Love it or hate it, Cash for Clunkers has jump-started economy
Media outlets (including your very own Rocky Mountain Independent) are all abuzz over Cash for Clunkers, the government’s auto rebate program that could come to a screeching halt after only a week in action.
The program proved to be too popular and is pretty much out of money, although the government says it will honor rebate deals made through Tuesday. The U.S. House rushed through approval of more money for Cash for Clunkers on Friday, but it won’t be a done deal until the Senate signs off on it. Which likely won’t be until later this week, if at all.
That’s because the jury’s still out on the program’s true nature. Dealers and carmakers love it because it’s bringing people in droves to car lots. Consumers love it because they’re getting deep discounts. Some politicians love it because they feel they’ve actually done something to stimulate the economy. To wit:
- Ford’s July sales up from a year ago
- Cash for Clunkers buyers flood car dealers
- Car dealers applaud clunkers program as big shot in the arm
- Cash for clunkers success a positive economic sign
On the other side are those who think Cash for Clunkers is a lemon. Used car dealers are upset because the traded-in cars are recycled and scrapped instead of being resold. Ditto with parts dealers, who can’t resell the clunkers’ engines (a very lucrative part of the car) since they must be permanently disabled. Some environmentalists feel the program is wasteful because the fuel efficiency gains are minimal. Some politicians say it’s just another bailout that adds a debt burden to taxpayers.
- ‘Cash for Clunkers’ faces Senate battle
- Why Cash for Clunkers is a bad policy
- Clunker program throws a rod
And then there’s the unintended consequences. Dealers being on the hook for taxes on the rebates. Dealers potentially being left in the lurch for deals made during this past weekend’s is-there-or-isn’t-there-any-money funding limbo. In fact, the Colorado Auto Dealers Association warned its members late Sunday not to accept any more clunker deals until the funding situation is straightened out.
Love it or hate it, Cash for Clunkers is stimulating the economy as the country struggles to come out of recession. But unless the Senate acts quickly this week to put more money into the program, its boost will be short-lived.