Study says 'Cash for Clunkers' created few jobs

[Dave]

Not only did Cash for Clunkers not create hardly any jobs, it didn't really do anything for the environment either.... but who is really shocked with either of those revelations? The silliness of destroying all the cars that were taken in during the program was even stupider... not only did it artificially raise the price of used cars, it took a number of reliable parts off the market as well. So people that couldn't afford to buy a new car had to pay more if they needed to purchase a vehicle during the course of the CFC program. Heard it mentioned on a talk radio show this afternoon on the way to work where a couple bought a vehicle, drove it for 6 years and then sold for more then what they bought it for, simply because that's where the market for used vehicles was at at the time.

Washington — The nearly $3 billion “Cash for Clunkers” program approved by Congress in 2009 did little to boost the environment and created few jobs, a new study released Wednesday found.

A Brookings Institution study found the $2.85 billion program “provided a short-term boost in vehicle sales, which were pulled forward from sales that would have occurred in subsequent months. There was a small increase in employment but the implied cost per job created ($1.4 million) was far higher than other fiscal stimulus programs.”

The study — from researchers Ted Gayer and Emily Parker — said the “Car Allowance Rebate System,” or CARS did little to boost employment. This is at least the fourth major study since 2012 that has raised questions about the value of the program.

The study said far more jobs could have been created using other government stimulus programs — increasing unemployment benefits (at $95,000 per job); $80,000-$133,000 per job created for cutting employers’ payroll taxes; $222,000 per job created for reducing employees’ payroll taxes; $200,000 per job created for providing additional Social Security benefits; or $222,000 per job created for allowing the expensing of investment costs.

The study estimates the sales led to 3,676 “job years” — sales supporting a job for a single year — between the automaker and auto parts sector, or at a cost of $1.4 million per job. “This suggests that the CARS program was far less cost effective at creating jobs than other fiscal stimulus programs,” the report said.

The White House Council of Economic Advisers in 2009 had estimated far more jobs as a result of the program. The program “estimated that cash for clunkers will create 70,000 jobs in the second half of 2009.” The White House got into a war of words with Edmunds.com in October 2009 about the value of the program.

Nearly 700,000 vehicles were traded in between July and August 2009 under the program. Participants received either a $3,500 or $4,500 voucher toward the purchase of a new car depending on the difference in fuel efficiency — and the car traded in had to be destroyed. The study credits Alan Blinder for proposing the idea in a New York Times op-ed in July 2008. Initially the program received $1 billion but after the program quickly ran out of money, Congress approved another $2 billion.

The study noted that during “Cash for Clunkers,” the program accounted for 31.4 percent of total auto sales. Vehicle sales fell by 38 percent in September after the program expired. The study and several other studies suggest the program pulled ahead a $2 billion increase in third quarter Gross Domestic Program from the next six months. It also argues that the program “provided a short-term boost in vehicle sales of approximately 380,000 vehicles, which were pulled forward from sales that would have occurred in subsequent months.” The average price of vehicles purchased was $22,592.

But the program also destroyed some perfectly good cars. “Incentivizing the premature destruction of used vehicles represents a loss of capital stock and thus a reduction in economic wealth,” the study said.

A 2012 study found the program resulted in a reduction in gasoline consumption of 884 million to 2.9 billion gallons of gasoline — or 2.4 days to 7.9 days of total U.S. gasoline consumption. The study found the costs for reducing carbon emissions was similar to the $3,400 hybrid tax credit, but more cost effective than the electric vehicle tax credit, excise tax credit for ethanol or renewable fuel standard.

“The cost per ton of carbon dioxide reduced from the program suggests that the program was not a cost effective way to reduce emissions,” the study found.

The bill had required dealers to administer surveys to determine if people taking part had planned to buy a new car without the program. But because the program was rushed into existence, just 21 percent of buyers fully completed the survey.

The Transportation Department didn’t immediately respond to a request for comment. In June, outgoing Transportation Secretary Ray LaHood defended the program, saying the program took automakers “off life support.”

“The showrooms had been abandoned,” LaHood said before the program took effect.

From The Detroit News: http://www.detroitnews.com/article/20131030/AUTO01/310300106#ixzz2j...

[Willy]

Very interesting Dave.

What fiasco's the liberal mind can think up. I hope this out of control Government will not destroy us before people realize what is going on.

[XLFD]

When a government program as unsophisticated, limited in scope, and simple as "Cash for Clunkers" has so many 'unintended consequences' (at least for the short-sighted progressive mindset), one can only shiver in fear over what irreparable damage the complicated and wide-scoped  juggernaut known as Obamacare will inflict on our country   

[masonco]

Not only did cash for clunkers remove a lot of used cars from the market thus raising prices for used vehicles, but I heard that they wanted to eliminate them cause the newer cars all have some type of gps tracking device aka black boxes.

[XLFD]

Other problems:  It stole car sales from the future, at the time it was implemented it was a program the US couldn’t afford, it favored one troubled industry over others (just like the auto bailout), it helped sell foreign cars and created jobs in other countries and it gave false readings on the economy by creating taxpayer subsidized deflation.

The loss of all those used cars to the grinders, created used car inflation that hit the poor extremely hard.  That's who usually see the consequences of progressive acts, because progressives know that their message sells to the poor dependent on government programs better than those who live independent of the government.