So, while I was busy yesterday trying to finish up work, frantically reading some stuff for class, and spending every spare moment looking through the health care bill released yesterday, America learned just how much of a miserable failure the Cash For Clunkers program was. A study by the folks at Edmunds.com showed that taxpayers forked over $24,000 for each new car sold.
Perhaps the best synopsis of the study results and the best analysis of what it meant could be found at HotAir.com. Here are a few excerpts:
The Cash for Clunkers program provided federal subsidies of up to $4500 for those car owners willing to buy a more fuel-efficient vehicle in exchange for certain classes of gas guzzlers. In all, the C4C program generated over 690,000 sales in the few weeks that it ran, with an average subsidy of $4,348 per sale. How many of these, though, would have bought a new car in the near future anyway? According to a new study by Edmonds, an industry analyst, only 125,000 of these sales would have not been made without C4C — which brings the subsidy to about $24,000 per actual successful incentive.
In the end, almost all C4C did was steal sales from the new model year. Dealers unloaded last year’s models, and their new inventory will sit on the lots without the buyers they may have had otherwise. The destruction of used cars will make it more difficult for lower-income earners to buy vehicles, thanks to a shortage of about 700,000 in the national inventory. That will impact employment and consumer spending indirectly, which will mean a drag on future GDP growth.
Meanwhile, we spent almost as much to buy an average new car to incentivize each legitimate new sale. Is this smart economic management? Or is this yet another data point that proves that this administration has no idea how a free-market economy works, and even less idea of how a top-down managed economy fails?
I’d like to take it a bit further and ask an obvious question that was perhaps even too obvious for a professional like Ed Morrissey to mention at HotAir: is this the same federal government which hopes to run one-sixth of our national economy through health care reform?
After all, the purported deficit neutrality being promised by the administration depends largely upon the government becoming more efficient in the way it spends money, as they hope to find and excise more than $450 billion in Medicare waste in order to pay for Pelosi’s monstrosity.
We just paid $24,000 per car for a program which, compared to health care reform, is the size of a flea on an elephant. Not only that, but the downhill consequences pointed out by Morrissey–and pointed out on so many prior occasions here at America’s Right in Cash For Clunkers-related pieces–will add further cost to an already recklessly inefficient program.
Worse yet is that I’m predicting that the Obama administration brings the program back next summer, in advance of the mid-term election. Despite being a complete failure in reality, Cash For Clunkers was a populist success in the fantasyland inhabited by Democrats and promoted by the mainstream press. It will be back, and our wallets will be lighter for it.