Posted on 08/10/2014 2:43:53 AM PDT by afraidfortherepublic
“Cash for Clunkers,” the 2009 Obama administration stimulus program designed to spend $2.85 billion to jumpstart the auto industry, turned out to be a complete disaster — for the auto industry.
In the minds of Obama’s team of advisers and economists, the program made total sense, of course. The plan was to dangle a $4,500 credit to persuade car owners to trade in their older automobiles for new cars with better fuel efficiency. It would stimulate an economy then in the midst of a deep recession. As a bonus, it would mean less oil consumption and cleaner-running cars.
The law of unintended consequences is a brutal thing, though, especially for inexperienced, shortsighted policymakers.
According to the findings of three Texas A&M University economics professors, “Cash for Clunkers” ultimately caused auto industry revenue to shrink by about $3 billion in less than a year
The professors issued the results of their research last month in a National Bureau of Economic Research-sponsored working paper entitled “Cash for Corollas: When Stimulus Reduces Spending.”
“This highlights how — even over a relatively short period of time — a conflicting policy objective can cause a stimulus program to instead have a contractionary net effect on the targeted industry,” the trio of economists wrote, according to The Wall Street Journal’s Market Watch.
“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.”
For one month, the nearly-$3 billion program increased the sales of tiny, low-profit-margin vehicles. In the next few months, though, all sales faded rapidly.
Overall, the Obama administrative initiative produced exactly no net increase for the number of automobiles Americans purchased.
“In this particular case, environmental objectives undermined and even reversed the stimulus impact of the program,” the professors wrote, according to Market Watch.
To say nothing about the fact that it removed a lot of 2nd hand cars from the marketplace that could have been used fo teenagers’ first cars, or job seekers.
Or more importantly, for downtrodden women and minorities...
Socialists love to p*ss away other people’s money.
Willful destruction of property for leftist political expediency.
My barber bought his vehicle, a loaded Jeep I believe, new, because “cash for clunkers” (which was strictly a PR campaign) had driven up the price of used vehicles. It was his first new vehicle purchase since before he’d married. Thanks afraidfortherepublic.
They also destroyed some classic cars.
Cash for Clunkers was Van Jones’ idea. In his 2008 book “The Green Collar Economy” he said we needed to trade our hoolas for hoopties. (Can he turn a phrase or what?) The problem is he has no practical experience in anything but he set policy. This seems to be the Left’s theme, let’s try something so stupid it simply has to work. Real economists predicted what would happen with perfect accuracy.
Jones’ entire book is reduced in the above link to eight bullets which pretty much sum up the Left’s war on energy and reality.
THATS a great image - thanks for posting.
Of course, Cash for Clunkers was not really an economic policy - it was a green wacko policy disguised in a phony economic shell.
Bump
YES YES YES.
And all the cars traded in were required to be destroyed. No more used car parts for the cars not traded in either.
There were huge discounts on gas guzzlers right before cash for clunkers went into effect. High gas prices were still fresh in most everyones mind so SUV's and sports cars were going at fire sale prices. I bought my current car 25% off MSRP..
At the time people were complaining about that (the damage to the secondary car market); I’m sure Obama and his handlers thought we’d all trade in our metal cars for brand-new (more expensive) plastic ones (to give the illusion of a boost to the economy, funded by more debt).
Devising methods of government intervention into problems where it is not necessary, resulting in more damage to a situation, often in aspects that were "unexpected", then excuse it away by stating their intentions were good and eventually disavowing all responsibility whatsoever by throwing it down the memory hole or blaming it directly on their critics.
Taxpayer money is wasted, livelihoods damaged and lost, and markets altered.
There is a reason Rush Limbaugh refers to liberals as "Drive By Liberals".
The reception you get from any liberal is a blank stare: "Cash for Clunkers? What is that, some kind of program foisted on us by conservative lobbyists?"
More like:
In case of nothing to do, break glass, say your intentions are good, pause to see if anyone is angry about it, then leave glass on floor for someone else to sweep up and walk to next glass box 20 feet away.
Repeat.
Also known as the self-licking ice cream cone.
Too boot, none of them has ever worked in the private sector, as far as I could tell. Only academia and government.
Spend gobs of money now fixing the problem and find out later what the problem is.
A letter will cost a dollar soon to mail. And you trust the same people with the economy and cars. Someone is crazy here and it may not be just them.
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