“Cash for Clunkers”- Fodder for the Spin-Meisters


Here’s what Robert Gibbs had to say about Cash for Clunkers:

“It’s good for dealers and auto manufacturers, it’s good for our energy security and our environment.”

Like most “spin” there is an element of truth in all these claims but not as much as the claimants want us to believe.

Let’s begin with the environmental claim and the inference that the Cash for Clunkers program is making headway in the fight against global warming.  Yes it is true that a few relatively “dirty” vehicles are being taken off the roads and replaced with new “cleaner” models.  This is surely a good thing to do, but it has virtually no impact on the environment and it certainly has no impact on global warming.  The number of vehicles being traded in is a drop in the bucket.

I’m willing to give the spin-meisters the fuel efficiency claim.  It is certainly true that relatively inefficient vehicles are being traded in for more efficient models.  Of course that was the requirement to get your fellow taxpayers’ $4500, so let’s hope that it was accomplished.  That said, the “energy security” claim is pure political BS.  Again, too few cars, with too little efficiency gain to reduce our consumption of foreign oil in any meaningful way.

Finally, there is the implication that the program is helping pull the car companies and dealers out of the recession.  It is certainly true that traffic is up and the sales rate has improved.  That seems like a good thing, but is it really helping the manufacturers and the dealers over the longer term?

The fact is the government put into place a big incentive program; just like car companies have been doing for years.  Incentive programs don’t add incremental industry sales; more often then not they pull sales forward.  There will certainly be those instances where a person who probably would have bought a used car, will buy a new car, but those will be few and far between.  Cash for Clunkers has gotten some folks off the couch who were holding off buying a vehicle but there is a body of opinion that says they would have come into the market anyway.

I’m afraid that we will eventually learn that Cash for Clunkers has mortgaged the industry’s 2010 sales in favor of a couple of good months in 2009.

On balance, the Cash for Clunkers program seems to me to be another easy to sell program that provides the spin-meisters with “proof” that the Administration and Congress are getting something done.

If they would really like to have a positive impact on the environment, help consumers make better vehicular choices and enable the auto industry to create a profitable future for itself, their time would be better spent developing a coherent energy policy for our country that actually makes sense.  An energy policy that’s takes on the politically tough stuff like gasoline prices and the real culprit behind our country’s contribution to global warming, our use of coal fired electrical plants.  That would really make a difference for all of us.

Here are a couple of links to some good articles that will help you make sense of the spin:

In the New York Times:  “Cash for Clunkers by the numbers”

From the Wall Street Journal:  “More Cash for Clunkers”

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