Giveaways won't lift economy

The Cash for Clunkers program was a clunker, according to a media analysis.

The taxpayer-financed Cash for Clunkers car sales incentive program proved – as if it was in doubt – that people will line up to accept money the federal government is giving away.

But if anyone was hoping that it would contribute in any significant way to putting more fuel efficient cars on the road – one of the primary objectives of the program – it's no dice.

A recent analysis of the program by the Associated Press reveals only marginal improvement in the overall fuel efficiency on the new vehicles that were sold. Indeed, the most common purchase under the program involved motorists who were trading in one fuel-inefficient truck – the Ford 150 – for a new one of the same model. AP reports that buyers trading in trucks were 17 times more likely to buy another truck than the fuel efficient Toyota Prius.

Despite what proponents of the plan were saying, it's hard to believe they really thought motorists would rush out to buy the smaller cars they have disdained for so long. The "green" argument was just political marketing for a multimillion-dollar giveaway designed to boost the auto industry and help beleaguered car dealers.

It certainly spurred sales, but growing evidence indicates that much of the activity involved persuading people already thinking of buying a new vehicle to make the buy in September instead of November. Was that really worth $3 billion in taxpayer money?

The program involved providing rebates ranging from $3,500 to $4,500 to motorists who traded in older vehicles for new ones. Dealers report that many of the cars traded in really were clunkers, worth nowhere near the government subsidy. But it was a good deal for everyone but the taxpayer.

One wonders how a program this ill-advised gets started. Obviously politicians on Capitol Hill, eager to convince constituents they're doing something to boost the economy, are easy targets for lobbyists pushing the plan. But wasn't there anyone on Capitol Hill who could stand up and ask his colleagues or the public whether it was worth spending all that money in a way that didn't really boost fuel efficiency, simply moved sales from one month to another and didn't generate much of value in economic growth? Apparently not.

This essentially was a gimmick that provided the illusion of a substantive action to get the economy out of the rut. Like much of the other economic stimulus efforts, Cash for Clunkers didn't stimulate much beyond a round of self-congratulations among the political class.

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