I think people are being too hard on Cash for Clunkers. Yes, driving a gas guzzling car is still more environmentally than making a new one. And yes, allowing people to trade cars in for used cars would have probably been more environmentally friendly. But just because the policy hasn’t achieved peak environmental efficiency and may do little to boost the economy doesn’t mean it’s worthless.
First, I think it’s short-sighted to say that this cannibalizes future car sales. It’s possible, but because car sales dropped so significantly during the recession, it’s more likely that this is just fulfilling pent-up demand, making up for past sales more than hurting future ones. We also can’t assume that the people trading in their SUVs for more fuel efficient cars would necessarily buy more fuel efficient cars once the recession is over. It isn’t an unlikely possibility that once people start feeling comfortable about their finances again, they will continue to buy Hummers, trucks and SUVs. We can wait around and hope that when people eventually trade in their vehicles in the future that the economic and cultural climate is such that they will still buy a more environmentally friendly automobile, or we can take advantage of their current popularity and incentivize their purchase to get as many people in fuel efficient cars as we can while they’re still hot.
Sure, we could have been more strict in our regulations. We could have said people could only trade up if they purchased a car that got 35 mpg, or 40 mpg, but that’s missing the real point of this entire policy: to give people a little bit of good news. You can call it a selfish move by Congress to win cheap political points, and maybe that’s what it actually is, but that doesn’t change the fact that this program is giving some good news to a lot of people who haven’t had anything as uplifting as a new car in quite a while, not to mention our auto industry (lord knows they could use it). And maybe you aren’t a fan of encouraging more of the kind of consumption that arguably partially contributed to the mess we’re in, or maybe you don’t have much sensitivity towards or empathy for middle class America, which is fine. But even if you don’t think the U.S. government should be spending tax dollars to essentially be giving some Americas a nice shiny new car as a gift, consider the big picture.
Ironically, people who are calling Cash for Clunkers short-sighted are the ones who aren’t looking at the bigger picture. One the key components of Obama’s plan to fix the economy is comprehensive health reform, but you don’t need to be reading the Times every day to know that’s looking less likely as Obama’s perceived support dries up. Whether it actually is doesn’t matter, because it’s perceptions that sway the media and control momentum in Congress. Obama desperately needed to regain some momentum, and if that means spending the political equivalent of chump change on a few new cars, so be it. And while some economists in high brow publications may scoff at the immediate overall effectiveness of the program, it has been a smashing success with much of middle class America and given the president a significant tailwind again.
So could Cash for Clunkers be more environmentally friendly? Sure. You know what would be even better for the environment? If we didn’t drive at all. We should have spent the money on public transportation instead. Or, wait, you know what’s better than that? Bicycles. Oh! Or if we live in communes and don’t need to travel anywhere. And while I am being facetious, I do understand why environmentalists feel this program could be more “green,” and there is absolutely nothing wrong with wanting to improve the program’s effect on the environment. But you can always find some excuse about how a program can be more environmentally-friendly, and while this program is being billed as good for the environment as one of its selling points, that isn’t it’s main goal. Cash for Clunkers is just a small part of Obama’s much larger plan to get health care reform passed, and ultimately fix the economy.
The bottom line is that Cash for Clunkers slightly boosts the economy in the short term and ultimately gets more people in more fuel efficient cars for a bargain price. I’ve read more moral indignity over the measly $3 billion we’ve given Cash for Clunkers than the $160 billion we gave the lowlifes at AIG or the $700 billion we gave the corporate tools on Wall Street. And while I’m not saying that it’s ok to be irresponsible with $3 billion because we’ve made worse investments, it is a relatively small price to pay for something you can’t always put a price on: a little confidence.
boomshockalocka:
On the surface, Cash for Clunkers seems like a great idea. Get some money flowing into the economy through big purchases, help out car companies, and save the environment. However, its biggest accomplishment may be scoring political points without doing much for car companies or the environment.
First, economically, CfC is terribly shortsighted. These clunkers that are being traded in would likely have been traded in within five years time anyways. So, instead of spreading those sales out, we spent $3 billion dollars and crammed them all within a couple of weeks (or however the extra $2 billion lasts) thus cannibalizing future steady sales rates. With the industry moving towards greater mileage standards anyways (if it wants to survive), people would have bought higher mileage cars to replace their clunkers, except they wouldn’t have bought them quite yet, all at once, or necessarily new.
The problem environmentally is that making hundreds of thousands of new cars has an extremely high impact on the environment. The mileage requirements set in order for a new car to qualify for CfC aren’t stringent enough to offset the huge footprint of manufacturing a new car within a reasonable amount of time. Also, while yes, it is nice to get gas guzzlers off the road, most often it is better to run your current car into the ground. Instead, CfC influenced consumers to purchase new cars (possibly before a replacement was necessary) when a used car would be the obvious eco-friendly choice.
Overall, Cash for Clunkers was short-sighted economically, and environmentally, was mainly greenwashing. However, congresspeople who voted for it can go back to their districts and visit their constituents who will be in a cheery high from the effects of consumption.
The Economist: Congress just buying people cars now
The Washington Post: When the ‘Clunker’ is Greener
