Posted on 08/07/2014 10:06:33 PM PDT by 2ndDivisionVet
Back in 2008, economist Alan Blinder called the idea of a “cash for clunkers” federal rebate plan “the best stimulus idea you’ve never heard of.”
But more and more analysis of the program suggests “cash for clunkers” will be a stimulus idea we’ll never hear of again. “Cash for Corollas: When Stimulus Reduces Spending by Mark Hoekstra, Steven Puller, and Jeremy West finds the programs merely pulled forward car sales from the subsequent seven to nine months and thus “had no impact on the number of vehicles sold.” This counters the Obama White House claim that “a substantial proportion of the CARS sales were pulled forward from a far more distant future, and thus represented an important increment to aggregate demand at just the time when such demand was sorely needed.”
Second, thanks to fuel efficiency restrictions imposed on qualifying new vehicles, “‘Cash for Clunkers’ – a bill President Obama signed when the jobless rate was 9.5% — actually reduced the amount of money spent on new cars by two to four billion dollars” and “actually lowered total new vehicle spending over less than a year by inducing people to buy more fuel efficient but less expensive cars.”
Consistent with the existing literature, we show that while the program significantly increased the number of vehicles sold during the two months of the program, this entire increase represented a shift from sales that would have occurred in the following seven to nine months. Thus, over a nine to eleven month period, the program had no impact on the number of vehicles sold.
Strikingly, however, we show that over a nine to eleven month period, including the two months of the program, Cash for Clunkers actually reduced the amount of money spent on new cars by two to four billion dollars. We attribute this to the fuel efficiency restrictions imposed on new vehicles that could be purchased with the subsidy, which induced households to buy smaller and less expensive vehicles. In short, by lowering the relative price of smaller, more fuel efficient vehicles, the program induced households to purchase vehicles that cost between $4,000 and $6,000 less than the vehicles they otherwise would have purchased.
Thus, while the stimulus program did increase revenues to the auto industry during the\two-month program, the environmental component of the bill actually lowered total new vehicle spending over less than a year by inducing people to buy more fuel efficient but less expensive cars. More generally, our findings highlight the difficulty of designing policies to achieve multiple goals, and suggest that in this particular case, environmental objectives undermined and even reversed the stimulus impact of the program.
“suggest that in this particular case, environmental objectives undermined and even reversed the stimulus impact of the program.”
DUH....
But if you thought it was a horrible program, you were just one of those racists that hated the idea of a black president, remember?
Then it naturally follows, 2 billion is cheap for the benefit gained.
Most frightening words in the English language? “I’m from the government and I’m here to help”!
That would be time to close the door, lock the door, and go out the back way.
One of the worst results was to reduce the inventory of used cars available to the lower class. This must have raised the prices. Thus, the costs were shifted to the poor! This whole thing was a really bad idea.
cash for clunkers was a other payoff to the UAW, just like the administrations’s interference in what should have been normal bankruptcy proceedings at GM. But the UAW would have taken a huge, if not fatal, financial hit, so Obama stepped in and essentially gave the UAW a car company.
anything the libturds touch turns to ca ca.
Only a complete idiot would think that destroying value is good for the economy. But then we are talking about “progressives”. They would think that destruction is the way to prosperity and growth.
My nephew is an auto mechanic for a dealership. When he saw the vehicles they were junking, he said those vehicles were better than his car and he would have loved to swap them out.
Thanks Obama, Well off people got a reduction in the price of a new car and others working in the pre-owned industry lost their jobs.
C4C did eliminate a bunch of Ø bumper stickers from the roads though!
In 2008, my vehicle qualified as a ‘clunker’. If I had traded it, they would have had to give me $4,000 for it. I kept it until late 2011, traded for a new vehicle and was given $4,000 in trade for it and they didn’t junk it!
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