Cash for clunkers…the final chapter

The verdict is finally in on the “cash for clunkers” program, and I doubt that any rational person will applaud.

I know you will find this hard to believe, but, it appears that new car sales weren’t “stimulated” at all, they were just moved from one time period to another.

Last week U.S. automakers reported that new car sales for September, the first month since the clunker program expired, sank by 25% from a year earlier. Sales at GM and Chrysler fell by 45% and 42%, respectively. Ford was down about 5%.

Now, there’s a surprise.

But, the news gets even better, assuming that’s possible.

Rather than stimulating the economy, the program made the nation as a whole $1.4 billion poorer.

How could that be, you ask?  Well, we took thousands of old cars that were traded in under the program and destroyed them…no used cars to sell to people who couldn’t afford new cars, no spare parts to sell to people who couldn’t afford new parts, and no sales of used cars to many other poorer nations that eagerly buy our used cars.  That dumb piece of the program destroyed capital (i.e. used cars) and, as a result, as a nation, we are $1.4 billion poorer now than we were before this misguided legislation.  Taking that further though, I wonder how many jobs were lost in those industries as well?

But, some will say, hey, look at all the gas we will save by having more fuel efficient cars on the road.  Certainly that will redeem the program, won’t it?  Well, no it won’t.

According to Hudson Institute economist Irwin Stelzer, at best ‘the reduction in gasoline consumption will cut our oil consumption by 0.2 percent per year, or less than a single day’s gasoline use.’

So, summing up, cash for clunkers didn’t increase auto sales, destroyed $1.4 billion in capital, put people out of work, reduced our gasoline consumption only by an amount equivalent to one day’s use per year, and it only cost us $3 billion to accomplish that feat.  Pretty neat, huh?

And now, they want to run our health care.  Think of how much havoc the government can wreak with a $1trillion program.

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The Sound Off Sister was an Assistant United States Attorney for the Southern District of Florida, and special trial attorney for the Department of Justice, Criminal Division; a partner in the Florida law firm of Shutts & Bowen, and an adjunct professor at the University of Miami, School of Law. The Sound Off Sister offers frequent commentary concerning legislation making its way through Congress, including the health reform legislation passed in early 2010.


  1. Dimsdale on October 5, 2009 at 5:12 pm

    "We're the government, and we're here to help you" is the death knell of anything they supposedly "help".


    It wasn't bad enough that they couldn't even run the relatively simple clunker program worth a hoot, but that they think that they are even remotely qualified to run something that is orders of magnitude more complex and potentially harmful to the country.


    The "Cash for clunkers" program was small potatoes compared to their other screwups: Social Security, Medicare, the "Great Society", education, energy, you name it.  More evidence that they don't know the most basic precepts of economics and a free society.  As if we needed more proof….


    I wouldn't trust them to find their own butts if both hands were Krazy glued to their gluteus maximi!

  2. phil on October 7, 2009 at 3:48 am

    Look on the bright side– The poor suckers who got scammed into paying income taxes on the 'extra' $4500 they 'earned'.  Should be enough for a nice date for Barry and his squeeze.

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