Cash For Clunkers: The Rosetta Stone of Obamanomics Failure


A group called Resources For the Future, billing itself as “a nonprofit and nonpartisan organization that conducts independent research – rooted primarily in economics and other social sciences – on environmental, energy, natural resource and environmental health issues,” recently released a study confirming what everyone already knew: President Obama’s “Cash for Clunkers” program was among his many expensive failures:

“Cash-for-Clunkers” was a $3 billion program that attempted to stimulate the U.S. economy and improve the environment by encouraging consumers to retire older vehicles and purchase more fuel efficient new vehicles. We investigated the effects of this program on new vehicle sales and the environment.

Using Canada as the control group in a difference-in-differences framework, we find that the program increased new vehicle sales by about 0.36 million during July and August of 2009, implying that approximately 45 percent of the spending went to consumers who would have purchased a new vehicle anyway.

Our results suggest no gain in sales beyond 2009 and hence no meaningful stimulus to the economy. In addition, the program will reduce CO2 emissions by only 9 to 28.4 million tons, implying a cost per ton ranging from $91 to $288 even after accounting for reduced criteria pollutants.

Reporting these results, Washington Post writer Brad Plumer concedes “the actual benefits of the program were pretty meager,” but invests a remarkable degree of effort in looking for a bright side to the story:

Now, there’s a case to be made that that’s better than nothing. For one, handing $3,500 vouchers to people who would’ve bought cars anyway still counts as stimulus. What’s more, as the RFF paper found, the program reduced overall U.S. carbon-dioxide emissions by between 9 million and 28.4 million tons. But even so, that implies that it cost between $91 and $288 per ton to get those reductions — a pretty lousy bargain as far as carbon policy goes. Even if the program did have some benefits, it’s hard to argue that it was an efficient way to dole out cash.

That’s the Obamanomics mindset in a nutshell: as long as the government is throwing money at somebody, and its intentions were socially or environmentally “pure,” it’s all good.  Pity so much taxpayer cash was wasted to so little effect, but maybe they’ll do better next time… and no matter how many times Obama’s “stimulus” pork-barrel-stuffing and vote-buying schemes fail, no matter how many billions he pours into what amount to mediocre P.R. stunts, there must always be a “next time.”

Instead of looking for a more “efficient way to dole out cash,” shouldn’t we be challenging the very notion of the dole?  Obama’s crackpot schemes would be morally offensive even if they worked.  Why on Earth should any freedom-loving American accept the premise that everyone who didn’t buy a car during July and August of 2009 should be compelled to provide a subsidy to those who did?

The economic damage from “Cash for Clunkers” was far worse than the $3 billion seized from taxpayers (or borrowed from the Chinese, or conjured from the thin air of the Treasury) to fund it.  The used-car market was thrown into turmoil.  Spare parts for used cars were deliberately driven into short supply.  Disposing of the “clunkers” proved to be expensive and problematic. 

“Cash for Clunkers” is the Rosetta stone of Obamanomics.  Largely free of the pure corruption that turned other Obama “green” initiatives into thinly-veiled excuses for stuffing taxpayer loot into the pockets of big contributors, it was still a disaster six times the size of Solyndra that accomplished nothing except generating a few ridiculously optimistic headlines, and shoveling car sales from Q4 2009 to Q3 2009. 

The real American economy withers beneath the theme park of command economics failure Obama has constructed atop it.  If you got a Cash for Clunkers rebate, the least you could do is thank the suckers who paid for your $3500 lollipop.  You’ll drive past dozens of them on your way home from work, or the unemployment office.