Yes they even had to pass a law against it.)
I’m like, you’re kidding right? Talk about a niche group of hobbyists. We should let the entire auto manufacturing industry based in Tennessee go under because you want a gear shift from 1982?
Pangloss
The post was a roundabout way of pimping one of the GOP talking points (which Boehner echoed yesterday in his speech in Cleveland), that the government shouldn’t be “picking winners and losers.” This, of course, is the new formulation of the old GOP favorite tune, “let the market decide.”
The trouble with this is you can’t have an effective long term policy this way. We let the market decide a lot of things, and we got crap and inefficiencies as a result because better promotion and market share trumped efficacy. We got VHS instead of the superior Beta. We got PCs instead of Macs. We lost railroad right of ways and public transportation infrastructure. We got ethanol from corn, subsidized out the wazoo. We got wars for cheap oil, and dozens of other scourges.
Meanwhile, China is eating our lunch, in part because they have a totally command economy where decisions about winners and losers can be made in an instant.
superking
@Southern Beale:
Perhaps your acquaintance should have considered that old cars only increase in value once they become rare, or are of particular historical interest.
Seebach
” An armed Christian organization, Right Wing Extreme, will protect a church that is planning to host an “International Burn a Quran Day” on September 11, the church’s pastor said Tuesday.
…Dove World Outreach Center Pastor Terry Jones has accepted the support of Right Wing Extreme, which he said offered to come to the church with between 500 and 2,000 men on September 11. He described the organization as an armed civilian militia group.
…[I]n a statement sent to CNN by the Dove World Outreach Center, Right Wing Extreme founder Shannon Carson said: ”We fully support Dove World Outreach Center and its efforts to put an end to the notion that Islam is a peaceful religion. Islam is a violent cult with the goal of world domination.””
God no.
jl
Since I’ve learned to be XXXtra cantankerous thanks thanks to this here blog, I will criticize this post as well.
Cash for clunkers was good stimulus program, and did achieve it’s goals as an environmental program, I don’t think it should be called an overall smashing success.
It would have been much more efficient at achieving it goals, and equity concerns would have been less, if it had simply been split into to parts, one for subsidizing purchase of new cars with higher fuel efficiency and better pollution standards, and one for junking used cars that were a mess.
Each program could have had more flexibility as a stand alone program. People who participated in one could have been automatically informed about the other, and they could have made their own personal clunkers program if they wanted to.
I think the program was a kluge that worked in an economic emergency. To that extent it was a success, but I don’t believe it was a particularly good program on its own merits in terms of efficiency.
thefncrow
@Southern Beale: Even worse, short of needing a replacement engine for these old cars, they weren’t losing out on replacement parts.
Cash For Clunkers required that the engine be burned out. The rest of the car was untouched, so it could be disassembled and kept for spare parts.
So those people who need replacement parts for their ’82 Shitbox weren’t deprived of their parts by someone trading in said same ’82 Shitbox to get a car with reasonable gas mileage.
JamesC
@Seebach:
Right, because bringing in an armed mercenary group to protect your right to hate speech paints Christianity in a positive light~
Is there something in the water that’s been tampering with everybody’s irony detectors?
WereBear
My old car was too efficient to qualify for Cash for Clunkers.
kdaug
Heil, Jesus!
malraux
@Southern Beale: Given that the cars were valued at less than 5k, we aren’t talking about Rolls Royces here.
beltane
@superking: In rural America, junked cars are considered lawn art. Instead of nativity scenes, RealAmericans have an ’85 Chevy truck that maybe someone will fix one day, flanked by an old snow machine with a “for sale” sign and a decrepit four-wheeler. The truck is not a clunker; it is a masterpiece of Americana.
SP
Since the most commonly destroyed car was arguably the most dangerous car in America there’s an argument that the program also saved the lives of hundreds or thousands of teenagers.
scav
oh yeah, nothing proves Xianity as the one and only religion of peace as much as armed militias protecting aggressive acts of incitement.
alhutch
@Southern Beale:
Just so your friend can put his mind at ease, only the engines in these cars were destroyed. The car (with said dead engine) ended up in a salvage yard somewhere to be picked over by folks just like him (and me!).
Edit – I see crow beat me with his reply.
numbskull
Well, as you say, C4C wasn’t a longterm program (unlike, apparently, the ED Kain training wheels program; how much longer will that go on, John?). However, I think it is in fact a longterm environmental program. Those 10 mpg clunkers are not coming back. That makes a huge difference in air quality for a lot of metro areas.
me
Doves are apparently now a symbol representing paranoia.
cleek
@Southern Beale:
and the only things that were required to be destroyed were the engines. all the rest of them ended up in salvage yards to be sold for parts, or to be melted down, or whatever – just like a normal junker.
there are probably acres of old Explorers sitting out there right now, waiting for scavengers to pick them clean.
(which is exactly what @thefncrow said)
J.A.F. Rusty Shackleford
@J:
Folks, if all conservalibertaricans were like ED Kain the world would be a much better place. I generally disagree with Kain but he seems like a decent guy who doesn’t make me want to end the misery and stab myself in the brain.
That being said I was non-plussed on his Cash for Clunkers post, partly because I don’t own a car. But I thought his posts on housing and on “limited / big govt” were pretty decent and made me think.
malraux
@jl: I’ll nitpick that idea. Timeliness was also an important element of the program. The more detailed and complicated a program you want to design and get passed, the longer it’ll take happen. Crude but fast is going to be better than well designed but very late.
soonergrunt
Ahhh, the self-answering question. It has a zen quality to it, don’t you think?
Violet
It didn’t line the pockets of a very well connected rich lobby. Therefore it didn’t have a lot of talking heads supporting it. Ergo, people didn’t know to like it.
schrodinger's cat
I am getting tired of EDK’s Mr Goody two shoes attitude. I don’t own a TV, I rent and I drive a used car, I am so virtuous.
DougL
Probably not surprising, but I actually had an acquaintance of mine ranting that all these cars were going into landfills. Um, no. The cars may not be runnable/driveable (as noted, the only thing required destruction was the engine), but the salvage parts and scrap metal from the frame are too valuable to be just tossed into landfill.
WereBear
Mars Attacks!
Puss
“Folks, if all conservalibertaricans were like ED Kain the world would be a much better place.”
Sorry, but….Pfffft. No big surprise here that he doesn’t know what he’s talking about. You know why? Because no matter how well libertarians try to buff their “reasonable” credentials they are 100% wrong 100% of the time, without exception. It’s the philosophy, not the person, that I dismiss out of hand in this case. In fact, I don’t even bother to read the guy’s posts, because I know that no matter what the pleasantries, he is simply going to be wrong.
Chris G.
@Southern Beale: Wasn’t part of the program that the clunkers were mined for useful/recyclable parts and such before being disposed of?
Martin
Well, I think the whole debate depends a great deal on where you start your assumptions. Truth is, there are few holes smaller than the automotive money pit that we all willingly toss our money. I suppose you could say that a program that accelerates the rate that we willingly waste money (and engines) is a failure, but we’ve been going on for a century with this being a perfectly normal and desirable state of affairs. Untold amounts of advertising dollars (free market!) have been dedicated to convincing people to toss their perfectly good cars away in order to get one that will presumably get you laid faster. The problem with taking the opposing view is to then critically analyze all the things that we willingly waste money on in this way and suggest that we stop all similar waste behavior results in either a completely destroyed economy or a logical argument that conservatives would be terrified to make.
If we tear out all of that extraneous discretionary spending – from cable TV to cars beyond what’s needed to get to work (assuming mass transit is inappropriate) to iPods and decorative landscaping, and even if we only propose doing that to a modest degree, where do we shift that GDP to in order to keep the nation fully employed, and where do we shift those discretionary dollars given that we’re actively discourage the ‘discretionary’ part? For all of those clamoring for tax cuts so you can ‘keep more of your money’, other than those in the bottom half of the labor pool (who are never the beneficiary of these tax cuts, because we’re not bitching that the lazy fuckers that are replacing your roof on a 105 degree day aren’t paying their way) what’s the point of the extra money except to buy that Corvette you’ve always wanted, or toss your kitchen appliances for better ones, etc. The whole point of tax cuts for the upper 50% is to convert that money into waste, presumably with the goal of making some jobs along the way.
So what to do instead if the waste is indicative of a failed policy? We could have people invest more, creating some new investment bubbles, but where can that money go that would keep GDP going and be simultaneously productive, and I can only think of one thing – taxes or at least directed spending. The only reasonable alternative to Cash for Clunkers would be Taxes for Trains or windmills or other infrastructure projects, or to funnel some of that money into paying off the national debt or giving the entitlement programs some breathing room. To put it into long-term projects that will pay dividends later. Of course, the same people saying that Cash for Clunkers is wasteful would never agree to channel that money into such projects.
WereBear
Virtue? Or Necessity?
gex
I don’t think you understand. The program failed because it deviates from libertarian dogma. QED.
Eric S.
@malraux:
No, but there was a Bentley, an Aston Martin, and 131 Corvettes. However, those complaining about the loss of the 1985 Maserati Quattroporte or the 1984 Corvettes should be banned from all classic car gatherings for at least the next decade.
Napoleon
Good post.
That aside on its face the whole argument that the cash for clunker had anything to do with, or at the very least is most of the cause, of the run up in used car prices is ridiculous. First it was inventory neutral. To take advantage you removed your car from the inventory on the road and replaced it with a unit not previously part of the inventory on the road. So long as every thing else remained the same at worst there is no effect on car prices (and actually I think there is a good economic argument to be made that if all things were the same in reality the price for the remaining vehicles would actually drop because you would have a higher quality of used car available then typical but not buyers ordinarily willing to buy them, so you would have to drop your price to capture those buyers).
So what is the cause? I posit that it is the fact that separately people have been not buying cars since the downturn at a rate to replace the existing inventory on the road (sorry, no link but I have read that repeatedly) Of course this hasnothing to do with C4C since there was a one for one exchange.
schrodinger's cat
@WereBear: Virtue out of necessity? Also driving an SUV? not so virtuous actually.
Shorter EDK, since he didn’t benefit from it, it was a bad idea.
Scott H
@mikefromArlington: I sure know that my 97 CRV wasn’t eligible. Still driving it, tho.
Napoleon
@Pangloss:
So why are they in favor of liability caps and subsidies for nukes and oil drilling but not wind farms?
Kirk Spencer
While C4C was running, there was a constant warning from a lot of folk that it was robbing future sales to make it work. An empirical proof was presented: car sales in the months after C4C ended would fall.
The fall didn’t happen. There are two possibilities. They were wrong. Something else happened to balance the plunge.
I’ve pushed a lot of people with whom I argued to tell me the something else. Unless they can show something, something identifiable and potentially testable, the answer is they were wrong.
C4C worked. As with a lot of the stimulus, it was too small to do the heavy lifting we need(ed).
A Guest
@Mark S.: just not true. We still make a ton of shit. We just do it with a smaller portion of the workforce. That isn’t bad in and of itself.
not producing shit here
les
If old man grumpypants weren’t already using it, I’d suggest retiring “McEstimate” and substituting “McKain.” Yeah, I get the spelling…
Death Panel Truck
Hey, now, don’t be hatin’ on the Ford LTD. My first car was a 1970 LTD. Had a gas-suckin’ 429 four-barrel, drove like a dream and blew most of my friends’ Camaros and Mustangs right off the road. Later on I had a 1962 Buick Electra 225 – the best car I’ve ever owned. I bought it from a young kid who inherited it from his grandmother. His dad said if he got rid of the car for a decent price, he’d help him buy a Toyota 4Runner. He was so eager to unload it, that I got it for $335 and a college algebra textbook. His dad was pissed, ’cause he thought it was worth at least $750 (this was in 1986, and that 24-year old car only had 99,000 original miles, with receipts for every tune up, new battery, new set of tires and oil change since ’62 still in the glove box.) I stole that car.
I loved those big ole land yachts. In a way, it’s kind of sad that America can’t build cars like that anymore.
malraux
@Eric S.: My problem with that claim is that if those cars were so valuable, why weren’t the sellers selling to the higher values? The Maserati, for example, got scrapped cuz the engine was already in horrible shape and the owner couldn’t find anyone who wanted it, even at a few thousand bucks. If collectors were so upset at these scrappings, then why weren’t they outbidding the government’s low price?
Ecks
@superking:
and moreover considered that nobody was going to make them sell their old cars. In fact, all that was happening is that some terrible ENGINES were being voluntarily sold by people in return for money, and disabled… with the entire rest of the car being made available as auto parts.
Also…
C4C was nothing as a failure compared to iPods when they first came out. Why, I went to my local store and they were all gone. Not a single one. Just like C4C, this proves it was a market failure! Why, if Apple were a private company, Steve Jobs would have been fired, and this is why the framers made Apple against the constitution, even though modern constitution-hating liberals keep it around.
/wingnut.
Mnemosyne
@Pangloss:
Not to mention that, as Napoleon pointed out, the government picks winners and losers all the time. There are many industries that are propped up thanks to government money (agriculture subsidies, anyone?)
Once you realize that, you realize that the Republican complaint is that they don’t like the winners that this administration has picked — ordinary, middle-class people — and thinks they should lose out to corporations and the super-rich.
Southern Beale
Just so your friend can put his mind at ease, only the engines in these cars were destroyed.
Yeah I told them that .. I know. But apparently engine parts are highly valued by people collecting ’80s era shitboxes on their front lawn.
Whatever. Do I have a sad? No I do not. Some shit is more important than some redneck Tennessean’s hobby. Sorry if that makes me a bad person.
Wingnuts have selfishness in the DNA.